SCHAWK INC, 424B4, 1998-02-05

SCHAWK INC
424B4, 1998-02-05
SERVICE INDUSTRIES FOR THE PRINTING TRADE

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<PAGE> 1

PROSPECTUS

3,000,000 Shares

SCHAWK LOGO
Class A Common Stock
---------------------

Of the 3,000,000 shares of Class A Common Stock (the "Class A Common
Stock") of Schawk, Inc. ("Schawk" or the "Company") offered hereby (the
"Offering"), 1,500,000 shares are being sold by the Company and 1,500,000 shares
are being sold by certain stockholders of the Company (the "Selling
Stockholders"). The Company will not receive any proceeds from the sale of
shares of the Class A Common Stock by the Selling Stockholders. See "Use of
Proceeds" and "Principal and Selling Stockholders."

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol "SGK." On February 3, 1998, the last sale price of the Class A Common
Stock as reported on the New York Stock Exchange was $9 15/16 per share. See
"Price Range of Class A Common Stock."

---------------------

THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 9.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
================================================================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $9.00 $0.54 $8.46 $8.46
- ----------------------------------------------------------------------------------------------------------------
Total(3)................ $27,000,000 $1,620,000 $12,690,000 $12,690,000
================================================================================================================
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."

(2) Before deducting estimated expenses of $325,000 payable by the Company.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
450,000 additional shares of Class A Common Stock on the same terms and
conditions as set forth above solely to cover over-allotments, if any. If
such option is exercised in full, the Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $31,050,000,
$1,863,000 and $16,497,000, respectively. See "Underwriting."

---------------------

The shares of Class A Common Stock offered by this Prospectus are offered
by the Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that the delivery
of certificates for the shares will be made at the offices of Lehman Brothers
Inc., New York, New York, on or about February 9, 1998.

---------------------
LEHMAN BROTHERS MCDONALD & COMPANY
SECURITIES, INC.

February 3, 1998

<PAGE> 2

SCHAWK LOGO

[The following appears as a series of four statements surrounding in a
clockwise fashion a pictorial displayed in color.]

DIGITAL IMAGING PREPRESS SERVICES

Schawk supplies high quality prepress services, including digitized and
conventional color separations, image retouching, platemaking and press proofs,
as well as digital photography and art production, for the consumer products
industry.

GLOBAL SERVICES NETWORK

Through its North American operations and alliances with prepress service
providers in the Far East, Europe and Australia, Schawk is positioned to meet
its clients' growing demand for global brand consistency.

IMAGING ASSET MANAGEMENT SERVICES

Using its PaRTs(TM) System, Schawk is able to maintain and manage
customized databases for its clients' images and package designs. Databases can
include brand packaging, images, text, production specifications, audio and
video commercial and advertising page information.

OUTSOURCING SERVICES

Initiated in 1993, Schawk's on-site program presently places skilled Schawk
employees at or near 22 client locations, enabling its clients to achieve
greater speed-to-market for their products.

[Image -- a globe surrounded by consumer products packaging, cans, labeling
information and computer technology components.]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK. SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF CLASS A COMMON
STOCK PRIOR TO THE PRICING OF THE OFFERING FOR THE PURPOSE OF MAINTAINING THE
PRICE OF THE CLASS A COMMON STOCK, THE PURCHASE OF SHARES OF CLASS A COMMON
STOCK FOLLOWING THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION
IN THE CLASS A COMMON STOCK OR THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES SEE "UNDERWRITING."

Schawk, the Schawk logo, PaRTs(TM), CLICk(TM) and the names of certain
other services offered by Schawk are service marks, trademarks or registered
service marks or trademarks of Schawk. All other trademarks or service marks
appearing in this Prospectus are trademarks, service marks or registered
trademarks or service marks of the respective companies that utilize them.

2
<PAGE> 3

AVAILABLE INFORMATION

The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As long as the Company is subject to such periodic reporting and
information requirements, it will file with the Securities and Exchange
Commission (the "Commission") all Commission reports, proxy statements and other
information required thereby, which may be inspected at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material may be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, electronically filed documents, including
reports, proxy statements and other information filed by the Company, can be
obtained from the Commission's Web site at http://www.sec.gov. The Class A
Common Stock is quoted on the New York Stock Exchange, and reports and other
information concerning the Company may also be inspected and copied at the
office of the New York Stock Exchange, 2 Broad Street, New York, New York 10005.

The Company has filed a Registration Statement on Form S-2 under the
Securities Act of 1933, as amended (the "Securities Act"), with the Commission
in Washington, D.C., with respect to the Class A Common Stock offered by this
Prospectus. This Prospectus, filed as part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information regarding the Company and
the shares offered hereby, reference is made to the Registration Statement and
any amendments, exhibits and schedules thereto, which may be inspected without
charge and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549. Such information may also be available on the Web site maintained by
the Commission at http://www.sec.gov. Statements contained in this Prospectus as
to the contents of any contract or other document referred to herein are not
necessarily complete and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in its entirety by such reference.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents filed by the Company with the Commission pursuant
to the Exchange Act (File No. 0-26094) are incorporated herein by reference as
of their respective dates:

(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996.

(b) Current Report on Form 8-K dated February 7, 1997.

(d) Current Report on Form 8-K dated May 5, 1997.

(e) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.

(f) Current Report on Form 8-K dated July 8, 1997.

(g) Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.

All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering of the Class A Common
Stock shall be deemed to be incorporated by reference herein. Any statement
contained in a document incorporated or deemed to be incorporated by reference
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

3
<PAGE> 4

The Company shall provide without charge to each person to whom a
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the information incorporated by reference in this Prospectus,
other than exhibits to such information (unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to A. Alex Sarkisian,
Schawk, Inc., 1695 River Road, Des Plaines, Illinois 60018.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

STATEMENTS CONTAINED IN THIS PROSPECTUS OR IN ANY DOCUMENT INCORPORATED OR
DEEMED TO BE INCORPORATED BY REFERENCE HEREIN THAT RELATE TO THE COMPANY'S
BELIEFS OR EXPECTATIONS AS TO FUTURE EVENTS RELATING TO, AMONG OTHER THINGS, THE
SUCCESS OF THE COMPANY'S GROWTH STRATEGY, THE ABILITY OF THE COMPANY TO EXPLOIT
INDUSTRY TRENDS, SUCH AS OUTSOURCING, AND THE COMPANY'S EXPLOITATION OF
TECHNOLOGICAL ADVANCEMENTS IN THE IMAGING INDUSTRY, ARE NOT STATEMENTS OF
HISTORICAL FACT AND ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT AND ARE SUBJECT TO
THE "SAFE HARBOR" CREATED THEREBY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UPON WHICH SUCH FORWARD-LOOKING STATEMENTS ARE BASED ARE REASONABLE
WITHIN THE BOUNDS OF ITS KNOWLEDGE OF ITS BUSINESS AND OPERATIONS, IT CAN GIVE
NO ASSURANCE THAT THE ASSUMPTIONS WILL PROVE TO HAVE BEEN CORRECT. REFERENCE TO
SECTIONS IN THIS PROSPECTUS WHICH CONTAIN FORWARD-LOOKING STATEMENTS AND
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY AND
ADVERSELY FROM THE COMPANY'S EXPECTATIONS AND BELIEFS ARE SET OUT UNDER "RISK
FACTORS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS." THESE FACTORS SHOULD BE CAREFULLY CONSIDERED BY
POTENTIAL INVESTORS.

4
<PAGE> 5

PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information, including "Risk Factors,"
appearing elsewhere in this Prospectus, and the consolidated financial
statements and notes thereto. Unless otherwise indicated, the information set
forth in this Prospectus does not give effect to the exercise of the
Underwriters' over-allotment option.

THE COMPANY

Schawk, Inc. ("Schawk" or the "Company") is a leading provider of digital
imaging prepress services for the consumer products industry in the United
States and Canada. The Company offers its clients a complete line of high
quality prepress services, including conventional, electronic and desktop color
separations, electronic production design, film preparation, platemaking and
press proofs for the three main printing processes used in the graphic arts
industry: lithography, flexography and gravure. The Company also provides its
clients such value-added services as digital image management, digital
photography and art production. The preparation of film, digital tape and press
proofs for lithography, flexography and other printing processes related to
packaging accounted for in excess of 70% of net sales in both 1996 and for the
nine months ended September 30, 1997. The balance of the Company's business
consists of the production of similar services for point-of-sale, advertising
and direct mail.

"Prepress services" are the tasks involved in preparing images and text for
reproduction to exact specifications for a variety of media, including packaging
for consumer products, point-of-sale displays and other promotional materials.
Packaging for consumer products encompasses folding cartons, boxes, trays, cans,
containers, packaging labels and wrap. While prepress work represents a
relatively small percentage of overall product packaging and promotion costs,
the visual impact and effectiveness of product packaging and promotions are
largely dependent upon the quality of prepress work.

The Company's clients typically outsource their prepress requirements and
assign the Company the responsibility of interfacing with the clients'
designated graphic designers who design the packaging and the converters or
printers who print and produce the packaging and related materials. The Company
competes on the basis of offering its multi-national client base: (i) high
quality customized imaging; (ii) rapid turnaround and delivery times; (iii)
up-to-date knowledge of the printing press specifications of converters and
printers located throughout the United States and Canada; (iv) digital imaging
asset management; (v) art production; and (vi) the ability to service its
clients' global prepress requirements through the Company's North American
facilities and international alliance partners. The Company's clients include:
Bayer, Campbell Soup, ConAgra, General Mills, Hershey, Keebler, Leo Burnett,
Nestle, Pepsico, Pillsbury, Publisher's Clearing House, Quaker Oats and a
significant number of other Fortune 1000 accounts.

The prepress industry in North America has over 1,300 market participants,
principally independent color separators, such as the Company, converters,
printers and consumer products companies that perform these services in-house.
The majority of prepress providers specialize in high volume, commodity-oriented
publication work that includes textbooks, advertising, catalogs, newspapers and
magazines. The Company's target market, however, is the consumer products
industry. The North American market for prepress services to the consumer
products industry is estimated by the Company to range from $1.0 billion to $1.3
billion, while the worldwide market is estimated by the Company to be as high as
$6.0 billion. The consumer products prepress industry is highly fragmented with
hundreds of market participants, only a small number of which have annual
revenues exceeding $50.0 million. The Company believes that the number of
participants in the North American prepress market for the consumer products
industry will diminish due to consolidation and attrition caused by competitive
forces such as accelerating technological requirements for advanced systems,
equipment and highly skilled personnel and the growing demands of clients for
full-service global capabilities.

5
<PAGE> 6

the consumer products industry and in particular for the food and beverage
segment. Additional industry trends include: (i) the shorter turnaround and
delivery time requirements from the creative design phase to final distribution
of the packaged product; (ii) an increasing number of stock keeping units
("SKUs") competing for shelf space and market share; (iii) the increasing
importance of package appearance and promotions due to demonstrated
point-of-sale consumer purchasing behavior; and (iv) the increasing requirements
for worldwide quality and consistency in packaging as companies attempt to build
global brand name recognition.

The Company believes that its clients have increasingly selected Schawk as
the primary supplier of prepress services because of the Company's ability to
provide quick turnaround and delivery times and high quality, customized
imaging. The Company is able to compete on this basis due to the following core
competencies:

- Technical Expertise. The Company places an emphasis on state-of-the-art
systems and equipment and continual training and development of its
employees.

- On-Site Personnel. The Company has placed over 60 employees on-site at or
near 22 client locations in an effort to further integrate its prepress
services directly with client operations. This facilitates faster
turnaround and delivery times and fosters stronger client relationships.

- Strong Relationships with Converters and Printers. Over the course of its
44-year business history, the Company has developed strong relationships
with many of the major converters and printers in the United States and
Canada and, as a result, has extensive knowledge of their equipment,
thereby enabling the Company to increase the overall efficiency of the
printing process.

- Imaging Asset Management. The Company maintains and manages a database of
its clients' images and package designs. Once an image is in the
Company's database, the client can make frequent regional, seasonal or
event-related adjustments to the file image prior to printing. The
Company's ability to quickly manipulate digital images enables its
clients to deliver their products to the market faster.

The Company's primary goal is to enhance its leadership position in the
prepress imaging market for the consumer products industry. Key aspects of the
Company's business strategy to achieve this goal include the following:

- Growth through Acquisitions and Start-ups. In its 44-year business
history, the Company has integrated more than 25 prepress and imaging
businesses into its operations while streamlining overhead and improving
margins. These acquisitions are part of the Company's growth strategy to
acquire companies with Fortune 1000 client lists, excellent client
service or proprietary products and solid management who will continue to
operate the business after the acquisition. The Company believes that an
emphasis on complementary acquisitions of companies serving targeted
markets will allow it to broaden its service offerings and provide single
source prepress and imaging services. Schawk has also established
start-up operations in response to client or market requirements. The
Company expects to continue this strategy as opportunities warrant.

Company continually invests in new technology designed to support its high
quality prepress services. The Company concentrates its efforts on understanding
the systems and equipment available in the marketplace and creating solutions
using off-the-shelf products, customized to meet a variety of specific
client and internal requirements.

In addition to its operations in the United States and Canada, the Company
has established a full-service prepress and digital imaging operation in Mexico.
The Company also has alliances with selected prepress companies in Europe, the
Far East and Australia to provide international prepress services to its
multi-national client base.

The Company is incorporated under the laws of the State of Delaware. The
Company's principal executive offices are located at 1695 River Road, Des
Plaines, Illinois 60018, and its telephone number is (847) 827-9494.

THE OFFERING

Class A Common Stock offered

By the Company................................ 1,500,000 shares

By the Selling Stockholders................... 1,500,000 shares

Total Class A Common Stock offered............ 3,000,000 shares

Class A Common Stock to be outstanding after the
Offering........................................ 21,534,102 shares (21,984,102
shares if the Underwriters'
over-allotment option is
exercised)(1)

Use of Proceeds................................. Together with other available
funds, to repurchase all of
the outstanding Series A
Preferred Stock and Series B
Preferred Stock of the
Company. See "Use of
Proceeds."

New York Stock Exchange Symbol.................. "SGK"
- ---------------

(1) Excludes 2,376,074 shares of Class A Common Stock reserved for issuance
pursuant to the exercise of options under the Company's stock option plans
and other employee compensation agreements. Under such plans and agreements,
options for 659,250 shares were outstanding and options for 460,055 shares
were vested as of January 31, 1998.

7
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

On February 7, 1997, the Company sold its plastics business segment for
$93.485 million plus working capital adjustments. The consolidated statement of
income data for the Company set forth below has been restated to exclude
discontinued operations and is presented for continuing operations only. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General."

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
DATA
Net Sales........................... $ 82,860 $ 95,809 $103,889 $ 87,204 $ 90,763 $ 63,881 $ 85,157
Operating Income.................... 14,065 16,276 20,309 11,022 13,373 9,530 13,777
Income from Continuing Operations
Before Income Taxes............... 12,653 12,680 15,991 7,243 9,056 6,642 13,698
Income Taxes........................ 425(a) 601(a) 3,722(a)(b) 945(c) 3,530 2,487 5,479
Income from Continuing Operations... 12,228 12,079 12,269 6,298 5,526 4,155 8,219
Income from Continuing Operations
Per Common Share.................. --(d) --(d) --(d) $ 0.26 $ 0.22 $ 0.17 $ 0.37
PRO FORMA INFORMATION (CONTINUING
OPERATIONS)(E)
Pro Forma Income Taxes.............. $ 5,061 $ 5,072 $ 6,396 -- -- -- --
Pro Forma Income from Continuing
Operations Adjusted Only for
Income Taxes...................... 7,592 7,608 9,595 -- -- -- --
OTHER DATA
Cash Dividends per Common Share..... --(d) --(d) --(d) $ 0.260 $ 0.260 $ 0.195 $ 0.195
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------
AS
ACTUAL ADJUSTED(F)
-------- -----------
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Working Capital................................... $ 25,379 $ 21,616
Total Assets...................................... 129,551 125,788
Long-Term Debt and Capital Lease Obligations...... 44,963 44,963
Stockholders' Equity.............................. 53,403 49,640
</TABLE>

- ---------------
(a) The Company was taxed as an S corporation and therefore was subject only to
certain state income taxes for the years ended December 31, 1992, 1993 and
1994.

(b) Income taxes for the year ended December 31, 1994 include a one-time
deferred tax charge of $3,000 for the termination of the S corporation tax
election.

(c) Income taxes for the year ended December 31, 1995 include a benefit of
$1,632 for utilization of net operating loss carryforwards for which no tax
benefit was previously recorded.

(d) Because of the limited number of stockholders of the Company during the
periods it was taxed as an S corporation, income and cash dividends per
common share data is not meaningful and has not been presented for the years
ended December 31, 1992, 1993 or 1994.

(e) Pro forma information is presented to reflect income tax expense at a normal
corporate rate for the years ended December 31, 1992, 1993 and 1994.

(f) Adjusted to reflect the sale by the Company of 1,500,000 shares of Class A
Common Stock offered hereby at the public offering price of $9.00 per share
and the application of the estimated net proceeds therefrom, together with
other funds available to the Company, to repurchase Series A Preferred Stock
and Series B Preferred Stock of the Company. See "Use of Proceeds" and
"Capitalization."

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<PAGE> 9

RISK FACTORS

The Class A Common Stock being offered hereby involves a high degree of
risk. Prospective purchasers of the Class A Common Stock offered hereby should
carefully consider the following risk factors, as well as the other information
contained in this Prospectus or incorporated by reference herein.

RISKS OF TECHNOLOGICAL CHANGE

The success of the Company has in part depended on its ability to develop
and exploit emerging technologies in the prepress services industry. By
leveraging its technological expertise, the Company has been able to maintain an
advantage over its competitors and has demonstrated to its clients the value of
using the Company for prepress services rather than attempting to perform these
functions in-house, through lower-cost competitors or through converters who
provide certain prepress services. While the Company continually invests in
training, education and research, there can be no assurance that the Company
will be successful in continuing to develop and exploit emerging technologies.
New technologies may also have the effect of lessening the Company's current
technological advantages, leading to increased in-house production of prepress
work by the Company's clients, or lowering barriers to entry so as to permit
other firms to provide competitive services. Use of the latest computer
equipment and software, while providing the opportunity for quicker turnaround
and delivery times, has placed greater reliance upon the accuracy of formatting
and information input methodologies. In order to ensure this accuracy as early
in the process as possible, well trained, highly efficient client service
personnel are vital. There can be no assurance that the Company will be
successful in continuing to attract, train or retain the highly skilled
personnel which are necessary for its operations.

The Company's services and the equipment that it employs in delivering its
services are subject to rapid technological change and rapid obsolescence.
Accordingly, the Company's ability to grow will depend upon its ability to keep
pace with technological advances on a continuing basis and to integrate
available technologies with client needs in a commercially appropriate manner.
The Company's business may be adversely affected if it is unable to keep pace
with relevant changes or if the technologies that it adopts do not receive
widespread market acceptance.

RISKS ASSOCIATED WITH ACQUISITIONS; MANAGEMENT OF GROWTH

The Company plans to further expand its business through acquisitions and
evaluates acquisition opportunities on an ongoing basis. There can be no
assurance that the Company will successfully identify, complete or integrate
additional acquisitions or that any acquisitions will perform as expected or
will contribute significant revenues or profits to the Company. In addition, the
Company may pursue and consummate acquisitions that are dilutive to stockholders
if it believes that such acquisitions are in the best interests of the Company.
Additionally, in the future, the Company may face increased competition for
acquisition opportunities, which may inhibit the Company's ability to consummate
acquisitions on terms favorable to the Company.

Any acquired business may provide services that, although complementary,
differ from the existing services offered by the Company. There can be no
assurance that the anticipated benefits of these acquisitions will be achieved.
There can be no assurance that the Company will be able to manage successfully
new service areas of the Company, the employees of such service areas or the
client base supported by such service areas.

The ability of the Company to manage growth through acquisitions and its
own internal growth depends on its ability to maintain the high quality of
services that it provides to clients; to successfully integrate the different
services that it provides; to recruit, motivate and retain qualified personnel;
and to train existing sales representatives or recruit new sales representatives
to cross-sell different services or products. There can be no assurance that the
Company will be able to manage its expanding operations effectively or that it
will be able to maintain its growth. Failure to successfully manage its
expanding operations or to maintain its growth would have a material adverse
effect on the Company's business, financial condition and results of operations.

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<PAGE> 10

INABILITY TO PREDICT ORDER FLOW

The prepress services business is generally characterized by individual
orders from clients on a project-by-project basis rather than long-term supply
contracts. Continued engagements for successive projects or orders are primarily
dependent upon the client's satisfaction with services previously provided. As
technological developments have significantly reduced the time-to-market for the
production of product packaging materials, seasonal fluctuations in the
Company's sales volume that previously occurred due to holiday promotions and
special marketing tie-ins have become less pronounced. Currently, on average,
the Company's projects and orders are processed in its production facility
within four days. Although the Company has established long-standing
relationships with its clients and believes its reputation for quality service
is excellent, the Company is not able to predict with certainty the volume of
its business even in the near future.

DEPENDENCE ON KEY MANAGEMENT

The Company's success has been and will be dependent to a large degree upon
its ability to retain the services of its existing senior management and to
attract and retain qualified additional senior and middle management in the
future. To provide for continuity of leadership, the Company has entered into
employment agreements with two of its executive officers. The loss of the
services of any of the key management personnel or the inability to recruit and
retain qualified personnel in the future could have a material adverse effect on
the Company's business and results of operations. See "Management."

CONCENTRATION OF OWNERSHIP

Clarence W. Schawk, David A. Schawk, other members of their immediate
families and A. Alex Sarkisian as trustee of various family trusts for the
benefit of Clarence W. Schawk's grandchildren (the "Schawk Family") presently
beneficially own, in the aggregate, approximately 83.8% of the Class A Common
Stock of the Company and will beneficially own approximately 73.0% of the Class
A Common Stock after completion of the Offering. As a result, the Schawk Family
will, acting together, be able to control most matters requiring approval by the
stockholders of the Company, including the election of directors. The voting
control of the Schawk Family could have the effect of delaying or preventing a
change in control of the Company. See "Principal and Selling Stockholders" and
"Description of Capital Stock."

COMPETITION

The Company competes with other providers of prepress and digital imaging
services. The market for prepress services is highly fragmented, with several
national and many regional participants. The Company faces, and will continue to
face, competition in its prepress business from many sources, including national
and regional companies, some of which have greater financial, marketing and
other resources than the Company. In addition, local and regional firms
specializing in particular industry segments compete on the basis of established
long-term relationships or specialized knowledge of such segments. The
introduction of new technologies may also lead to increased in-house production
of prepress work by the Company's clients, or create lower barriers to entry so
as to permit other firms to provide competing services.

There can be no assurance that competitors will not introduce services or
products that achieve greater market acceptance than, or are technologically
superior to, the Company's prepress and digital imaging service offerings.
Competitors and future competitors have or may have more extensive digital
imaging service capabilities, more extensive experience and greater financial,
marketing and other resources than the Company.

No assurance can be given that the Company will be able to continue to
compete successfully or that competitive pressures will not adversely affect the
Company's business, financial condition and results of operations. See
"Business -- Competition."

10
<PAGE> 11

DEPENDENCE ON KEY CLIENTS

The Company's ten largest clients accounted for approximately 37% of the
Company's revenues in 1996 and approximately 34% of revenues for the nine months
ended September 30, 1997. In 1996 and for the nine months ended September 30,
1997, approximately 8% and 7%, respectively, of the Company's total revenues
came from the Company's largest single client. While the Company seeks to build
long-term client relationships, revenues from any particular client can
fluctuate from period to period due to such client's purchasing patterns. Any
termination or significant disruption of the Company's relationships with any of
its principal clients could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Clients."

FLUCTUATIONS IN VALUE OF MARKETABLE SECURITIES

As of September 30, 1997, the Company held $52.3 million of marketable
securities and short-term investments which consisted of $10.5 million in equity
securities and equity mutual funds, $6.3 million in U.S. Treasury and U.S.
Government notes, $3.3 million in corporate bonds and $32.2 million in bond
mutual funds. The Company carries the marketable securities at fair value, with
unrealized gains and losses, net of income taxes, reported as a separate
component of stockholders' equity. Realized gains and losses upon disposition of
marketable securities and declines in value of marketable securities judged to
be other than temporary are included in investment income. As of September 30,
1997, the fair value of the marketable securities exceeded the Company's cost by
$2.6 million ($1.6 million net of tax effects) which was recorded in
stockholders' equity. See Note 7 to notes to condensed consolidated interim
financial statements.

The fair value of the Company's marketable securities are subject to stock
market and interest rate risk and it is expected that the fair value of the
Company's marketable securities will fluctuate from period to period. Any
decrease in the market value of the marketable securities held by the Company
will have a negative impact on the Company's stockholders' equity and would have
an adverse effect on the Company's income from operations if the Company sold
its marketable securities below the cost thereof. Substantial decreases in the
fair value of such marketable securities may adversely affect the Company's
financial condition, results of operations and growth strategy, particularly its
ability to pursue its acquisition strategy.

LIMITED PROPRIETARY RIGHTS

The Company seeks to protect its know-how and proprietary software through
copyright and trade secret laws and, in certain cases, contractual restrictions
on disclosure. Despite such measures, it may be possible for unauthorized third
parties to copy aspects of the Company's software and processes or to obtain and
use information that the Company regards as proprietary. In addition, no
assurance can be given that protective measures taken by the Company will be
sufficient to preclude competitors from developing competing or similar software
or processes.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's quarterly operating results have fluctuated in the past and
may fluctuate in the future as a result of a variety of factors, including
timing of the completion of particular projects or orders, material reduction or
cancellation of major projects or the loss of a major client, timing of new
business, timing of the hiring or loss of personnel, differences in order flows
between traditional prepress and digital imaging services, sensitivity to
general economic conditions, the health of the consumer products industry, the
relative mix of different types of work with differing margins, clients' order
patterns, changes in the pricing strategies of the Company and other costs
relating to the expansion of operations. Many of these factors are outside of
the Company's control. Because of the high fixed-cost nature of the Company's
business, the Company may not be able to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall, which would adversely affect
operating results. For the foregoing reasons, the Company believes that
period-to-period comparisons of its financial results should not be relied upon
as an indication of future performance. In addition, the results of any
quarterly period are not indicative of results to be expected for a full fiscal
year. It is possible that, in certain future quarters, the Company's operating
results may be below the expectations of

11
<PAGE> 12

public market analysts and investors. In such an event, the price of the Class A
Common Stock would likely be materially adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Results of Operations."

SUSCEPTIBILITY TO CHANGE IN ECONOMIC CONDITIONS AND TRENDS

The Company's revenues and results of operations are subject to
fluctuations based upon the economic conditions of the United States and Canada
in general, and the economic conditions of the consumer products industry and
food and beverage companies in particular. If there were to be a general
economic downturn or a recession in the United States or one specifically
affecting the consumer products industry and food and beverage companies, the
Company would expect that business enterprises, including its clients and
potential clients, will substantially and immediately reduce both their prepress
budgets and their expenditures on other services of the types offered by the
Company. Adverse economic trends affecting the consumer products industry, such
as increases in the costs of paper or other materials used in consumer products
packaging, could also cause a reduction in the demand for prepress and related
services. In the event of such an economic downturn or adverse trend, there can
be no assurance that the Company's business, operating results and financial
condition would not be materially and adversely affected.

LABOR RELATIONS

As of September 30, 1997, approximately 29% of the Company's employees were
represented by local units of international labor unions. The Company considers
its union employees to be vital to its operations. Although the Company
considers its relationship with its union employees to be good, there can be no
assurance that the Company will be successful in renegotiating collective
bargaining agreements with its union employees in the future or that the failure
to renegotiate such contracts will not result in work stoppages or disruption to
the operations of the Company. Any such work stoppages or disruption could have
a material adverse effect on the Company's financial condition, results of
operations or growth opportunities. See "Business -- Employees."

RESTRICTIVE DEBT COVENANTS

The Company may in the future incur indebtedness in connection with its
acquisition strategy or to fund its operations. Existing or future credit
agreements entered into by the Company with its lenders with respect to existing
or future indebtedness may contain covenants that could restrict certain actions
by the Company and may impede its ability to implement its growth strategy. No
assurances can be given that existing credit agreements will not restrict the
Company's growth strategy or that the Company will not in the future enter into
agreements with its lenders that contain restrictive covenants that would have a
similar effect.

POTENTIAL STOCK PRICE VOLATILITY

The trading price of the Class A Common Stock could be subject to
significant fluctuations in response to variations in quarterly operating
results or other factors. Announcements concerning developments in the prepress,
digital imaging or related industries, results of the Company's operations and
stock market conditions generally could have a significant impact on the market
price of the Class A Common Stock. In addition, stock prices for many companies
fluctuate widely for reasons that may be unrelated to those companies' results

12
<PAGE> 13

of operations. These fluctuations, as well as general economic, political and
market conditions, may have a material adverse effect on the market price of the
Class A Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a significant number of shares of Class A Common Stock in the
public market following the Offering, or the perception that such sales could
occur, could adversely affect the market price of the Class A Common Stock and
such sales could materially impair the Company's ability to raise capital
through the future offering of equity securities. All of the 3,000,000 shares
offered hereby (3,450,000 shares if the Underwriters' over-allotment option is
exercised in full) will be freely transferable without restriction or
registration under the Securities Act. Upon completion of the Offering, the
Company will have 21,534,102 shares of Class A Common Stock outstanding and will
have increased the number of shares that will be freely transferable without
restriction (the "public float") from 5,360,051 shares to 8,360,051 shares
(8,810,051 shares if the Underwriters' over-allotment option is exercised in
full). The public float includes 2,247,045 freely transferable shares held by
non-management members of the Schawk Family. Of the remaining shares
outstanding, 159,521 shares will be held by independent parties and constitute
"restricted securities" as defined under Rule 144 of the Securities Act and
subject to the resale limitations thereunder, and 12,811,614 shares will be
beneficially owned by "affiliates" of the Company as defined under Rule 144
(including management members of the Schawk Family and other executive officers
and directors of the Company) and eligible for resale subject to the limitations
under Rule 144. Of the shares held by or on behalf of the Schawk Family,
2,247,045 shares are freely transferable and 13,413,642 shares are eligible for
resale subject to the limitations of Rule 144. All of the shares held by the
Schawk Family are subject to demand or piggyback registration rights. See
"Shares Eligible for Future Sale."

Up to 535,176 additional shares of Class A Common Stock may be purchased by
certain employees and directors of the Company pursuant to the exercise of
options (the "Options") granted under the Company's 1988 Equity Option Plan and
the 1991 Outside Directors' Formula Stock Option Plan, of which Options for
335,981 shares were vested as of January 31, 1998. The shares of Class A Common
Stock issuable upon exercise of the Options are freely tradable under a
registration statement on Form S-8, except that such shares held by affiliates
of the Company will be subject to the volume limitations of Rule 144. The
Company also has outstanding options for 124,074 shares under employee
compensation agreements all of which were vested as of January 31, 1998. Any
shares acquired upon exercise of such options would be subject to Rule 144.

The Company may issue shares of Class A Common Stock in connection with
acquisitions of other companies. Such shares, if registered, could be freely
tradeable.

ANTI-TAKEOVER CONSIDERATIONS

The Company is subject to the restrictions imposed by Section 203 of the
Delaware General Corporation Law, as amended ("Section 203"). Section 203
provides that, subject to certain exceptions specified therein, an "interested
stockholder" of a Delaware corporation shall not engage in any business
combination, including mergers, consolidations or acquisitions of additional
shares of the corporation, with the corporation for a three-year period
following the date that such stockholder becomes an "interested stockholder"
unless: (i) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an "interested stockholder"; (ii) upon consummation of
the transaction which resulted in the stockholder becoming an "interested
stockholder," the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares); or (iii) on or subsequent to such date, the business
combination is approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." Except as otherwise specified in Section 203, an
"interested stockholder" is defined to include (x) any person that is the owner
of 15% or more of the outstanding voting stock of the corporation, or is an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within three years
immediately prior to the relevant date and (y) the

13
<PAGE> 14

affiliates and associates of any such person. The Schawk Family became
"interested stockholders" in September 1992.

These provisions could have the effect of delaying, deferring or preventing
a change of control of the Company. The Company's stockholders, by adopting an
amendment to its Amended Certificate of Incorporation or By-laws, may elect not
to be governed by Section 203, effective 12 months after adoption.

THE COMPANY

Schawk is a leading provider of digital imaging prepress services for the
consumer products industry in the United States and Canada. The Company offers
its clients a complete line of high quality prepress services, including
conventional, electronic and desktop color separations, film preparation,
platemaking and press proofs for the three main printing processes used in the
graphic arts industry: lithography, flexography and gravure. The Company also
provides its clients such value-added services as digital photography, digital
image management and art production. See "Business."

The Company's prepress business was begun in 1953, operating from one
location in Chicago, Illinois. Under the direction of Clarence W. Schawk and his
son, David A. Schawk, the Company has grown into an international business with
operations in the United States and Canada and has recently established a full-
service prepress operation in Mexico. The Company also maintains international
affiliations with selected prepress providers in Europe, the Far East and
Australia. Over the Company's 44-year business history, Schawk has integrated
more than 25 prepress and imaging businesses into its operations while
streamlining overhead and improving margins. Schawk intends to continue to
expand through acquisitions of well-managed companies in prepress and
imaging-related businesses with solid market positions, established client
relationships and new technologies. Schawk has also established start-up
operations in response to client or market requirements and expects to continue
this strategy as opportunities warrant.

The Company functions as a network of autonomous operating businesses with
purchasing, technology development and finance centralized at the Company's
corporate headquarters in Des Plaines, Illinois. The following is a listing of
the various Schawk operations and international alliances:

<TABLE>
<CAPTION>
SCHAWK OPERATIONS LOCATION
----------------- --------
<S> <C>
United States
Amber Design Associates............. Hackettstown, New Jersey
Color Data East..................... Armonk, New York
Converterscan....................... Smyrna, Georgia
Dimension Imaging................... Roseville, Minnesota
Lincoln Graphics.................... Cherry Hill, New Jersey
Litho Colorplate, Inc............... Minneapolis, Minnesota
LSI/Atlanta......................... Smyrna, Georgia
LSI/Kala............................ Kalamazoo, Michigan
The Palm Group...................... Minneapolis, Minnesota
Process Color Plate Co.............. Chicago, Illinois
Schawk Cincinnati................... Cincinnati, Ohio
Schawkgraphics...................... Des Plaines, Illinois
Stebbins Photography................ Minneapolis, Minnesota
Weston Engraving Company, Inc....... Minneapolis, Minnesota
929 Design.......................... Costa Mesa, California
Canada
Batten Graphics..................... Toronto, Ontario
CyberImages......................... Toronto, Ontario
PrinterNet.......................... Toronto, Ontario
Fishbowl Productions................ Toronto, Ontario
StanMont, Inc. ..................... Montreal, Quebec
</TABLE>

14
<PAGE> 15

<TABLE>
<CAPTION>
INTERNATIONAL ALLIANCES LOCATION
----------------------- --------
<S> <C>
</TABLE>

XZact............................... Montreal, Quebec
Mexico
Schawk de Mexico, S.A. de C.V. ..... Queretaro, Mexico
Europe
Brent International PLC............. Buckinghamshire, United Kingdom
Pre-press Group De Schutter......... Antwerpen, Belgium
Saueressig & Company................ Vreden, Germany
Far East
Colourscan Co. Pte. Ltd. ........... Singapore
Laserscan SDN.BHD................... Penang, Malaysia
Australia
Network Graphics.................... Marrickville, Australia

The Company has taken advantage of its clients' needs to rationalize their
workforces and outsource their prepress services by establishing satellite
operations either on-site or in close proximity to the Company's clients. The
Company presently has over 60 employees on-site at or near 22 client facilities.
Maintaining personnel on-site provides for increased client communication,
improved turnaround and delivery time and enhanced long-term client
relationships. It also enables the Company to modify and customize its
operations to fit the particular requirements of each client.

The Company is primarily engaged in one line of business, prepress and
digital imaging. Prior to February 7, 1997, the Company also operated a second
business segment, the operations of which were sold in transactions accounted
for in 1996. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- General."

USE OF PROCEEDS

The proceeds to the Company from the sale of the 1,500,000 shares of Class
A Common Stock offered by the Company hereby are $12,365,000, net of
underwriting discounts, commissions and estimated expenses. If the Underwriters'
over-allotment option is exercised in full, the proceeds to the Company from the
sale of 1,950,000 shares, net of underwriting discounts, commissions and
estimated expenses, are estimated to be $16,172,000. The Company will not
receive any proceeds from the sale of shares of Class A Common Stock by the
Selling Stockholders.

Simultaneously with the closing of the Offering, the Company intends to use
the net proceeds from the Offering, together with other available funds, to
repurchase 15,400 shares of Series A Preferred Stock of the Company and 5,207
shares of Series B Preferred Stock of the Company at a price of $707.14 per
share plus accrued dividends thereon to the date of repurchase. All of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock of
the Company are beneficially owned by members of the Schawk Family. Each holder
of Series A Preferred Stock and Series B Preferred Stock has agreed to sell such
shares, and the Company has agreed to purchase such shares subject to certain
conditions. See "Certain Transactions."

15
<PAGE> 16

PRICE RANGE OF CLASS A COMMON STOCK

The Class A Common Stock is traded on the New York Stock Exchange under the
symbol "SGK." The following table sets forth, for the periods indicated, the
high and low sales prices for the Class A Common Stock, as reported on the New
York Stock Exchange.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Quarter ended March 31.................................... $111/4 $ 81/8
Quarter ended June 30..................................... 91/8 71/4
Quarter ended September 30................................ 83/4 7
Quarter ended December 31................................. 73/4 57/8
YEAR ENDED DECEMBER 31, 1996:
Quarter ended March 31.................................... 93/8 63/4
Quarter ended June 30..................................... 91/4 75/8
Quarter ended September 30................................ 83/4 71/8
Quarter ended December 31................................. 87/8 65/8
YEAR ENDED DECEMBER 31, 1997:
Quarter ended March 31.................................... 9 75/8
Quarter ended June 30..................................... 91/8 73/4
Quarter ended September 30................................ 117/16 8
Quarter ended December 31................................. 125/8 103/8
</TABLE>

The last sale price of the Class A Common Stock, as reported on the New
York Stock Exchange on February 3, 1998, was $9 15/16 per share. As of January
31, 1998, the Company had 20,034,102 outstanding shares of Class A Common Stock
and had, as of September 30, 1997, approximately 2,140 stockholders of record,
which does not include shares held in securities position listings.

16
<PAGE> 17

DIVIDEND POLICY

The Company's Board of Directors has declared and the Company has paid a
regular quarterly dividend on the Class A Common Stock of $0.065 per share, or
$0.260 per share annually. The table below sets forth information with respect
to dividends paid on the Class A Common Stock during the periods indicated.

<TABLE>
<CAPTION>
PER SHARE OF CLASS A
COMMON STOCK
--------------------
<S> <C>
YEAR ENDED DECEMBER 31, 1995:
Quarter ended March 31.................................... $0.065
Quarter ended June 30..................................... 0.065
Quarter ended September 30................................ 0.065
Quarter ended December 31................................. 0.065
-------
$0.260
=======
YEAR ENDED DECEMBER 31, 1996:
Quarter ended March 31.................................... $0.065
Quarter ended June 30..................................... 0.065
Quarter ended September 30................................ 0.065
Quarter ended December 31................................. 0.065
-------
$0.260
=======
YEAR ENDED DECEMBER 31, 1997:
Quarter ended March 31.................................... $0.065
Quarter ended June 30..................................... 0.065
Quarter ended September 30................................ 0.065
Quarter ended December 31................................. 0.065
-------
$0.260
=======
</TABLE>

The Company's Board of Directors may determine to discontinue declaring and
paying any dividends with respect to the Class A Common Stock in the future.
There can be no assurance that dividends will be paid in the future by the
Company. Any future determination as to payment of dividends will depend upon
the Company's financial condition, results of operations, growth opportunities
and such other factors as the Board of Directors deems relevant.

17
<PAGE> 18

CAPITALIZATION

The following table sets forth, as of September 30, 1997, the
capitalization of the Company and the capitalization of the Company as adjusted
to give effect to the receipt and application by the Company of the net proceeds
from the sale of 1,500,000 shares of Class A Common Stock offered hereby as
described in "Use of Proceeds" (at the public offering price of $9.00 per share
and after the deduction of underwriting discounts and commissions and estimated
offering expenses payable by the Company). The table also gives effect to
additional funds to be paid by the Company to repurchase the remaining Series A
Preferred Stock and Series B Preferred Stock not repurchased with the proceeds
of the Offering. The table should be read in conjunction with the historical
consolidated financial statements of the Company and the notes thereto, and the
other financial information appearing elsewhere in this Prospectus or
incorporated by reference herein. See "Index to Consolidated Financial
Statements."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------
(IN THOUSANDS)
AS
ACTUAL ADJUSTED
-------- --------
<S> <C> <C>
Cash and cash equivalents................................... $ 1,878 $ 1,878
Short-term investments...................................... 18,967 15,204
-------- --------
Total cash and short-term investments............. $ 20,845 $ 17,082
Marketable securities....................................... $ 33,354 $ 33,354
Short-term debt:
Notes payable to banks.................................... $ 4,200 $ 4,200
Current portion of long-term debt and capital lease
obligations............................................ 391 391
-------- --------
Total short-term debt............................. $ 4,591 $ 4,591
Long-term debt.............................................. $ 40,000 $ 40,000
Capital lease obligations................................... 4,963 4,963
Stockholders' equity:
Series A Preferred Stock, $0.01 par value; $1,000
liquidation value; 17,600 shares issued and outstanding
(Actual); no shares issued and outstanding (As
Adjusted).............................................. -- --
Series B Preferred Stock, $0.01 par value; $1,000
liquidation value; 5,207 shares issued and outstanding
(Actual); no shares issued and outstanding (As
Adjusted).............................................. -- --
Class A Common Stock, $0.008 par value; 19,803,739 shares
issued and outstanding (Actual); 21,303,739 shares
issued and outstanding (As Adjusted) (1)............... 159 171
Class B Common Stock, $0.05 par value; 172,281 shares
issued but not outstanding (Actual and As Adjusted).... -- --
Additional paid-in capital................................ 78,318 67,864
Retained earnings (deficit)(2)............................ (23,491) (16,812)
Other equity.............................................. (1,583) (1,583)
-------- --------
Total stockholders' equity........................ 53,403 49,640
-------- --------
Total capitalization.............................. $ 98,366 $ 94,603
======== ========
</TABLE>

- ---------------
(1) Excludes 2,376,074 shares of Class A Common Stock reserved for issuance
pursuant to the exercise of options under the Company's stock option plans
and other employee compensation agreements. Under such plans and agreements,
options for 659,250 shares were outstanding and options for 460,055 shares
were vested as of December 31, 1997.

(2) The increase in retained earnings is due to the repurchase of Series A and
Series B Preferred Stock at $707.14 per share which represents a discount
over its liquidation value of $1,000 per share.

18
<PAGE> 19

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial data of the
Company. On February 7, 1997, the Company sold its plastics business segment for
$93.485 million plus working capital adjustments. The consolidated statement of
income data for the Company set forth below has been restated to exclude
discontinued operations and is presented for continuing operations only. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General." The selected consolidated financial data as of and for
the fiscal years ended 1992, 1993, 1994, 1995 and 1996 is derived from the
consolidated financial statements of the Company which have been audited by
Ernst & Young LLP, independent auditors. Ernst & Young LLP has relied upon an
audit report of Arthur Andersen LLP with respect to the presentation of certain
financial information in the Company's 1994 financial statements. The selected
consolidated financial data as of September 30, 1997 and for the nine months
ended September 30, 1996 and September 30, 1997 is derived from the unaudited
condensed consolidated financial statements of the Company which, in the opinion
of management, contain all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the Company's financial
position and results of operations. The data should be read in conjunction with
the consolidated financial statements and related notes included elsewhere in
this Prospectus or incorporated by reference herein.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA
Net Sales....................................... $82,860 $95,809 $103,889 $87,204 $90,763 $63,881 $85,157
Operating Income................................ 14,065 16,276 20,309 11,022 13,373 9,530 13,777
Income from Continuing Operations Before Income
Taxes......................................... 12,653 12,680 15,991 7,243 9,056 6,642 13,698
Income Taxes.................................... 425(a) 601(a) 3,722(a)(b) 945(c) 3,530 2,487 5,479
Income from Continuing Operations............... 12,228 12,079 12,269 6,298 5,526 4,155 8,219
Income from Continuing Operations Per Common
Share......................................... --(d) --(d) --(d) $ 0.26 $ 0.22 $ 0.17 $ 0.37
PRO FORMA INFORMATION (CONTINUING OPERATIONS)(E)
Pro Forma Income Taxes.......................... $ 5,061 $ 5,072 $ 6,396 -- -- -- --
Pro Forma Income from Continuing Operations
Adjusted Only for Income Taxes................ 7,592 7,608 9,595 -- -- -- --
OTHER DATA
Cash Dividends per Common Share................. --(d) --(d) --(d) $ 0.260 $ 0.260 $ 0.195 $ 0.195
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1997
---------------------------------------------------- ----------------------
AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(F)
-------- -------- -------- -------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA(G)
Working Capital................................... $ 26,186 $ 30,049 $ 25,753 $ 26,875 $ 21,881 $ 25,379 $ 21,616
Total Assets...................................... 155,756 180,193 193,925 184,463 160,840 129,551 125,788
Long-Term Debt and Capital Lease Obligations...... 70,803 83,271 81,090 75,582 67,785 44,963 44,963
Stockholders' Equity.............................. 44,183 51,119 75,590 76,429 48,926 53,403 49,640
</TABLE>

- ---------------

(a) The Company was taxed as an S corporation and therefore was subject only to
certain state income taxes for the years ended December 31, 1992, 1993 and
1994.

(b) Income taxes for the year ended December 31, 1994 include a one-time
deferred tax charge of $3,000 for the termination of the S corporation tax
election.

(c) Income taxes for the year ended December 31, 1995 include a benefit of
$1,632 for utilization of net operating loss carryforwards for which no tax
benefit was previously recorded.

(e) Pro forma information is presented to reflect income tax expense at a normal
corporate rate for the years ended December 31, 1992, 1993 and 1994.

(g) Consolidated balance sheet data for the years ended December 31, 1992, 1993,
1994, 1995 and 1996 includes the plastics business segment of the Company.

19
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
Prospectus or incorporated by reference herein. Except for the historical
information contained herein, the following discussion contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those projected in the forward-looking statements
discussed herein. Factors that could cause or constitute such differences
include, but are not limited to, those discussed in this section, as well as in
the sections entitled "Risk Factors" and "Business."

GENERAL

In 1992, the company previously known as Schawk, Inc. ("Old Schawk") and
affiliated companies controlled by the Schawk Family (such companies
collectively referred to with Old Schawk as the "Old Schawk Companies") acquired
a controlling interest in Filtertek, Inc., a New York Stock Exchange listed
company ("Filtertek"). Effective December 30, 1994, the Old Schawk Companies
were merged into Filtertek (the "Merger") in a transaction accounted for as a
purchase transaction. The surviving corporation in the Merger was Filtertek,
which then changed its name to Schawk, Inc.; however, under applicable
accounting rules the historical financial statements of the Old Schawk
Companies, rather than the Filtertek statements, are treated as the financial
statements of the Company. The Filtertek business and certain related plastics
businesses constituted what had been the plastics group of the Company (the
"Plastics Group") prior to the Merger.

During 1996, the Company adopted a plan to discontinue the operation of its
Plastics Group. The Company concluded that its managerial and financial
resources could be more productively invested in the Company's primary
competency, prepress and digital imaging services. Plastic Molded Concepts, a
division of the Plastics Group located in Eagle, Wisconsin, was sold on May 1,
1996, to a management buyout group. On December 19, 1996, the Company announced
the sale of the remaining Plastics Group to ESCO Electronics Corporation. This
sale transaction closed on February 7, 1997. As a result of the February 7, 1997
sale, the Company recorded a 1996 fourth quarter charge of $33.0 million ($1.67
loss per share) to write-down assets of the Plastics Group to estimated net
realizable value and provide for income taxes and other costs of disposing of
this business. The financial information with respect to discontinued operations
is presented in Note 14 to the Consolidated Financial Statements.

As a result of the sale of the entire Plastics Group in 1996, the Company,
comprised primarily of what had been the business of the Old Schawk Companies,
is now strategically focused on its prepress and digital imaging business.
Accordingly, the Company has restated its financial statements to reflect
discontinued operations accounting treatment with respect to the Plastics Group.
Sales, cost of sales and operating income for all years presented reflect the
actual financial information for the continuing operations only of the Company's
prepress and digital imaging business and may be used as a basis of comparison
with the 1996 consolidated financial statements.

20
<PAGE> 21

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationship to net sales of selected items in the Company's consolidated income
statement for continuing operations:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------- ------------------
1994 1995 1996 1996 1997
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net sales................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................ 50.5 58.6 56.4 57.0 56.2
----- ----- ----- ----- -----
Gross profit............................. 49.5 41.4 43.6 43.0 43.8
Selling, general and administrative...... 29.9 28.8 27.8 28.1 27.6
Write-off of equipment................... -- -- 1.1 -- --
----- ----- ----- ----- -----
Operating income......................... 19.6 12.6 14.7 14.9 16.2
Income from continuing operations before
income taxes........................... 15.4 8.3 10.0 10.4 16.1
Income from continuing operations........ 11.8 7.2 6.1 6.5 9.7
Net income (loss)........................ 13.0 8.0 (27.5) 9.4 9.7
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996

Net Sales. Net sales from continuing operations for the first nine months
of 1997 increased 33.3% to $85.2 million from $63.9 million for the first nine
months of 1996. The increase in net sales is attributable to internal revenue
growth of approximately 12.4% and revenue growth from acquisitions of
approximately 20.9%. The Company acquired several new major clients during 1997
and experienced additional revenues from the expansion of its pre-existing
client base.

Operating Income. For the first nine months of 1997 operating income
increased 44.6% to $13.8 million from $9.5 million due to increased sales volume
and increased operating efficiency. Cost of sales for the nine months ended
September 30, 1997 decreased as a percent of net sales to 56.2% from 57.0% of
net sales for the comparable period in 1996 due to increased sales volume and
improved operating efficiency. Selling, general and administrative expenses
increased $5.6 million or 31.0% but decreased as a percent of net sales from
28.1% to 27.6% for the first nine months of 1997 versus the comparable period in
1996.

Income From Continuing Operations Before Income Taxes. Income from
continuing operations before income taxes for the nine months ended September
30, 1997 was $13.7 million, a gain of 106.2% over $6.6 million in the comparable
period of 1996. The pretax income margin for the first nine months of 1997 was
16.1% versus 10.4% for the first nine months of 1996. The improvement in pretax
income in the first nine months of 1997 versus the comparable period in 1996 is
primarily due to increased sales volume and increased operating efficiency.

Income From Continuing Operations. Income from continuing operations
increased 97.8% to $8.2 million for the first nine months of 1997 versus $4.2
for the first nine months of 1996 due to the increased sales volume, greater
operating efficiencies and the application of the proceeds of the sale of the
Plastics Group. For the nine-month period ended September 30, 1997, the Company
experienced growth in interest income to $2.1 million from $0.3 million for the
same period in 1996 due to an increase in invested balances relating to the
receipt of proceeds from the sale of the Plastics Group. Additionally, interest
expense decreased for the first nine months of 1997 to $2.8 million from $3.3
million in 1996 as a result of lower overall borrowings due to the retirement or
cancellation of certain of the Company's indebtedness with proceeds from the
sale of the Plastics Group. Other income of $0.6 million for the nine months
ended September 30, 1997 is primarily due to gain on the sale of investments as
the Company liquidated a portion of the equity portfolio acquired with proceeds
of the sale of the Plastics Group which was reinvested in bond funds.

Net Income. Net income increased to $8.2 million for the first nine months
of 1997 from $6.0 million for the first nine months of 1996, which included $1.9
million of income from the Plastics Group.

21
<PAGE> 22

1996 COMPARED TO 1995

Net Sales. Sales for 1996 were $90.8 million, up 4.1% over 1995 sales of
$87.2 million. Sales increased primarily as a result of the acquisition of
Converterscan of Stamford, Connecticut and Atlanta, Georgia (August 1996) and
StanMont Inc. of Montreal, Quebec and Toronto, Ontario (September 1996). These
acquisitions were included in the Company's results during the third quarter and
increased sales in the fourth quarter of 1996 by 32% from $20.3 million in sales
during the fourth quarter of 1995 to $26.9 million for the comparable quarter of
1996.

Internal growth, which was negative during the first six months of 1996,
increased in the last half of 1996 as new projects and promotions came on stream
with the Company's pre-existing consumer products clients.

Operating Income. Operating income for 1996 was $13.4 million, a gain of
21.3% as compared to 1995 operating income of $11.0 million. The operating
margin in 1996 of 14.7% increased over 1995 operating margin of 12.6%. The
operating gain was due to improved operating efficiencies in the Company's
plants as capacity utilization on new and existing electronic equipment improved
and the Company was able to hold selling, general and administrative costs flat
when compared with 1995.

Additionally, the Company made a decision to write off approximately $1.1
million of obsolete electronic equipment that was taken out of service in
several plants due to newer, more efficient equipment going on-line. Without the
write-off, operating income would have been $14.4 million in 1996, a gain of
30.9% over 1995 operating income of $11.0 million. The operating margin
comparison without the write-off for obsolete equipment for 1996 would have been
15.9% versus 1995 operating margin of 12.6%.

Income from Continuing Operations Before Income Taxes. Income from
continuing operations before income taxes for 1996 was $9.1 million, a gain of
25.0% over 1995 income of $7.2 million. This is a pretax income margin for 1996
of 10% versus the 1995 pretax income margin of 8.3%. Interest expense in 1996
was 8.2% higher than 1995, increasing from $4.3 million in 1995 to $4.7 million
in 1996 due to increased borrowings from acquisition-related debt. Without the
write-off of obsolete equipment of approximately $1.1 million, pretax income for
1996 would have been $10.1 million, a gain of 39.5% over 1995 pretax income of
$7.2 million. The pretax margin without the write-off for obsolete equipment for
1996 would have been 11.1% as compared to 1995 margin of 8.3%.

Income from Continuing Operations. Income from continuing operations for
1996 was $5.5 million as compared to $6.3 million in 1995. Excluding the
write-off of obsolete equipment in 1996, income from continuing operations would
have been $6.6 million, an increase of 4.4% compared to 1995 income of $6.3
million. Excluding the write-off of equipment in 1996 and the benefit of net
operating loss carryforwards in 1995, income from continuing operations in 1996
would have been $6.6 million, an increase of 40.9%, compared to 1995 income of
$4.7 million.

Net Income (Loss). Net loss for 1996 of $25.0 million contains a $33.0
million loss ($1.67 loss per share) on the disposal of the Plastics Group and
the related stockholder litigation settlement. The 1996 loss on the disposal of
discontinued operations contains a write-down of assets to estimated net
realizable value and provides for income taxes and other costs of disposing of
this business.

1995 COMPARED TO 1994

Net Sales. Sales for 1995 were $87.2 million compared to 1994 sales of
$103.9 million. Sales for 1994 were at a record level due in part to labeling
law changes required by the NLEA (National Labeling and Education Act). Every
food and beverage package sold in the U.S. was required to conform to a standard
contents label on each SKU by May 1994. Sales declined 16.1% in 1995 from 1994
as clients adjusted their typical package redesign cycles as a result of the
1994 NLEA deadline. This, combined with large increases in paper prices, lowered
the annual volume of projects or orders at the Company. The resulting effect was
that many of the Company's clients in 1995 elected to postpone package changes
or use up existing packaging inventories. The rebound in sales volume was much
slower than had been anticipated.

22
<PAGE> 23

Operating Income. Operating income for 1995 was $11.0 million as compared
to operating income for 1994 of $20.3 million. The operating margin for 1995
dropped to 12.6% from 19.6% in 1994. This 45.7% decline in operating income
resulted from lower sales and the corresponding impact of a high fixed-cost
base. The Company took multiple steps during 1995 to lower its cost base,
including a consolidation of its operating units, aggressive retraining of staff
and digitization of its workflow, a reduction in workforce and a reduction in
sales, general and administrative costs.

Income from Continuing Operations Before Income Taxes. Income from
continuing operations before income taxes for 1995 was $7.2 million as compared
to 1994 income of $16.0 million. Pretax income margin for 1995 was 8.3% versus a
1994 pretax income margin of 15.4%. Pretax income declined as a result of the
significant drop in operating income described above. Interest expense in 1995
was 11.6% higher than 1994, increasing from $3.9 million in 1994 to $4.3 million
in 1995 due to marginally higher average interest rates and higher average
outstanding debt in 1995.

Income from Continuing Operations. Income from continuing operations for
1995 was $6.3 million as compared to 1994 income of $12.3 million. This decline
was the result of the above-mentioned factors. Income from continuing operations
in 1995 contains a tax credit of $1.6 million related to losses from its
Plastics Group.

Net Income (Loss). Net income for 1995 of $6.9 million contains income from
discontinued operations of $0.6 million. This is compared to net income for 1994
of $13.5 million, which also contains $1.2 million of income from discontinued
operations.

QUARTERLY RESULTS OF OPERATIONS

The following table presents certain unaudited quarterly consolidated
financial data for each of the four quarters in 1995 and 1996 and the first
three quarters of 1997. This information was derived from unaudited condensed
consolidated financial statements of the Company that include, in the opinion of
the Company, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation when read in conjunction with the condensed
consolidated financial statements of the Company included elsewhere in this
Prospectus or incorporated by reference herein. The Company's quarterly results
of operations have fluctuated in the past and may continue to do so in the
future depending upon a variety of factors. See "Risk Factors -- Fluctuations in
Quarterly Operating Results."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1995 1995 1995 1995 1996 1996 1996
--------- -------- --------- -------- --------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............ $23,162 $22,689 $21,063 $20,290 $19,280 $21,629 $22,972
Cost of sales........ 12,733 13,251 12,662 12,420 11,453 11,900 13,045
------- ------- ------- ------- ------- ------- -------
Gross profit......... 10,429 9,438 8,401 7,870 7,827 9,729 9,927
Selling, general and
administrative..... 7,355 7,024 6,068 4,669 5,477 6,367 6,109
Write-off of
equipment.......... -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- -------
Operating income..... 3,074 2,414 2,333 3,201 2,350 3,362 3,818
Income from
continuing
operations......... 1,306 1,652 1,349 1,991 1,001 1,510 1,644
Net income (loss).... 1,611 1,997 947 2,381 1,588 2,211 2,221
Earnings per share
from continuing
operations......... $ 0.05 $ 0.07 $ 0.05 $ 0.09 $ 0.04 $ 0.06 $ 0.07
Earnings (loss) per
share.............. 0.07 0.09 0.03 0.11 0.07 0.10 0.10

<CAPTION>
THREE MONTHS ENDED
-------------------------------------------
DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1996 1997 1997 1997
-------- --------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales............ $ 26,882 $26,192 $29,397 $29,568
Cost of sales........ 14,755 15,163 16,167 16,523
-------- ------- ------- -------
Gross profit......... 12,127 11,029 13,230 13,045
Selling, general and
administrative..... 7,234 7,281 8,374 7,872
Write-off of
equipment.......... 1,050 -- -- --
-------- ------- ------- -------
Operating income..... 3,843 3,748 4,856 5,173
Income from
continuing
operations......... 1,371 1,890 3,017 3,312
Net income (loss).... (31,004) 1,890 3,017 3,312
Earnings per share
from continuing
operations......... $ 0.05 $ 0.08 $ 0.14 $ 0.15
Earnings (loss) per
share.............. (1.58) 0.08 0.14 0.15
</TABLE>

23
<PAGE> 24

The following table sets forth for the periods indicated the percentage of
net sales represented by the indicated items:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1995 1995 1995 1995 1996 1996 1996 1996 1997
--------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 55.0 58.4 60.1 61.2 59.4 55.0 56.8 54.9 57.9
----- ----- ----- ----- ----- ----- ----- ------- -----
Gross profit............ 45.0 41.6 39.9 38.8 40.6 45.0 43.2 45.1 42.1
Selling, general and
administrative........ 31.7 31.0 28.8 23.0 28.4 29.5 26.6 26.9 27.8
Write-off of
equipment............. -- -- -- -- -- -- -- 3.9 --
----- ----- ----- ----- ----- ----- ----- ------- -----
Operating income........ 13.3 10.6 11.1 15.8 12.2 15.5 16.6 14.3 14.3
Income from continuing
operations............ 5.6 7.3 6.4 9.8 5.2 7.0 7.2 5.1 7.2
Net income (loss)....... 7.0 8.8 4.5 11.7 8.2 10.2 9.7 (115.3) 7.2

<CAPTION>
THREE MONTHS ENDED
--------------------
JUNE 30, SEPT. 30,
1997 1997
-------- ---------
<S> <C> <C>
Net sales............... 100.0% 100.0%
Cost of sales........... 55.0 55.9
----- -----
Gross profit............ 45.0 44.1
Selling, general and
administrative........ 28.5 26.6
Write-off of
equipment............. -- --
----- -----
Operating income........ 16.5 17.5
Income from continuing
operations............ 10.3 11.2
Net income (loss)....... 10.3 11.2
</TABLE>

Results of operations for the quarters shown above include the results of
operations of prepress and digital imaging businesses acquired during such
periods. The quarterly results set forth above may not be indicative of the
future operating results of the Company. See "Risk Factors -- Fluctuations in
Quarterly Operating Results" and "-- Seasonality" below.

LIQUIDITY AND CAPITAL RESOURCES

The Company presently finances its business from available cash held by the
Company and from cash generated from operations. The Company maintains a $10.0
million unsecured credit facility and its Canadian subsidiary maintains a
Cdn$7.5 million unsecured working capital facility which is guaranteed by the
Company. Both facilities are due on demand.

On February 7, 1997, the Company received proceeds from the sale of the
Plastics Group of $93.485 million plus working capital adjustments. Long-term
debt and capital lease obligations decreased to $45.0 million at September 30,
1997 from $67.8 million at September 30, 1996 as the Company repaid debt with
proceeds from the sale of the Plastics Group. The Company had $20.8 million of
available cash and short-term investments at September 30, 1997.

At September 30, 1997, the Company held invested balances of $52.3 million
in bond mutual funds, equity mutual funds, U.S. Treasury and U.S. Government
notes, corporate bonds and equity securities. These funds are available for sale
to provide for acquisitions and corporate requirements. Unrealized appreciation
on these investments of $2.6 million ($1.6 million net of tax effects) at
September 30, 1997, has been excluded from earnings in the Company's
consolidated statement of operations and has been included as a separate
component of stockholders' equity.

The Company repaid on or about February 7, 1997, the following debts out of
a portion of the proceeds of the sale of the Plastics Group: (i) the balance
outstanding on a $55.0 million multi-currency Revolving Credit Agreement was
paid in-full and the agreement was canceled; (ii) the interest rate swap
agreement (floating to fixed) was made whole and canceled; and (iii) all notes
payable related to unpaid 1994 S corporation dividends were paid in full and the
notes were canceled.

At September 30, 1997, outstanding debt of the Company consisted of: (i)
unsecured notes issued pursuant to a Note Purchase Agreement dated August 18,
1995, for $40.0 million with terms ranging from 1999 through 2004 (averaging
seven years) at an average interest rate of 6.88%; and (ii) US$4.2 million of
borrowings under the Company's Canadian subsidiary's working capital facility.

Management believes that the level of working capital is adequate for the
Company's liquidity needs related to normal operations both currently and in the
foreseeable future, and that the Company has sufficient resources to support its
growth, either through currently available cash, through cash generated from
future operations or through short-term financing.

24
<PAGE> 25

The Company had capital expenditures in the first nine months of 1997 of
$5.5 million, in 1996 of $9.0 million, in 1995 of $5.4 million, and in 1994 of
$5.1 million. For the first nine months of 1997, capital expenditures were made
for machinery, equipment and automation to expand production facilities and
improve productivity. Capital expenditures in 1996 were for the purchase of new
equipment and building renovations. Capital expenditures during 1997 are not
expected to exceed depreciation.

Combined depreciation and amortization at Schawk was $5.3 million for the
first nine months of 1997, $7.4 million in 1996, $7.5 million in 1995 and $7.2
million in 1994.

Acquisition costs during 1996 were $19.6 million. Acquisition costs during
1995 and 1994 were negligible.

The Company repurchased $1.4 million of Class A Common Stock during the
first nine months of 1997, $1.4 million during 1996 and $1.7 million during
1995.

SEASONALITY

Historically, the Company has experienced lower revenues in the first and
fourth quarters due to the seasonal trends of its clients and lower overall
economic activity. However, the Company believes that this seasonal effect on
the Company's revenues will be less pronounced in the future as a result of
frequent redesigns of packaging for promotional and other reasons and the
shorter lead times for the provision of the Company's services and products.

IMPACT OF INFLATION

The Company believes that over the past three years inflation has not had a
significant impact on the Company's results of operations.

YEAR 2000 COMPLIANCE

The Company has upgraded or replaced its computer software applications and
systems which the Company believes accommodates the "Year 2000" dating changes
necessary to permit correct recording of year dates for 2000 and later years.
The Company does not expect that additional costs with regard to year 2000
compliance will be material to its financial condition or results of operations.
The Company does not currently anticipate any material disruption in its
operations as the result of any failure by the Company to be in compliance. The
Company does not currently have any information concerning the compliance status
of its suppliers and customers.

25
<PAGE> 26

BUSINESS

GENERAL

The Company is a leading provider of digital imaging prepress services for
the consumer products industry in the United States and Canada. The Company's
facilities produce conventional, electronic and desktop color separations,
electronic production design, film preparation, platemaking and press proofs for
the three main printing processes used in the graphic arts industry:
lithography, flexography and gravure. The Company's services also include both
digital and analog image database archival and management as well as digital
photography, art production and various related outsourcing services. These
services require skilled, highly trained technicians applying various
computerized design, manipulation and assembly techniques. The preparation of
film, digital tape and press proofs for lithography, flexography and other
printing processes related to packaging accounted for in excess of 70% of net
sales in both 1996 and for the nine months ended September 30, 1997. The balance
of the Company's business consists of the production of similar services for
point-of-sale, advertising and direct mail.

The Company has particular expertise in preparing color images for high
volume print production runs of consumer products packaging. The Company
functions as a vital interface between its Fortune 1000 consumer products
clients, their creative designers and their converters or printers in assuring
the production of consistent, high quality packaging materials in increasingly
shorter turnaround and delivery times. The Company's ability to provide high
quality, customized prepress services quickly makes it a valued player in new
product introduction and promotional activity.

The Company maintains both digital and analog data archives of product
package layouts and designs as a value-added service which improves the
Company's efficiency in accommodating clients' rapidly changing packaging design
modifications and product line extensions. By continuing to provide such
high-end, value-added services, the Company commands a significant share of the
market for prepress services for the food and beverage industry, which uniquely
positions it to benefit from positive industry trends.

The Company believes that its clients have increasingly chosen to outsource
their prepress needs to the Company because of its: (i) high quality customized
imaging capabilities; (ii) rapid turnaround and delivery times; (iii) up-to-date
knowledge of the printing press specifications of converters and printers
located throughout the United States and Canada; (iv) digital imaging asset
management; (v) art production; and (vi) ability to service its clients' global
prepress requirements through the Company's North American facilities and
international alliance partners.

PREPRESS SERVICES INDUSTRY

Prepress services do not entail the actual printing or production of such
packaging materials, but rather include the various preparatory steps such as
art production design, digital photography, retouching, color separation and
other platemaking services, for use in lithography, flexography and gravure.
"Color separation" refers to preparing color images, text and layout for the
printing process. Prepress services such as color separation work have
traditionally been performed by skilled craftspersons almost entirely by hand,
using what is known as the "conventional" method. With the development of
digital technology, prepress firms such as the Company have become increasingly
computerized, relying instead on digital imaging, in which digitized images and
text are manipulated according to client and converter specifications. On an
increasing basis, clients supply material to the Company in a digitized format
on a variety of media, including tape, floppy disk and CD-ROM.

26
<PAGE> 27

The rapid development of lower-cost, faster desktop publishing software
systems has increased the potential for competition in the prepress industry by
lowering barriers to entry relating to equipment costs. However, this
development has also resulted in the proliferation of software systems, many of
which have created training issues. Frequent changes in software necessitates
continuous training and education and investment in faster equipment. It has
also created the demand from clients for increasingly faster turnaround and
delivery times. As technology advances in the imaging industry, speed has become
and continues to be a significant differentiator between the Company and its
competition.

The Company focuses primarily on the food and beverage segment of the
consumer products industry, where packaging requirements are more complex and
demanding due to variations in packaging materials, shapes and sizes, custom
colors, varying storage conditions and marketing enhancements. Product
extensions and frequent packaging redesigns have resulted in an increasing
volume of color separation and related work in the consumer products industry
and in particular for the food and beverage segment. Additional industry trends
include: (i) the shorter turnaround and delivery time requirements from the
creative design phase to final distribution of the packaged product; (ii) an
increasing number of SKUs competing for shelf space and market share; (iii) the
increasing importance of package appearance and promotions due to demonstrated
point-of-sale consumer purchasing behavior; and (iv) the increasing requirements
for worldwide quality and consistency in packaging as companies attempt to build
global brand name recognition.

THE COMPANY'S GROWTH STRATEGY

The Company's primary goal is to enhance its leadership positions in the
prepress imaging market for the consumer products industry. Key aspects of the
Company's business strategy to achieve this goal include the following:

- Growth Through Acquisitions and Start-up Operations. The Company's
profitability and ready access to capital have enabled it to make
strategic acquisitions of companies that range in size from $2 million to
$20 million. In its 44-year business history, the Company has integrated
more than 25 prepress and imaging businesses into its operations while
streamlining overhead and improving margins. These acquisitions are part
of the Company's growth strategy to acquire market niche companies with
Fortune 1000 client lists, excellent client service or proprietary
products and solid management who will continue to operate the business
after the acquisition. These acquired managers receive performance
incentives to continue to profitably grow the business.

The Company intends to continue expanding through acquisitions of
well-managed companies with solid market positions and established client
lists and/or new technologies. Schawk believes that an emphasis on
complementary acquisitions of companies serving targeted markets will
allow it to broaden its service offerings and provide single source
prepress and imaging and image database services.

The Company believes it has greater versatility in meeting the various
requirements of its clients than smaller, less integrated competitors
lacking technical expertise, and that this versatility will result in
greater opportunities for internal growth as well as enhancing the
Company's image as an attractive
27
<PAGE> 28

purchaser for potential consolidation candidates. Schawk believes that
there will continue to be a number of attractive acquisition candidates in
the fragmented and consolidating industry in which it operates,
particularly in the packaging and image database management markets. The
Company expects to strengthen its market position by applying its
management and operational philosophies and practices, which have been
successful in its graphic arts businesses, to newly acquired businesses.

The Company also has been successful in establishing start-up operations
in response to perceived client and market requirements. Schawk intends to
continue this strategy as opportunities warrant. See "--Acquisitions and
Start-up Operations."

- Exploitation of Industry Trends; Outsourcing. The Company has
historically attempted to strengthen its market position by identifying
and exploiting industry trends. As a consequence, the Company has been
uniquely positioned to benefit as consumer products companies continue to
reduce both their prepress staffs and total number of suppliers. The
Company's on-site strategy developed as clients outsourced imaging
functions in an attempt to cut costs and improve turnaround and delivery
times. The Company intends to expand this effort as clients increasingly
require on-site service. Further, the Company believes that its
commitment to client service and its broad array of premium service
offerings position the Company as a cost effective, value-added supplier
of prepress services. As clients continue to cut their staffing levels,
they are expanding the number of services required of their prepress
suppliers. As a result, fewer of the Company's competitors have the full
complement of capabilities required in the marketplace. The Company
believes outsourcing trends will continue. The following is a partial
listing of the Company's on-site locations:

<TABLE>
<CAPTION>
CLIENT LOCATION
------ --------
<S> <C>
Brachs & Brock Confections, Inc.............. Chattanooga, Tennessee
Campbell Soup Company........................ Camden, New Jersey
International Home Foods..................... Parisippany, New Jersey
The Keebler Company.......................... Elmhurst, Illinois
Nabisco Foods Group.......................... Parisippany, New Jersey
Pepsico, Inc................................. Rye, New York
Pillsbury, Inc............................... Minneapolis, Minnesota
The Quaker Oats Company...................... Chicago, Illinois
Stouffer Foods Corporation................... Solon, Ohio
</TABLE>

The Company has also expanded its imaging operations in Cincinnati, Ohio.
The Company is currently on-site in a client location in Cincinnati and
believes that by locating a facility there, turnaround and delivery time
for its existing clients and access to new client relationships will be
strongly enhanced. The Company has also formed a start-up operation for a
client located in Queretaro, Mexico.

- Exploitation of Technology Advancements. The Company is dedicated to
keeping abreast of and initiating technological process developments in
its industry. To build upon its leadership position, the Company actively
evaluates systems and software products of various computer and software
manufacturers and also independently develops software for implementation
at its operating facilities. The Company continually invests in new
technology designed to support its high quality prepress services. The
Company concentrates its efforts on understanding the systems and
equipment available in the marketplace and creating solutions using
off-the-shelf products, customized to meet a variety of specific client
and internal requirements.

MANAGEMENT PHILOSOPHY

The Company believes that by adhering to its management philosophy, the
Company has gained in market share and improved margin performance in its core
business. The Company's management philosophy incorporates the following key
concepts:

Total Quality Management. A cornerstone of the Company's management
philosophy is its emphasis on high quality. The Company is committed to the
principles of "Total Quality Management" ("TQM") and

28
<PAGE> 29

stresses to all employees, regardless of level, the importance of striving to
meet or exceed client expectations. Historically, the Company has been committed
to employee training and technological improvements to achieve this level of
performance. Through the Company's application of TQM employees have adopted the
necessary commitment to client service that is essential to quick turnaround and
consistent delivery of high quality services and products. Such increased
quality results in decreased costs to clients and the Company in the long run.
The Company views itself as a service provider to its clients. Understanding the
needs of its clients and customizing its services and products is part of the
TQM process that has helped the Company differentiate itself from the
competition. Consequently, the Company makes the necessary investments to ensure
that these services continue to meet the highest quality standards and needs of
its clients.

Client Service. Another key component of the Company's management
philosophy has been its commitment to client service. The Company believes that
this commitment has contributed to the confidence and loyalty its clients have
shown. Because of the increasingly competitive markets faced by its clients, the
Company must be flexible enough to modify its operations in order to meet the
specialized needs of its clients. The Company's emphasis on on-site client
representatives and operations addresses this requirement and has further
solidified existing imaging client relationships.

Employee Training and Investment in Equipment. The Company believes that
its most valuable assets are its employees because its ability to provide
clients with high quality services and products depends upon their dedication
and expertise. The Company provides extensive and continuous training to keep
its employees abreast of the latest technological developments and the
particular needs of its clients. Providing its employees with the latest
equipment, software and training are fundamental to the Company's philosophy.

Technical Expertise. The Company is able to provide its clients with high
quality services and products and quick response time because of its efficient
utilization of state-of-the-art equipment software, digital server, storage
technology and telecommunication systems. As part of its commitment to maintain
its technological expertise, the Company has historically worked with software
developers to create software that fully addresses the Company's and its
clients' needs. The Company acts as a test site for numerous hardware and
software products. In order to facilitate the exchange of information among its
various facilities, in 1991 the Company established the Schawk Technical
Advisory Board for the purpose of coordinating the research and evaluation of
new technologies in the graphic arts industry. This group continues to be
recognized for its efforts and has been invited to lecture at numerous national
and international symposiums and conferences.

SERVICES

The Company offers comprehensive, high quality prepress services. The
Company's facilities produce conventional, electronic and desktop color
separations, electronic production design, film preparation, platemaking and
press proofs for lithography, flexography and gravure. The Company's services
also include both digital and analog image database archival and management as
well as art production and various related outsourcing services.

The Company interfaces between consumer products manufacturers and the
creative designers and converters used by those businesses to produce packaging,
such as folding cartons, boxes, trays, cans, containers, packaging labels and
wrap and related point-of-sale and promotional materials. The Company's services
consist principally of the electronic and digital production of art design,
color separations and color proofs to client and converter specifications and
imaging asset management. These services are an intermediate step between
creative artwork and the actual printing of graphic materials. The production of
color separations requires well-trained and highly skilled technicians applying
various digital and analog image manipulation, assembly and color management
techniques in order to preserve the integrity of the original image when
translated into print and to ensure consistency of the printed materials.

The Company specializes in prepress services relating to the packaging and
promotional needs of clients in the consumer products industry, particularly
Fortune 1000 clients who need to ensure worldwide quality and consistency in the
packaging and related imagery of their products. Consumer products have no
consistent size, shape, color or packaging material. To achieve its clients'
varying requirements, the Company functions

29
<PAGE> 30

as a network of custom job shops taking advantage of its size for technical
expertise while being able to respond quickly to the increasingly global needs
of particular clients.

Image quality and consistency and ever-shortening response and delivery
times are becoming increasingly important to consumer products manufacturers as
packaging assumes a greater role in promotion. While prepress work represents a
relatively small percentage of overall packaging costs, the visual impact and
effectiveness of product packaging is largely dependent upon the quality of the
prepress work.

The Company's clients typically outsource their prepress requirements and
assign the Company the responsibility of interfacing with the clients'
designated graphic designers, who design the packaging and the converters or
printers who print and produce the packaging and related materials. The Company
competes on the basis of offering its multi-national client base: (i) high
quality customized imaging; (ii) rapid turnaround and delivery times; (iii)
up-to-date knowledge of the printing press specifications of converters and
printers located throughout the United States and Canada; (iv) digital imaging
asset management; (v) art production; and (vi) the ability to service its
clients' global prepress requirements through the Company's North American
facilities and international alliance partners.

As technology has created opportunities for quicker production turnarounds
and deliveries, most of the Company's Fortune 1000 consumer products clients
have capitalized on the opportunity to modify their packaging more frequently in
order to customize their promotional activities on a regional, seasonal or
sporting event basis. This activity has greatly increased the importance of
maintaining the integrity of the digital and analog image design and text data
for each package variation.

With its expansion into electronic art production design, the Company is
utilizing its technical expertise to serve clients' requirements in a variety of
outsourcing services including image database archiving, telecommunication and
trafficking. The Company has the capacity to archive and manage past, current
and future package design data and, accordingly, serves as a quick access
library of accurate file data for its clients. The Company is continuously
updating and improving its imaging database management system, called PaRTs(TM)
(Packaging archival Retrieval and Transmission system). The Company believes
that PaRTs(TM) enhances a client's ability to manage its imaging assets more
efficiently and with reduced time commitments. When compared to other database
management systems available in the market place, the Company believes that
PaRTs(TM) contributes to the Company's ability to meet its clients' quick
turnaround and delivery times and quality standards.

The Company has also developed a customized client electronic communication
system called CLICk(TM) (Client Linked Information Centers) for its authorized
clients, designated converters and other authorized personnel. Compatible with
all major platforms and operating systems, CLICk(TM) allows clients to
efficiently communicate with the Company and others on the system using
telephone lines and/or the Internet.

Given the increased computerization of the prepress services industry,
highly trained technicians are essential to the quality of the end product.
Requirements of turnaround speed without a reduction in quality are increasing
as clients strive for differentiation and customization of their products and
brands. Schawk has met these requirements by continuously reinvesting in
technology, training its personnel and establishing numerous satellite on-site
operations to complement its main operating facilities.

To capitalize on market trends, management believes that the Company must
continue to be able to provide clients the ability to make numerous changes and
enhancements with shorter turnaround times than ever before. Accordingly, over
the past two years the Company has focused its efforts on improving its response
times and continues to invest in rapidly emerging technology and the continuing
education of its employees. The Company also educates clients on the
opportunities and complexities of state-of-the-art equipment and software. The
Company believes that its ability to provide quick turnaround and delivery
times, dependability and value-added training and education programs will
continue to give it a competitive advantage in serving clients who require high
volume, high quality product imagery.

The Company's services are distinguished by its ability to complete
prepress services for packaging designs in increasingly short time frames and
with high standards of quality. In order to satisfy client

30
<PAGE> 31

requirements, the Company is frequently required to provide services in as
little as 24 hours. The following core competencies of the Company are described
in more detail below:

- Technical Expertise. The Company places an emphasis on investment in
state-of-the-art systems and equipment and the need for continual
training and development of its employees through programs offered at the
Company-owned training center and operating facilities and on-site at
client locations. The Company has had success in elevating its employees'
competency and its clients' standards to levels requiring the superior
technical expertise and capabilities that distinguish the Company's
services.

- On-Site Personnel. The Company has placed over 60 employees on-site at or
near 22 client locations in an effort to further integrate its prepress
services directly with client operation. This facilitates faster
turnaround and delivery times and fosters stronger client relationships.

- Strong Relationships with Converters and Printers. As each client selects
its own converter(s) and/or printer(s) the Company coordinates
extensively with the converter to ensure uniformity in color and
appearance of the printed product packages. Each client generally selects
its printing services on a bid basis. By using the Company as its imaging
specialist, the print/read imagery information is not captive at any one
printer or converter. This affords each client consistent image
replication at any printing site as the Company can supply any printer or
converter with film customized for its printing press. Additionally, this
allows the client to reproduce its image consistently across many
printing sources and it also provides the client with information as to
location and cost of its press runs.

Over the course of its 44-year business history, the Company has
developed strong relationships with many of the major converters and
printers in the United States and Canada and, as a result, has extensive
knowledge of their equipment, thereby enabling the Company to increase
the overall efficiency of the printing process. Internal operating
procedures and conditions may vary from printer to printer, affecting the
quality of the color image. In order to minimize the effects of these
variations, the Company makes necessary adjustments to its color
separation work to account for irregularities or idiosyncrasies in the
printing presses of each of its clients' converters. The Company strives
to afford its clients total control over their imaging processes with
customized and coordinated services designed to fit each individual
client's particular needs, all aimed at ensuring that the color quality,
accuracy and consistency of a client's printed matter are maintained.

- Imaging Asset Management. The Company maintains and manages a database
for its clients' images and package designs. Once an image is in the
Company's database, the client can make frequent regional, seasonal or
event-related adjustments to the file image prior to printing. The
Company's ability to quickly manipulate digital images enables its
clients to deliver their products to the market faster. The Company's
capabilities also allow it to send an image for output and printing
virtually anywhere in the world. As more and more multi-national consumer
products companies strengthen their international packaging quality
control to reflect their global brand image, they are requiring a more
consistent worldwide image. In response to this trend, the Company is
playing an increasing role in ensuring that its clients' images are
satisfactory both domestically and internationally.

ACQUISITIONS AND START-UP OPERATIONS

The Company has acquired and integrated more than 25 prepress and imaging
businesses into its operations since the business was founded in 1953.
Throughout its history, the Company has successfully identified acquisition
candidates that represent market niche companies with Fortune 1000 client lists,
excellent client service or proprietary products and solid management. The
Company favors businesses with management teams that will continue to operate
the businesses as autonomous units. The Company has also commenced a number of
start-up operations over the years when client servicing requirements or market
conditions warranted.

During 1996, the Company made three acquisitions: Converterscan, StanMont,
Inc., and Stebbins Photography. Converterscan, previously based in Stamford,
Connecticut, and Atlanta, Georgia, has expertise

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<PAGE> 32

in digital imaging and a strong client base. Its two operating facilities and
production and sales organization have been consolidated with the Company's
LSI/Atlanta operation in Georgia. StanMont, Inc. is based in Montreal, Quebec
and has five operating entities or divisions: CyberImages (Toronto), Batten
Graphics (Toronto), PrinterNet (Toronto), Fishbowl Productions (Toronto) and
XZact (Montreal) which will continue as freestanding facilities. StanMont has a
Canadian presence with a strong client base as well as operations with which to
serve the imaging needs of Schawk's consumer products clients in Canada.
StanMont and Batten Graphics/CyberImages currently have significant
relationships with advertising and catalog clients, and offer further growth
opportunities in the packaging market. Stebbins Photography is a digital
photography studio in Minneapolis, Minnesota. Stebbins Photography has a strong
reputation in the emerging digital photography area. The Converterscan, StanMont
and Stebbins acquisitions were made to expand the client base, enhance the
Company's technical capabilities and services and increase its geographic
presence with its multi-national client base.

The Company intends to continue expanding through acquisitions of
well-managed companies with solid market positions and established client lists
and/or new technologies. The Company believes that emphasis on complementary
acquisitions of businesses serving targeted markets will allow it to broaden its
product offerings and provide its clients with a single source for imaging and
image database services. The Company will also continue to analyze and
investigate start-up operations on an ongoing basis.

RESEARCH AND DEVELOPMENT

The Company is dedicated to keeping abreast of and, in a number of cases,
initiating technological process developments in its industry that have
applications for packaging. To build upon its leadership position, the Company
is actively involved in system and software technical evaluations of various
computer systems and software manufacturers and also independently pursues
software development for implementation at its operating facilities. The Company
continually invests in new technology designed to support its high quality
prepress services. The Company concentrates its efforts in understanding systems
and equipment available in the marketplace and creating solutions using
off-the-shelf products, customized to meet a variety of specific client and
internal requirements. PaRTs(TM) and CLICk(TM) are examples of the Company's
commitment to systems development.

As an integral part of its commitment to research and development, the
Company has established the Schawk Technical Advisory Board for the purpose of
researching and evaluating new technologies in the graphic arts and
telecommunications industries. The Advisory Board meets formally, at least
quarterly, to review new equipment and programs, then disseminates the
information to the entire Company and to clients wherever appropriate.

MARKETING AND DISTRIBUTION

The Company markets its services nationally and internationally through
seminars, newsletters and training sessions targeted at existing and potential
clients. The Company sells its services through a group of approximately 100
direct salespersons and 115 client service technicians who call on consumer
products manufacturers, including those in the food and beverage, home products,
pharmaceutical and cosmetics industries and direct mail. The Company has adopted
a team approach to marketing, reflective of its TQM philosophy. Both the
Company's salespersons and the Company's client service technicians share
responsibility for marketing the Company's offerings to existing and potential
clients, thereby fostering long-term institutional relationships with its
clients.

In addition to its operations in the United States and Canada, the Company
considers its start-up prepress and imaging operation in Mexico and alliance
agreements with servicing partners in Europe, the Far East and Australia unique
and increasingly important aspects of its marketing and distribution
capabilities.

CLIENTS

The Company's clients consist of direct purchasers of color separations,
including end-use consumer products manufacturers and direct mailers, converters
and advertising agencies. Many of the Company's clients, a large percentage of
which are Fortune 1000 companies, are multi-national in scope and often use

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<PAGE> 33

numerous converters both domestically and internationally. Because these clients
desire uniformity of color and image quality across a variety of media, the
Company plays a very important role in coordinating their printing activities by
maintaining current equipment specifications regarding its clients and
converters. Management believes that this role has enabled the Company to
establish closer and more stable relationships with these clients. Converters
also have a great deal of confidence in the quality of the Company's services
and have worked closely with the Company to reduce the converters' required lead
time, thereby lowering their costs. End-use clients often select and utilize the
Company to ensure better control of their packaging or other needs and depend
upon the Company to act as their agent to ensure quality management of data
along with consistency among numerous converters and packaging media. The
Company has established 22 on-site locations at or near clients that require
high volume, specialized service. As its art production services continue to
expand, the Company anticipates that it will further develop its on-site
services to its client base.

Many of the Company's clients place orders on a daily and weekly basis and
work closely with the Company year-round as they frequently redesign product
packaging or introduce new products. While certain promotional activities are
seasonal, such as those relating to summer, back-to-school time and holidays,
shorter technology-driven prepress cycle time has enabled consumer products
manufacturers to tie their promotional activities to regional and/or current
events (such as sporting events or motion picture releases), prompting such
manufacturers to redesign their packages more frequently. This has resulted in a
correspondingly higher number of packaging redesign assignments. This
technology-driven trend toward more frequent packaging changes has offset
previous seasonal fluctuations in the volume of the Company's business. In
addition, consumer products manufacturers have a tendency to single-source their
prepress work with respect to a particular product line, so that changes to the
product continuity can be assured. As a result, the Company has developed a base
of steady clients in the food and beverage industry. During 1996, no single
client accounted for more than 8% of the Company's net sales, and the 10 largest
clients in the aggregate accounted for approximately 37% of net sales. For the
nine months ended September 30, 1997, no single client accounted for more than
7% of net sales, and the 10 largest clients accounted for approximately 34% of
net sales.

The Company's current clients include:

<TABLE>
<S> <C>
Bayer Corporation Lipton Tea Company, Ltd.
Brachs & Brock Confections, Inc. Nabisco Foods Group
Campbell Soup Company Nestle
ConAgra, Inc. Pepsico, Inc.
CPC Best Foods Pillsbury, Inc.
General Mills, Inc. PrintPack
Hershey Foods Corporation Publisher's Clearing House
Hunt-Wesson, Inc. The Quaker Oats Company
International Home Foods SmithKline Beecham
The Keebler Company Stouffer Foods Corporation
Leo Burnett Company, Inc. 7-Up/Dr. Pepper
Lever Brothers
</TABLE>

COMPETITION

The Company's competition comes from three sources: other independent color
separators; converters and printers that have prepress service capabilities; and
consumer products companies who are able to use developing technologies to
execute these services in-house.

Independent color separators are companies whose business is performing
prepress services for one or more of the principal printing processes. The
Company believes that only two firms, Wace Group U.S.A., a subsidiary of Wace
P.L.C., and Southern Graphics, a subsidiary of Reynolds Metals, compete with
Schawk on a national basis. The remaining independent color separators are
regional or local firms that compete in specific markets. To remain competitive,
each firm must maintain client relationships and recognize, develop and exploit
state-of-the-art technology and contend with the increasing demands for speed.

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<PAGE> 34

Some converters with prepress service capabilities compete with the Company
by performing such services in connection with printing work. Independent color
separators such as the Company, however, may offer greater technical
capabilities, image quality control and speed of delivery. In addition,
converters often utilize the services of the Company because of the rigorous
demands being caused by the requirement for increased timetables. Increasingly,
converters are being required to invest in technology to improve speed in the
printing process and have avoided spending on prepress technology.

In the past, the Company has faced competition from clients who have sought
to reduce costs by performing color separation services in-house. However, as
requirements of speed continue to be critical, along with the recognition of the
importance of focusing on their core competencies, clients have increasingly
recognized that the Company provides services at a rate and cost that makes
outsourcing more efficient.

PURCHASING AND RAW MATERIALS

The Company purchases photographic film and chemicals, storage media, ink,
plate materials and various other supplies and chemicals on consignment for use
in its business. These items are purchased from a variety of sources and are
available from a number of producers, both foreign and domestic. Materials and
supplies account for only a small portion of the Company's cost of production,
and no shortages are anticipated. Furthermore, as a growing proportion of the
workflow is digital, the already low percentage of materials in cost of sales
will continue to be reduced. Historically, the Company has negotiated and enjoys
significant volume discounts on materials and supplies from most of its
suppliers.

INTELLECTUAL PROPERTY

The Company owns no significant patents. The trademarks "Schawk,"
"Clockface and Creole," "CLICk" and "PaRTs" and the trade names "Amber Design,"
"Color Data East," "Schawkgraphics," "Schawk Client Services Group," "Schawk
Prep," "Lincoln Graphics," "Litho Colorplate," "LSI/Atlanta," "LSI/Kala,"
"Process Color Plate," "Total Reproductions," "Weston Engraving," "The Palm
Group," "Stebbins Photography," "Blue Barrel," "StanMont," "PrinterNet,"
"CyberImages," "Batten Graphics," "Fishbowl" and "XZact" are the most
significant trademarks and trade names used by the Company.

EMPLOYEES

As of September 30, 1997, the Company had approximately 880 full-time
employees. Of this number, 60% were production employees of which approximately
187 are represented by local units of the Graphic Arts International Union and
approximately 67 were represented by local units of the Toronto Typographical
Union. The Company's union employees are vital to its operations. Collective
bargaining agreements covering the Company's union employees in four facilities
are subject to renegotiation. One is subject to renegotiation in 1998 and three
are subject to renegotiation during 1999-2000. One is presently being
renegotiated. The Company considers its relationships with its employees and
unions to be good.

BACKLOG

The Company does not have or keep backlog figures as projects or orders are
generally in and out of the facilities within five to seven days. Generally, the
Company does not have contracts with its clients, but maintains client
relationships through a combination of service, technology enhancements and
price.

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<PAGE> 35

FACILITIES

The Company owns or leases the following office and operating facilities:

<TABLE>
<CAPTION>
LEASE
OWNED/ EXPIRATION
LOCATION SQUARE FEET LEASED PURPOSE DATE DIVISION
-------- ----------- ------ ------- ---------- --------
(APPROXIMATE)
<S> <C> <C> <C> <C> <C>
Armonk, New York.................. 10,000 Leased General Offices, Month to Color Data East
Operating Facility month
Carmel, Indiana................... 782 Leased Sales and Service October 1998 Weston Engraving
Office Company, Inc.
Cherry Hill, New Jersey........... 35,000 Owned General Offices, N/A Lincoln Graphics
Operating Facility
Chicago, Illinois................. 42,000 Leased General Offices, June 2002 Process Color Plate
Operating Facility Co.
Cincinnati, Ohio.................. 4,754 Leased Client Services October 2000 Schawk Cincinnati
Covington, Kentucky............... 200 Leased Sales Offices Month to LSI/Kala
month
Rosemont, Illinois................ 3,500 Leased Warehouse March 1998 Corporate
Des Plaines, Illinois............. 20,000 Owned Executive Offices N/A Corporate
Des Plaines, Illinois............. 60,000 Leased General Offices, N/A Schawkgraphics
Operating Facility
Hackettstown, New Jersey.......... 3,000 Leased General Offices, December 2000 Amber Design
Operating Facility Associates
Kalamazoo, Michigan............... 67,000 Owned General Offices, N/A LSI/Kala
Operating Facility
Minneapolis, Minnesota............ 31,000 Owned General Offices, N/A Weston Engraving
Operating Facility Company, Inc.
Litho Colorplate,
Inc.
The Palm Group
Stebbins Photography
Montreal, Quebec, Canada.......... 5,000 Leased General Offices, September StanMont, Inc.
Operating Facility 2004
Montreal, Quebec, Canada.......... 30,000 Owned General Offices, N/A StanMont, Inc.
Operating Facility XZact
Roseville, Minnesota.............. 16,000 Leased General Offices, May 1997 Dimension Imaging
Operating Facility
Smyrna, Georgia................... 20,000 Leased General Offices, October 1998 LSI/Atlanta
Operating Facility Converterscan
Toronto, Ontario, Canada.......... 30,000 Leased General Offices, December 2004 Batten Graphics
Operating Facility CyberImages
Fishbowl Productions
PrinterNet
</TABLE>

The Company considers its facilities adequate for current and foreseeable
levels of operations.

LEGAL PROCEEDINGS

From time to time, the Company has been a party to routine pending or
threatened legal proceedings and arbitrations. The Company insures some, but not
all, of its exposure with respect to such proceedings. Based upon information
presently available, and in light of legal and other defenses available to the
Company, management does not consider the liability from any threatened or
pending litigation to be material to the Company. The Company has not
experienced any significant environmental problems.

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<PAGE> 36

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's executive officers and directors are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Clarence W. Schawk.......... 71 Chairman of the Board and Director
David A. Schawk............. 41 Chief Executive Officer, President and Director
A. Alex Sarkisian........... 45 Executive Vice President, Corporate Secretary and
Director
James J. Patterson.......... 41 Senior Vice President and Chief Financial Officer
Judith W. McCue............. 49 Director
Robert F. Meinken........... 71 Director
John T. McEnroe............. 45 General Counsel, Assistant Secretary and Director
Hollis W. Rademacher........ 61 Director
Dennis D. Wilson............ 45 Chief Accounting Officer and Director of Financial
Reporting
John P. Cragen.............. 47 Corporate Controller
</TABLE>

Clarence W. Schawk has been Chairman of the Board of the Company since
September 1992, when he was also appointed to the Executive Committee. He served
as Chief Executive Officer of Filtertek from September 1992 until February 1993.
Clarence W. Schawk also served as Chairman of the Board of Old Schawk from 1953
until the Merger with Filtertek and served as Chief Executive Officer until June
1994. He is the father of David A. Schawk, President and Chief Executive Officer
of the Company. Clarence W. Schawk previously served as President and a Director
of the International Prepress Association. Mr. Schawk also served as a Director
of Old Schawk until the Merger.

David A. Schawk was appointed Chief Operating Officer of the Company in
September 1992, and was elected Chief Executive Officer and President in
February 1993. He was appointed to the Board of Directors in September 1992.
David A. Schawk served as the President of Old Schawk from 1987 until the
Merger. David A. Schawk was appointed Chief Executive Officer in June 1994.
David A. Schawk serves on the Company's Executive and 401(k) Administration
Committees. David A. Schawk is the son of Clarence W. Schawk. David A. Schawk
currently serves as a Director of the International Prepress Association. Mr.
Schawk also served as a Director of Old Schawk until the Merger.

A. Alex Sarkisian was appointed Executive Vice President in 1994 and has
served on the Company's Board of Directors and as Corporate Secretary since
September 1992. Mr. Sarkisian was the Executive Vice President and Secretary of
Old Schawk and has held such positions since 1988 and 1986, respectively. Mr.
Sarkisian also served as a Director of Old Schawk until the Merger. He is a
member of the Executive and 401(k) Administration Committees.

James J. Patterson was appointed Senior Vice President and Chief Financial
Officer in December 1997. Prior to joining the Company, Mr. Patterson was Vice
President of IMC Global Inc. from 1996 to September 1997. Mr. Patterson was Vice
President and Chief Financial Officer of The Vigoro Corporation from 1993 until
it was acquired by IMC Global Inc. in 1996. From 1990 to 1992, Mr. Patterson was
Vice President and Controller of Great American Management and Investment, Inc.,
a diversified holding company, and Vice President and Controller of Capsure
Holdings, Inc., a holding company in the specialty insurance business. Mr.
Patterson is a Certified Public Accountant.

Judith W. McCue has been a partner with the law firm of McDermott, Will &
Emery since 1995. Prior thereto, Ms. McCue was a partner with the law firm of
Keck, Mahin & Cate where she practiced from 1972 to 1995. Ms. McCue was
appointed Director of the Company in September 1992 and is a member of the Audit
and Option Committees.

Robert F. Meinken has been a retired private investor and businessman since
1988, after an extensive career in sales and marketing. Mr. Meinken was
appointed Director of the Company in September 1992 and is a member of the Audit
and Option Committees.

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<PAGE> 37

John T. McEnroe has been a partner with the law firm of Vedder, Price,
Kaufman & Kammholz, counsel to the Company, since May 1992. Prior to this
position, he was a partner with the law firm of Keck, Mahin & Cate where he
practiced from 1976 to 1992. Mr. McEnroe was appointed a Director of the Company
in September 1992 and is a member of the Executive and Option Committees.

Hollis W. Rademacher held various positions with Continental Bank, N.A.,
Chicago, Illinois, from 1957 to 1993 and was Chief Financial Officer of
Continental Bank Corporation, Chicago, Illinois, from 1988 to 1993. Mr.
Rademacher is currently self-employed in the fields of consulting and
investments in Chicago, Illinois. Mr. Rademacher was first elected a director of
the Company in 1995 and is a member of the Audit and Option Committees. Mr.
Rademacher also serves as a Director of Cityscape Financial Corporation, College
Television Network and Wintrust Financial Corporation.

Dennis D. Wilson has been Chief Accounting Officer since 1996 and Director
of Financial Reporting since 1994. From 1992 to 1994, Mr. Wilson was a principal
of Wilson Financial Services, Crete, Illinois, and Chief Financial Officer of
Family Services Center, Matteson, Illinois. Mr. Wilson is a Certified Public
Accountant.

John P. Cragen has been Corporate Controller of the Company since 1994 and
held a similar position with Old Schawk from 1976 to 1994. Mr. Cragen is a
Certified Public Accountant.

Currently, all outside Directors of the Company (except for Mr. McEnroe)
receive a $500 fee for attendance at each regularly scheduled or special board
or committee meeting. All Directors are also reimbursed for ordinary and
necessary expenses incurred in attending Board or committee meetings. Directors
fees are paid to Directors who are compensated employees of the Company as part
of such employees' overall compensation. All non-employee Directors have
received options under the Company's 1991 Outside Directors' Formula Stock
Option Plan.

There is presently one vacancy on the Board of Directors. The Board
presently intends to fill such vacancy, but has not identified any candidate to
date. Any person appointed by the Board to fill such vacancy in accordance with
the Company's By-laws during 1997 will be up for election at the 1998 Annual
Meeting.

EMPLOYMENT AGREEMENTS

In January 1991, the Company entered into employment agreements with
Clarence W. Schawk and David A. Schawk to serve as executive officers. These
agreements, upon review of comparable base salaries for executives of similarly
situated companies, have been amended and restated effective October 1, 1994.
Each employment agreement, as amended and restated in October, 1994, provides
for an initial term of 10 years (through December 31, 2004), with one-year
extensions thereafter unless terminated by either the Company or the executive.
Each employment agreement provides for payment of a base salary, adjustable
annually by the Board of Directors based upon a merit review and to account for
inflation, as well as an annual bonus consisting of short- and long-term
incentives. Clarence W. Schawk's employment agreement provided for a base salary
of $540,000 for the calendar year 1996 and David A. Schawk's employment
agreement provided for a base salary of $432,000 for the calendar year 1996.

The short-term bonus plan contemplates cash payments of 5.0% and 3.0% of
the excess of "adjusted net income" over $10.0 million with respect to Clarence
W. Schawk and David A. Schawk, respectively. "Adjusted net income" means annual
net income after taxes, but before bonuses to the Chairman and the President of
the Company and amortization of goodwill resulting from acquisitions of the
Company consummated after January 1, 1995. The amounts of such cash payments are
subject to adjustment based upon the Company's financial performance during the
relevant fiscal year. The long-term plan contemplates a non-cash distribution of
options calculated to equal 5.0% and 3.0% of the excess of "adjusted net income"
over $10.0 million for Clarence W. Schawk and David A. Schawk, respectively.
There were no short-term plan cash bonus payments made or long-term stock plan
options granted during 1996 to either Clarence W. Schawk or David A. Schawk.

37
<PAGE> 38

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of the Class A Common Stock as of the date of this Prospectus by: (i)
each Selling Stockholder; (ii) each member of the Schawk Family; (iii) each of
the Company's directors; and (iv) all directors and executive officers as a
group. Except as provided below, no other person is known by the Company to
beneficially own more than 5% of the outstanding shares of Class A Common Stock.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE OFFERING(1) SHARES TO BE AFTER OFFERING(1)
-------------------------- SOLD IN THE --------------------
NAME SHARES PERCENT OFFERING SHARES PERCENT
---- ----------- ------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Clarence W. Schawk(2)............ 11,129,272(3) 55.3% 883,068(4) 10,246,204 47.3%
David A. Schawk(2)............... 1,704,466(5) 8.5 200,000 1,504,466 6.9
Jacques R. Lilly(6).............. 304,780 1.5 304,780 0 0.0
John J. Leahy(7)................. 212,365(8) 1.1 112,152 100,213 *
Cathy Ann Schawk(2)(9)........... 1,098,871(10) 5.5 1,098,871 5.1
Judith Lynn Gallo(2)(11)......... 904,262(12) 4.5 904,262 4.2
Lisa Beth Stearns(2)(13)......... 863,760(14) 4.3 863,760 4.0
A. Alex Sarkisian(2)............. 1,339,223(15)(16) 6.7 1,339,223 6.2
James J. Patterson............... 5,000(17) * 5,000 *
John T. McEnroe.................. 25,687(18) * 25,687 *
Judith W. McCue.................. 24,461(19) * 24,461 *
Robert F. Meinken................ 20,160(20) * 20,160 *
Hollis W. Rademacher............. 15,950(21) * 15,950 *
Directors and Executive Officers
as a group (10 persons)........ 14,279,708(22) 69.9% 13,196,640 60.2%
</TABLE>

- ---------------

* Less than 1.0%.

(1) Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.

(2) Each is a member of the Schawk Family. The address for each of the Schawk
Family members is 1695 River Road, Des Plaines, Illinois 60018.

(3) Includes currently exercisable options to purchase 109,560 shares; 630,313
shares held directly by Mr. Schawk's wife; 428,890 shares held by the
Clarence W. and Marilyn G. Schawk Family Foundation (the "Schawk Family
Foundation"), a charitable foundation as to which Clarence W. Schawk and
his wife serve as trustees, and 8,471,702 shares held by SGK Investments
Limited Partnership (the "Schawk Family Partnership"), a family limited
partnership, with respect to which Clarence W. Schawk or his wife has
voting power. Clarence W. Schawk is the managing general partner of the
Schawk Family Partnership and has investment power with respect to all of
the 9,649,000 shares of Class A Common Stock held by the Schawk Family
Partnership. Does not include 1,177,298 shares held by the Schawk Family
Partnership for which Mr. Schawk does not have voting power, shares
beneficially owned by Clarence W. Schawk's son David A. Schawk, or shares
beneficially owned by Clarence W. Schawk's daughters Cathy Ann Schawk,
Judith Lynn Gallo and Lisa Beth Stearns, or held in family trusts for the
benefit of certain of his grandchildren. Clarence W. Schawk does not share
voting power over shares of the Company held by or on behalf of his
children or grandchildren.

(4) Represents 428,890 shares held by the Schawk Family Foundation and 454,178
shares held by the Schawk Family Partnership.

(5) Includes currently exercisable options to purchase 126,060 shares and
91,673 shares held by the Schawk Family Partnership with respect to which
David A. Schawk has voting power. David A. Schawk is a general partner of
the Schawk Family Partnership. Does not include shares beneficially owned
by David A. Schawk's father, Clarence W. Schawk or shares beneficially
owned by or held in family trusts for the benefit of David A. Schawk's
sisters Cathy Ann Schawk, Judith Lynn Gallo and Lisa Beth Stearns, and
certain of Clarence W. Schawk's grandchildren. Includes 475 shares held in
joint tenancy and as custodian for minors gifted to David A. Schawk's
friends.

38
<PAGE> 39

(6) Mr. Lilly's address is P.O. Box 286, Bridgewater Corners, Vermont 05035.

(7) Mr. Leahy's address is 20 Magnolia Drive North, Ormond Beach, Florida
32174.

(8) Includes currently exercisable options to purchase 100,213 shares.

(9) Ms. Schawk is the daughter of Clarence W. Schawk and sister of David A.
Schawk, Judith Lynn Gallo and Lisa Beth Stearns.

(10) Includes 289,500 shares held by the Schawk Family Partnership with respect
to which Ms. Schawk has voting power.

(11) Ms. Gallo is the daughter of Clarence W. Schawk and the sister of David A.
Schawk, Cathy Ann Schawk and Lisa Beth Stearns.

(12) Includes 156,000 shares held by the Schawk Family Partnership with respect
to which Ms. Gallo has voting power. Does not include shares held in trust
for the benefit of Ms. Gallo's child.

(13) Ms. Stearns is the daughter of Clarence W. Schawk and the sister of David
A. Schawk, Cathy Ann Schawk and Judith Lynn Gallo.

(14) Includes 174,348 shares held by the Schawk Family Partnership with respect
to which Ms. Stearns has voting power. Does not include shares held in
trusts for the benefit of Ms. Stearns' children.

(15) Includes currently exercisable options to purchase 57,626 shares.

(16) Includes 812,967 shares held by various Schawk Family trusts for the
benefit of certain of Clarence W. Schawk's grandchildren, and 465,777
shares held by the Schawk Family Partnership with respect to which Mr.
Sarkisian has voting power as trustee for Clarence W. Schawk's
grandchildren.

(17) Represents currently exercisable options.

(18) Includes currently exercisable options to purchase 19,960 shares and 4,726
shares owned indirectly by his spouse.

(19) Includes currently exercisable options to purchase 19,960 shares and the
indirect ownership of 4,501 shares held in retirement trust accounts.

(20) Includes currently exercisable options to purchase 19,960 shares.

(21) Includes currently exercisable options to purchase 14,950 shares.

(22) Includes currently exercisable options to purchase an aggregate of 385,026
shares held by certain executive officers and directors.

CERTAIN TRANSACTIONS

Clarence W. Schawk owns Geneva Waterfront, Inc., a Wisconsin corporation
that owns The Geneva Inn, a hotel in Lake Geneva, Wisconsin. Geneva Waterfront,
Inc. employees are eligible to participate in the Company's health plan. The
Company has been reimbursed for the full costs of such insurance. Schawk
believes that this arrangement benefits the Company because it enhances the
Company's bargaining power with its health insurance providers. The arrangement
is beneficial to Geneva Waterfront, Inc. because it enables Geneva Waterfront,
Inc. to purchase health insurance for its employees at a lower cost than it
would be able to obtain independently. In 1994, 1995 and 1996, the Company
received $167,595, $174,875 and $233,591, respectively, in insurance premium
reimbursements from Geneva Waterfront, Inc.

The Company's facilities at 1200 West Monroe Street, Chicago, Illinois are
leased from The Clarence W. Schawk 1979 Children's Trust, a trust established
for the benefit of the children of Clarence W. Schawk, including David A.
Schawk. Based on third-party appraisals, management believes that the gross rent
and other terms and conditions of this lease are comparable to those that would
have been obtained in an arm's-length transaction. The amount paid by the
Company in each of 1994, 1995 and 1996 under this lease was $380,355.

The Company's facility at 1600 East Sherwin Avenue, Des Plaines, Illinois
is leased from C.W. Properties, Chicago, a group consisting of a Missouri
corporation and certain individuals, all of whom are unrelated to the Schawk
Family. The lease provides for an option to purchase the building and the
adjoining property at 70% of the fair market value. The option is held by
Graphics IV Ltd., an Illinois limited

39
<PAGE> 40

partnership ("Graphics IV"). The limited partners of Graphics IV are David A.
Schawk and the daughters of Clarence W. Schawk. Based on third party appraisals,
management believes that the gross rent and other terms and conditions of this
lease are comparable to those that would have been obtained in an arm's-length
transaction. The amount paid by the Company in 1994, 1995 and 1996 under this
lease was $579,000, $670,986 and $679,347, respectively.

As recently as August 1997, Clarence W. Schawk purchased shares of Class A
Common Stock on the open market. These purchases have been consistent with Mr.
Schawk's regular pattern over the last two years of purchases on the open market
for his own account, under the Company's employee stock purchase plan and
through the Company's dividend reinvestment plan. In connection with the
Offering, Mr. Schawk has agreed to promptly pay to the Company any gains he
might realize for purposes of Section 16 of the Exchange Act as a result of any
prior purchase of Class A Common Stock. The Company presently estimates that the
amount of such gain, if any, will not exceed $50,000.

As part of the final settlement of certain stockholders' litigation against
the Company and its directors relating to the Merger, Clarence W. Schawk and
David A. Schawk transferred 159,521 shares of Class A Common Stock to a
settlement fund for the benefit of settlement class members. The shares are
subject to a put agreement whereby the class members may require the Company to
purchase the shares at a price ranging from $7.00 to $9.50 per share. The actual
price depends upon the time of exercise over the exercise period which begins on
the final settlement date and ends on the later of the second anniversary of the
final court approval of the settlement agreement (which occurred on May 21,
1997) or 180 days after the shares are distributed to class members (which is
not anticipated to occur prior to March 1, 1998).

The Company will use the proceeds from the Offering, in addition to other
available funds, to repurchase all of the issued and outstanding shares of the
Series A Preferred Stock and Series B Preferred Stock of the Company at a price
of $707.14 per share. All of the shares of the Series A Preferred Stock and
Series B Preferred Stock of the Company are held by or on behalf of the Schawk
Family. Each holder of shares of the Series A Preferred Stock and Series B
Preferred Stock has agreed to sell such shares to the Company at or prior to the
closing of the Offering. The Board of Directors has conditioned the repurchase
of such shares on receipt of a fairness opinion from an independent qualified
investment banking firm which provides that the price paid for the shares of the
Series A Preferred Stock and Series B Preferred Stock is fair to the
stockholders of the Company from a financial point of view.

DESCRIPTION OF CAPITAL STOCK

The Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), fixes the total number of shares of all classes of capital
stock which the Company has the authority to issue at 41,200,000 shares, of
which 1,000,000 shares are shares of Preferred Stock, $0.01 par value per share
(the "Preferred Stock"), 40,000,000 shares are shares of Class A Common Stock,
$0.008 par value per share, and 200,000 shares are shares of Class B Common
Stock, $0.05 par value per share (the "Class B Common Stock").

CLASS A COMMON STOCK

Voting Rights. Each share of Class A Common Stock is entitled to one vote
per share on all matters submitted to a vote of the stockholders.

Dividends. Subject to the rights of holders of Preferred Stock and subject
to any other provisions of the Certificate of Incorporation, holders of Class A
Common Stock are entitled to receive such dividends and other distributions in
cash, property or shares of stock of the Company as may be declared from time to
time by the Board of Directors in its discretion from any assets of the Company
legally available therefor. See "Dividend Policy."

Liquidation Rights. Upon the liquidation, dissolution or winding up of the
Company, the holders of Class A Common Stock are entitled to receive ratably the
net assets of the Company available after the

40
<PAGE> 41

payment of all debts and other liabilities and subject to the prior rights of
any outstanding Preferred Stock. Thereafter all distributions shall be made for
the benefit of the holders of Class A Common Stock.

Other Provisions. Class A Common Stock does not have preemptive rights to
subscribe to any additional securities that the Company may issue, and there are
no redemption provisions or sinking fund provisions applicable to the Class A
Common Stock nor is Class A Common Stock subject to calls or assessments by the
Company. All outstanding shares of Class A Common Stock are, and all shares of
Class A Common Stock to be outstanding upon completion of the Offering will be,
validly issued, fully paid and nonassessable.

CLASS B COMMON STOCK

The shares of Class B Common Stock are non-voting. There are presently no
shares of Class B Common Stock outstanding and there is no intention that the
Company will ever issue shares of Class B Common Stock.

PREFERRED STOCK

The Board of Directors has the authority, without further action by the
stockholders, to issue shares of Preferred Stock in one or more series and to
fix the rights, preferences, privileges and restrictions granted to or imposed
upon any unissued shares of Preferred Stock and to fix the number of shares
constituting any series and the designations of such series. Currently, two
series -- Series A Preferred Stock and Series B Preferred Stock -- have been
designated by the Board, both of which series are held by members of the Schawk
Family.

The Company issued 22,000 shares of Series A Preferred Stock and 5,207
shares of the Series B Preferred Stock to the Schawk Family in the Merger. There
are 15,400 shares of Series A Preferred Stock and 5,207 shares of Series B
Preferred Stock outstanding as of the date hereof. The terms and conditions of
the Series A Preferred Stock and Series B Preferred Stock were determined by the
Board of Directors and are set forth in respective certificates of designation
adopted by the Board and filed with the Secretary of State of the State of
Delaware in December 1994. In connection with the Offering, the Company will
repurchase all of the Series A and Series B Preferred Shares of the Company from
the proceeds of the Offering, together with other available funds, at a purchase
price of $1,000 per share plus accrued but unpaid dividends. See "Use of
Proceeds" and "Certain Transactions."

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

Upon consummation of the Offering, there will be 18,465,898 shares of Class
A Common Stock (of which 2,376,074 shares have been reserved for issuance
pursuant to the exercise of options granted or to be granted under the Company's
option plans and other employee compensation agreements) and 972,793 shares of
undesignated Preferred Stock available for future issuance without stockholder
approval. To the extent the Company utilizes a depositary facility in order to
issue units representing fractional interests in deposited shares of Preferred
Stock, the Company may effectively increase the amount of Preferred Stock
available for future issuance without stockholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital or to facilitate corporate
acquisitions. The Company does not currently have any plans to issue additional
shares of capital stock, other than shares of Class A Common Stock which may be
issued upon the exercise of options. The Company may issue Class A Common Stock
in connection with the acquisition of other companies.

One of the effects of the existence of unissued and unreserved Class A
Common Stock and undesignated Preferred Stock may be to enable the Board of
Directors of the Company to issue shares to persons friendly to current
management which could render more difficult, delay or discourage an attempt to
obtain control of the Company by means of a merger, tender offer, proxy contest
or otherwise, and thereby protect the continuity of the Company's management.
Although it has no present intention to do so, the Board of Directors of the
Company could issue Preferred Stock with voting, dividend and conversion rights
which could adversely affect the voting power of holders of Class A Common Stock
and the likelihood that such holders receive dividend payments and payments upon
liquidation.

41
<PAGE> 42

DELAWARE TAKEOVER STATUTE

The Company is subject to the restrictions imposed by Section 203 of the
Delaware General Corporation Law, as amended ("Section 203"). Section 203
provides that, subject to certain exceptions specified therein, an "interested
stockholder" of a Delaware corporation shall not engage in any business
combination, including mergers or consolidations or acquisitions of additional
shares of the corporation with the corporation for a three-year period following
the date that such stockholder becomes an "interested stockholder" unless: (i)
prior to such date, the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder
becoming an "interested stockholder;" (ii) upon consummation of the transaction
which resulted in the stockholder becoming an "interested stockholder," the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares); or
(iii) on or subsequent to such date, the business combination is approved by the
board of directors of the corporation and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the "interested stockholder."
Except as otherwise specified in Section 203, an "interested stockholder" is
defined to include (x) any person that is the owner of 15% or more of the
outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within three years immediately prior to the
relevant date and (y) the affiliates and associates of any such person. The
Schawk Family became "interested stockholders" upon the effective acquisition of
a controlling interest in Filtertek in September 1992.

These provisions could have the effect of delaying, deferring or preventing
a change of control of the Company. The Company's stockholders, by adopting an
amendment to its Certificate of Incorporation or By-laws, may elect not to be
governed by Section 203, effective twelve months after adoption.

LIMITATION OF DIRECTOR LIABILITY AND INDEMNIFICATION

The Company's Certificate of Incorporation contains a provision that limits
the liability of its directors for breaches of their fiduciary duties as
directors to the full extent permitted by the Delaware General Corporation Law.
As a result, directors will not be liable, in certain circumstances, to the
Company or its stockholders for monetary damages arising from a breach of their
fiduciary duties as directors. Such limitation does not, however, affect the
liability of a director: (i) for any transaction from which the director derives
an improper personal benefit; (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law; (iii) for
improper payment of dividends or redemption of shares; or (iv) for any breach of
the director's duty of loyalty to the Company or its stockholders. The
Certificate of Incorporation provides that the Company shall indemnify its
officers and directors to the fullest extent permitted by applicable law.

TRANSFER AGENT AND REGISTRAR

First Chicago Trust Company of New York serves as the transfer agent and
registrar for the Class A Common Stock.

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<PAGE> 43

SHARES ELIGIBLE FOR FUTURE SALE

All of the 3,000,000 shares sold in the Offering (3,450,000 if the
Underwriters' over-allotment option is exercised in full) will be eligible for
sale in the public market without restriction under the Securities Act except
that any share purchased by an "affiliate" of the Company (as that term is
defined in Rule 144 adopted under the Securities Act) will be subject to the
resale limitations of Rule 144. Upon completion of the Offering, there will be
21,534,102 outstanding shares of Class A Common Stock and the public float will
be increased from 5,360,051 shares to 8,360,051 (8,810,051 shares if the
Underwriters' over-allotment option is exercised in full). The public float
includes 2,247,045 freely transferable shares held by non-management members of
the Schawk Family. Of the remaining shares outstanding, 159,521 shares will be
held by independent parties and constitute "restricted securities" as defined
under Rule 144 of the Securities Act and subject to the resale limitations
thereunder, and 12,811,614 shares will be beneficially owned by affiliates of
the Company (including management members of the Schawk Family and other
executive officers and directors of the Company) and eligible for resale subject
to the limitations under Rule 144. Of the shares held by or on behalf of the
Schawk Family, 2,247,045 shares are freely transferrable under Rule 144, and
13,413,642 shares are eligible for resale subject to the volume limitations of
Rule 144. The Company and the Schawk Family have entered into a registration
rights agreement under which the Schawk Family may cause the Company to register
for sale under the Securities Act all of the shares of Class A Common Stock
owned by them or include such shares as part of a registered underwritten public
offering of Class A Common Stock by the Company.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) to whom the Rule is applicable, including an
affiliate, who has beneficially owned shares for at least a one-year period (as
computed under Rule 144) is entitled to sell within any three-month period the
number of shares that does not exceed the greater of (i) 1% of the then
outstanding shares of the Class A Common Stock (approximately 215,000 shares
after giving effect to the Offering) and (ii) the reported average weekly
trading volume of the then outstanding shares of Class A Common Stock during the
four calendar weeks immediately preceding the date on which the notice of sale
is filed with the Securities and Exchange Commission. Sales under Rule 144 also
are subject to certain provisions relating to the manner and notice of sale and
the availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed an affiliate of the
Company at any time during the 90 days immediately preceding a sale, and who has
beneficially owned shares for at least a two-year period (as computed under Rule
144), would be entitled to sell such shares under Rule 144(k) without regard to
the volume limitation and other conditions described above.

Up to 535,176 additional shares of Class A Common Stock may be purchased by
certain employees and directors of the Company pursuant to the exercise of
options granted under the Company's 1988 Equity Option Plan and the 1991 Outside
Directors' Formula Stock Option Plan, of which 335,981 were vested as of January
31, 1998. The shares of Class A Common Stock issuable upon exercise of the
Options are freely tradable under a registration statement on Form S-8, except
that such shares held by affiliates of the Company will be subject to the volume
limitations of Rule 144. The Company also has outstanding options for 124,074
shares under employee compensation agreements, all of which were vested as of
January 31, 1998. Any shares acquired upon exercise of such options would be
subject to Rule 144.

No prediction can be made as to the effect, if any, that future sales of
shares, including any shares that may be issued in connection with potential
future acquisitions, or the availability of shares for future sale, will have on
the market price prevailing from time to time. Sales of substantial amounts of
Class A Common Stock, or the perception that such sales could occur, could
adversely affect prevailing market prices of the Class A Common Stock and the
Company's ability to raise capital in the future through the sale of additional
securities. See "Risk Factors -- Shares Eligible for Future Sale."

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<PAGE> 44

UNDERWRITING

Under the terms of, and subject to the conditions in, the Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, the Underwriters named below,
for whom Lehman Brothers Inc. and McDonald & Company Securities, Inc. are acting
as representatives (the "Representatives"), have severally agreed to purchase
from the Company and the Selling Stockholders, and the Company and the Selling
Stockholders have agreed to sell to each Underwriter, the aggregate number of
shares of Class A Common Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERWRITERS ---------
<S> <C>
Lehman Brothers Inc. ....................................... 1,320,000
McDonald & Company Securities, Inc. ........................ 660,000
Bear, Stearns & Co. Inc. ................................... 125,000
BT Alex. Brown Incorporated................................. 125,000
A.G. Edwards & Sons, Inc. .................................. 125,000
Everen Securities, Inc. .................................... 125,000
Robert W. Baird & Co. Incorporated.......................... 65,000
Blackford Securities Corp. ................................. 65,000
Jefferies & Company, Inc. .................................. 65,000
C.L. King & Associates, Inc. ............................... 65,000
Legg Mason Wood Walker, Incorporated........................ 65,000
Mesirow Financial, Inc. .................................... 65,000
Raymond James & Associates, Inc. ........................... 65,000
C.E. Unterberg, Towbin...................................... 65,000
---------
Total............................................. 3,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters to purchase shares of Class A Common Stock are subject to certain
conditions, and that if any of the foregoing shares of Class A Common Stock are
purchased by the Underwriters pursuant to the Underwriting Agreement, all the
shares of Class A Common Stock agreed to be purchased by the Underwriters must
be so purchased.

The Company and the Selling Stockholders have been advised that the
Underwriters propose to offer the shares of Class A Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus, and to certain selected dealers (who may include the Underwriters)
at such public offering price less a selling concession not in excess of $0.28
per share. The selected dealers may re-allow a concession not in excess of $0.10
per share to certain brokers and dealers. After the Offering, the public
offering price, the concession to selected dealers and the reallowance may be
changed by the Underwriters.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act and to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Company has granted to the Underwriters an option to purchase up to an
aggregate of 450,000 shares of Class A Common Stock, exercisable solely to cover
over-allotments, at the offering price to the public less the underwriting
discounts and commissions shown on the cover page of this Prospectus. Such
option may be exercised at any time until 30 days after the date of the
Underwriting Agreement. To the extent that the option is exercised, each
Underwriter will be committed, subject to certain conditions, to purchase a
number of the additional shares of Class A Common Stock proportionate to such
Underwriter's initial commitment as indicated in the preceding table.

Certain stockholders of the Company, owning an aggregate of 15,760,900
shares after the Offering, have agreed that they will not, subject to certain
limited exceptions, directly or indirectly, offer, sell or otherwise dispose of
any shares of Class A Common Stock or any securities convertible into or
exchangeable or

44
<PAGE> 45

exercisable for any such shares for a period of 90 days after the effective date
of the Offering without the prior written consent of Lehman Brothers Inc. In
addition, the Company has agreed that it will not, subject to certain limited
exceptions, directly or indirectly, offer, sell or otherwise dispose of any
shares of Class A Common Stock or any securities convertible into or
exchangeable for such shares without the prior written consent of Lehman
Brothers Inc. for 90 days after the effective date of the Offering.

Until the distribution of the Class A Common Stock is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase shares of Class A Common Stock. As an
exception to these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the Class A Common Stock. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the Class A Common Stock.

In addition, if the Representatives over-allot (i.e., if they sell more
shares of Class A Common Stock than are set forth on the cover page of this
Prospectus), and thereby create a short position in the Class A Common Stock in
connection with the Offering, the Representatives may reduce that short position
by purchasing Class A Common Stock in the open market. The Representatives also
may elect to reduce any short position by exercising all or part of the
over-allotment option described herein.

The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Class A Common Stock in the open market to reduce the Underwriters'
short position or to stabilize the price of the Class A Common Stock, they may
reclaim the amount of the selling concession from the Underwriters and selling
group members who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Class A Common Stock. In addition,
neither the Company nor any of the Underwriters makes any representation that
the Representatives will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.

LEGAL MATTERS

The validity of the shares of Class A Common Stock being offered hereby and
certain other matters are being passed upon for the Company by Vedder, Price,
Kaufman & Kammholz, Chicago, Illinois. Certain legal matters relating to the
Offering will be passed upon for the Underwriters by Winston & Strawn, Chicago,
Illinois.

John T. McEnroe, a partner of Vedder, Price, Kaufman & Kammholz, is a
director of the Company.

EXPERTS

The consolidated financial statements (including a schedule incorporated by
reference) of Schawk, Inc. at December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996, appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing and incorporated by
reference elsewhere herein, which as to 1994 is based in part on the report of
Arthur Andersen LLP, independent auditors. The financial statements referred to
above are included in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.

45
<PAGE> 46

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports of Independent Auditors............................. F-2
Consolidated Financial Statements:
Consolidated balance sheets............................... F-4
Consolidated statements of operations..................... F-5
Consolidated statements of stockholders' equity........... F-6
Consolidated statements of cash flows..................... F-7
Notes to consolidated financial statements................ F-8
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(UNAUDITED)

<TABLE>
<S> <C>
Condensed Consolidated Interim Financial Statements:
Condensed consolidated balance sheet...................... F-20
Condensed consolidated statements of operations........... F-21
Condensed consolidated statements of cash flows........... F-22
Notes to condensed consolidated interim financial
statements............................................. F-23
</TABLE>

F-1
<PAGE> 47

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Schawk, Inc.

We have audited the accompanying consolidated balance sheets of Schawk,
Inc. as of December 31, 1996 and 1995, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1996. These financial statements are the
responsibility of Schawk, Inc. management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
1994 financial statements of Filtertek, Inc. (the Plastics Group of Schawk,
Inc.), which statements reflect net income of $4.2 million for the period ended
December 30, 1994 (included in income from discontinued operations). Those
statements were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to 1994 data included for the Plastics
Group, is based on the report of other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Schawk, Inc. at
December 31, 1996 and 1995, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Chicago, Illinois
February 14, 1997

F-2
<PAGE> 48

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Schawk, Inc.

We have audited the consolidated balance sheets of Filtertek, Inc. and
subsidiaries (a Delaware corporation and subsidiary of Schawk, Inc.; previously
a combined entity of Filtertek, Inc. and Filtertek de Puerto Rico, Inc., see
Note 1) as of December 30, 1994 and December 31, 1993, and the related
consolidated statements of income, cash flows and stockholders' equity for the
period ended December 30, 1994 and for the years ended December 31, 1993 and
1992, not separately presented herein. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. As discussed in Note
2, on October 2, 1993, the Company acquired Fuzere Manufacturing Company, Inc.,
Fuzere Midwest, and Robinson Industries ("Robinson/Fuzere") in a purchase
transaction between companies under common control and accounted for it as
though it was effective September 22, 1992, in a manner similar to
pooling-of-interests accounting. We did not audit the statements of income of
Robinson/Fuzere for the nine months ended September 30, 1993. Such statements
are included in the consolidated financial statements of Filtertek, Inc. and
subsidiaries. The net sales and net income of Robinson/Fuzere for the period
covered by the report of the other auditors represent 17 percent and 35 percent,
respectively, of the total consolidated net sales and net income for the year
ended December 31, 1993. These financial statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included in those financial statements, is based solely
on the reports of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of
the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Filtertek, Inc. and subsidiaries as of
December 30, 1994 and December 31, 1993, and the consolidated results of their
operations and their cash flows for the period ended December 30, 1994 and for
the years ended December 31, 1993, and 1992, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
February 17, 1995

F-3
<PAGE> 49

SCHAWK, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1996 1995
-------- --------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents................................. $ 483 $ 1,917
Trade accounts receivable, less allowance for doubtful
accounts of $760 in 1996 and $984 in 1995.............. 19,294 29,865
Inventories............................................... 3,675 16,806
Prepaid expenses and other................................ 6,258 3,463
Current Assets of Plastics business held for sale......... 27,495 --
Deferred income taxes..................................... 590 1,504
-------- --------
Total current assets........................................ 57,795 53,555
Property and equipment, net................................. 27,453 76,540
Property and equipment of Plastics business held for sale... 48,788 --
Excess of cost over net assets acquired, less accumulated
amortization of $3,449 in 1996 and $6,331 in 1995......... 13,158 47,858
Other assets of Plastics business held for sale............. 9,593 --
Other assets................................................ 4,053 6,510
-------- --------
Total assets................................................ $160,840 $184,463
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable.................................... $ 4,116 $ 7,943
Accrued expenses.......................................... 8,786 11,750
Notes payable to stockholders............................. 5,765 5,765
Current liabilities of Plastics business held for sale.... 7,270 --
Notes payable to banks.................................... 9,586 --
Current portion of long-term debt and capital lease
obligations............................................ 391 1,222
-------- --------
Total current liabilities................................... 35,914 26,680
Long-term debt.............................................. 62,500 69,907
Capital lease obligations................................... 5,285 5,675
Other....................................................... 1,217 1,036
Deferred income taxes....................................... 3,187 4,736
Deferred income taxes of Plastics business held for sale.... 3,811 --
Stockholders' Equity:
Common stock.............................................. 168 165
Preferred stock........................................... -- --
Additional paid-in capital................................ 77,928 75,506
Retained earnings (deficit)............................... (26,987) 4,573
Cumulative foreign currency translation adjustment........ -- (450)
-------- --------
51,109 79,794
Treasury stock, at cost................................... (1,523) (2,695)
Notes receivable from employees........................... (660) (670)
-------- --------
48,926 76,429
-------- --------
Total liabilities and stockholders' equity.................. $160,840 $184,463
======== ========
</TABLE>

See accompanying notes.

F-4
<PAGE> 50

SCHAWK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
Net sales................................................... $ 90,763 $87,204 $103,889
Cost of sales............................................... 51,153 51,066 52,486
Selling, general, and administrative expenses............... 25,187 25,116 31,094
Write-off of equipment...................................... 1,050 -- --
-------- ------- --------
Operating income............................................ 13,373 11,022 20,309
Other income (expense):
Interest and dividend income.............................. 340 532 544
Interest expense.......................................... (4,657) (4,306) (3,858)
Other..................................................... -- (5) (1,004)
-------- ------- --------
(4,317) (3,779) (4,318)
-------- ------- --------
Income from continuing operations before income taxes....... 9,056 7,243 15,991
Income tax provision before net operating loss
carryforwards............................................. 3,530 2,577 3,722
Benefit of net operating loss carryforwards................. -- (1,632) --
-------- ------- --------
Income from continuing operations........................... 5,526 6,298 12,269
Income (loss) from discontinued operations:
Income from discontinued operations (net of minority
interest of $1,717 in 1994)............................ 2,490 638 1,200
Loss on disposal of discontinued operations............... (33,000) -- --
-------- ------- --------
Net (loss) income........................................... $(24,984) $ 6,936 $ 13,469
======== ======= ========
Primary and fully diluted earnings per share:
Continuing operations..................................... $ 0.22 $ 0.26 $ --
Discontinued operations................................... (1.56) 0.03 --
-------- ------- --------
Total....................................................... (1.34) 0.29 --
======== ======= ========
Weighted average number of common and common equivalent
shares outstanding........................................ 19,545 19,203 --
Dividends per Class A common share.......................... $ 0.26 $ 0.26 $ --
Pro forma data (Note 15) (unaudited):
Pro forma income taxes.................................... 7,071
Pro forma net income adjusted only for income taxes....... 10,247
</TABLE>

See accompanying notes.

F-5
<PAGE> 51

SCHAWK, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
OLD SCHAWK, INC. CUMULATIVE
SCHAWK ----------------------------------------- FOREIGN
COMPANIES CLASS A CLASS B SERIES A SERIES B ADDITIONAL CURRENCY
COMMON COMMON COMMON PREFERRED PREFERRED PAID-IN RETAINED TRANSLATION
STOCK STOCK STOCK STOCK STOCK CAPITAL EARNINGS ADJUSTMENT
--------- ------- ------- --------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1993....................... $ 108 $ -- $-- $-- $-- $16,559 $38,107 $(1,393)
Net income................... -- -- -- -- -- -- 13,469 --
Capital contribution to Flexo
Graphics, Inc.............. -- -- -- -- -- 198 -- --
Dividends.................... -- -- -- -- -- -- (20,398) --
Cumulative foreign currency
translation adjustment..... -- -- -- -- -- -- -- 446
Issuance of Series A
preferred stock............ -- -- -- -- -- 22,000 (22,000) --
Issuance of Series B
preferred stock............ -- -- -- -- -- 5,207 (5,207) --
Deemed purchase of minority
interest................... -- -- -- -- -- 31,502 -- --
Recapitalization for
Merger..................... (108) 155 9 -- -- (54) -- --
----- ---- --- --- --- ------- -------- -------
Balance at December 31,
1994....................... -- 155 9 -- -- 75,412 3,971 (947)
Net income................... -- -- -- -- -- -- 6,936 --
Sale of Class A and B common
stock...................... -- -- -- -- -- 95 -- --
Purchase of Class A and B
treasury stock............. -- -- -- -- -- -- -- --
Cumulative foreign currency
translation adjustment..... -- -- -- -- -- -- -- 497
Conversion of Series A
preferred stock............ -- 1 -- -- -- (1) -- --
Issuance of Class A common
stock under dividend
reinvestment program....... -- -- -- -- -- -- (1,333) --
Cash dividends............... -- -- -- -- -- -- (5,001) --
----- ---- --- --- --- ------- -------- -------
Balance at December 31,
1995....................... -- 156 9 -- -- 75,506 4,573 (450)
Net loss..................... -- -- -- -- -- -- (24,984) --
Sale of Class A and B common
stock...................... -- -- -- -- -- 60 -- --
Purchase of Class A and B
treasury stock............. -- -- -- -- -- -- -- --
Cumulative foreign currency
translation adjustment..... -- -- -- -- -- -- -- (233)
Conversion of Series A
preferred stock............ -- 1 -- -- -- (1) -- --
Issuance of Class A stock in
connection with purchase of
Converterscan.............. -- 2 -- -- -- 2,363 -- --
Issuance of Class A common
stock under dividend
reinvestment program....... -- -- -- -- -- -- (2,607) --
Cash dividends............... -- -- -- -- -- -- (3,969) --
Write-off of foreign currency
adjustment to discontinued
operations................. -- -- -- -- -- -- -- 683
----- ---- --- --- --- ------- -------- -------
Balance at December 31,
1996....................... $ -- $159 $ 9 $-- $-- $77,928 $(26,987) $ --
===== ==== === === === ======= ======== =======

NOTES
RECEIVABLE
TREASURY FROM
STOCK EMPLOYEES
-------- ----------
<S> <C> <C>
Balance at December 31,
1993....................... $(2,262) $ --
Net income................... -- --
Capital contribution to Flexo
Graphics, Inc.............. -- --
Dividends.................... -- --
Cumulative foreign currency
translation adjustment..... -- --
Issuance of Series A
preferred stock............ -- --
Issuance of Series B
preferred stock............ -- --
Deemed purchase of minority
interest................... -- --
Recapitalization for
Merger..................... (63) (685)
------- -----
Balance at December 31,
1994....................... (2,325) (685)
Net income................... -- --
Sale of Class A and B common
stock...................... 130 (130)
Purchase of Class A and B
treasury stock............. (1,833) 145
Cumulative foreign currency
translation adjustment..... -- --
Conversion of Series A
preferred stock............ -- --
Issuance of Class A common
stock under dividend
reinvestment program....... 1,333 --
Cash dividends............... -- --
------- -----
Balance at December 31,
1995....................... (2,695) (670)
Net loss..................... -- --
Sale of Class A and B common
stock...................... 57 (57)
Purchase of Class A and B
treasury stock............. (1,492) 67
Cumulative foreign currency
translation adjustment..... -- --
Conversion of Series A
preferred stock............ -- --
Issuance of Class A stock in
connection with purchase of
Converterscan.............. -- --
Issuance of Class A common
stock under dividend
reinvestment program....... 2,607 --
Cash dividends............... -- --
Write-off of foreign currency
adjustment to discontinued
operations................. -- --
------- -----
Balance at December 31,
1996....................... $(1,523) $(660)
======= =====
</TABLE>

See accompanying notes.

F-6
<PAGE> 52

SCHAWK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) income........................................... $(24,984) $ 6,936 $ 13,469
Adjustments to reconcile net (loss) income to cash provided
by operating activities:
Depreciation and amortization............................. 15,435 16,219 14,866
Deferred income taxes..................................... (762) (138) 3,051
Deferred income taxes of Plastics business held for
sale................................................... 3,811 -- --
Other..................................................... 1,378 243 (147)
Loss on disposal of discontinued operations............... 33,000 -- --
Loss on write-off of equipment............................ 1,050 -- --
Changes in operating assets and liabilities, net of
effects from acquisitions:
Trade accounts receivable.............................. 13,219 1,356 (1,146)
Inventories............................................ 11,520 2,272 (1,509)
Prepaid expenses and other............................. (2,279) 1 (169)
Trade accounts payable and accrued expenses............ (12,197) (934) 285
Current assets of Plastics business held for sale...... (27,495) -- --
Current liabilities of Plastics business held for
sale................................................. 7,270 -- --
-------- -------- --------
Net cash provided by operating activities................... 18,966 25,955 28,700
INVESTING ACTIVITIES
Purchases of property and equipment......................... (16,823) (11,027) (13,882)
Cash proceeds from disposal of property and equipment....... 477 96 1,423
Advances from related parties............................... -- -- 1,238
Acquisitions, net of cash acquired.......................... (6,282) (395) (618)
Proceeds from sale of division.............................. 5,000 -- --
Proceeds from long-term note collected...................... 4,034 -- --
Other....................................................... 1,353 475 (401)
-------- -------- --------
Net cash used in investing activities....................... (12,241) (10,851) (12,240)
FINANCING ACTIVITIES
Proceeds from debt.......................................... 3,860 44,500 22,495
Principal payments on debt.................................. (6,732) (50,538) (25,035)
Principal payments on capital lease obligations............. (402) (323) (293)
Principal payments on notes payable to stockholders......... -- (3,015) --
Cash dividends.............................................. (3,969) (5,002) (12,878)
Purchase of common stock.................................... (1,427) (1,688) (1,960)
Issuance of common stock.................................... 60 94 57
Other....................................................... 451 497 (91)
-------- -------- --------
Net cash used in financing activities....................... (8,159) (15,475) (17,705)
-------- -------- --------
Net decrease in cash and cash equivalents................... (1,434) (371) (1,245)
Cash and cash equivalents beginning of year................. 1,917 2,288 3,533
-------- -------- --------
Cash and cash equivalents end of year....................... $ 483 $ 1,917 $ 2,288
======== ======== ========
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:
Issuance of note in connection with acquisition............. $ -- $ 807 $ --
Dividends issued in the form of Class A common stock........ 2,349 1,333 --
Stock issued in connection with acquisition................. 2,365 -- --
Note received for sale of operating division................ 2,619 -- --
</TABLE>

See accompanying notes.

F-7
<PAGE> 53

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Schawk, Inc. (the Company) operated in two business segments, Imaging and
Information Technologies (the Company) and Plastics, until the sale of the
Plastic business segment on February 7, 1997. The Plastics business segment has
been reflected in these financial statements as discontinued operations (see
Note 14). The Company consists of the Company known as Schawk, Inc. (Old Schawk)
and companies previously affiliated through common ownership, Lincoln Graphics,
Inc., and Flexographics, Inc. collectively, the Old Schawk Companies. The
Plastics segment consists of the previously 60% owned subsidiaries, Filtertek,
Inc. and subsidiaries (Filtertek or the Filtertek Companies). The Company is a
leader in the prepress industry in the United States primarily serving consumer
products businesses. The Company offers a complete line of prepress services,
digital image management, art production, digital photography and products for
the production of consumer product packaging and related marketing and
advertising materials. All significant intercompany balances and transactions
have been eliminated.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash Equivalents

Cash equivalents include highly liquid debt instruments and time deposits
with an original maturity of three months or less. Cash equivalents are stated
at cost, which approximates market.

Inventories

Inventories are stated at the lower of cost or market. Certain inventories,
which approximate 34% in 1996 and 10% in 1995, respectively, are determined on
the last in, first out (LIFO) cost basis. The remaining inventories are
determined on the first in, first out (FIFO) cost basis.

Property and Equipment

Property and equipment, including capitalized leases, are stated at cost,
less accumulated depreciation and amortization and are being depreciated and
amortized using the straight-line method over the estimated useful lives of the
assets or the term of the leases, ranging from 3 to 40 years.

Excess of Cost over Net Assets Acquired

Excess of cost over net assets acquired (goodwill) is being amortized using
the straight-line method over periods ranging from 10 to 40 years. The Company
continually evaluates the existence of goodwill impairment on the basis of
whether the goodwill is fully recoverable from projected, undiscounted net cash
flows of the related business unit.

Foreign Currency Translation

Foreign currency assets and liabilities are translated at the rate of
exchange existing at year-end and income and expenses amounts are translated at
the average of the monthly exchange rates. Gains and losses resulting from the
translation of foreign currency financial statements are deferred and classified
as a separate component of stockholders' equity.

Income Taxes

Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are

F-8
<PAGE> 54

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

expected to reverse. A valuation allowance is provided when it is more likely
than not that some portion of the deferred tax assets arising from temporary
differences and net operating losses will not be realized.

Prior to 1995 the Old Schawk Companies had elected to be taxed as an S
Corporation under applicable provisions of the Internal Revenue Code (IRC). S
Corporation income for federal income tax purposes is treated substantially as
if the Company were a partnership and, therefore, is not ordinarily subject to
federal income tax. At December 31, 1994, a provision for deferred income taxes
of $3,000 was recorded to reflect the termination of the S Corporation status of
the Old Schawk Companies. For informational purposes, the statement of
operations for 1994 includes an unaudited pro forma adjustment for income taxes
that would have been recorded if these Companies had been C Corporations, based
on the tax laws in effect during those periods.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Reclassifications

Certain amounts in the 1994 and 1995 financial statements have been
reclassified to conform to the 1996 presentation.

NOTE 3. ACQUISITIONS

The following acquisitions have been accounted for using the purchase
method of accounting. Accordingly, the purchase price has been allocated to the
respective net assets acquired based on the fair value of such assets, including
certain noncompete agreements and liabilities as of the date of the
acquisitions, and the results of operations have been included in the
accompanying consolidated statements of income from the effective date of the
acquisitions. The effects of the operations of the acquired companies prior to
the date of acquisition were not significant.

StanMont

Effective September 1, 1996, the Company acquired all of the stock of
StanMont Inc., which has operations in Montreal and Toronto, Canada. The
following summarizes the purchase price allocation and cash paid.

<TABLE>
<S> <C>
Fair value of assets acquired, net of cash acquired of
$74....................................................... $ 7,569
Cost in excess of net assets acquired....................... 4,552
Liabilities assumed......................................... (7,762)
-------
Cash paid, net of cash acquired............................. $ 4,359
=======
</TABLE>

The final purchase price is also subject to earn-out conditions based on
pretax earnings as a percentage of net sales for fiscal years 1997 and 1998.

F-9
<PAGE> 55

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Converterscan

Effective August 1, 1996, the Company acquired all of the stock of
Converterscan, Inc., which has operations in Stamford, Connecticut, and Atlanta,
Georgia. The following summarizes the purchase price allocation and cash paid.

<TABLE>
<S> <C>
Fair value of assets acquired, net of cash acquired of
$10....................................................... $ 1,921
Cost in excess of net assets acquired....................... 5,582
Liabilities assumed......................................... (3,215)
Class A common stock issued (305 shares).................... (2,365)
-------
Cash paid, net of cash acquired............................. $ 1,923
=======
</TABLE>

For each of the three years commencing two years after closing, the seller
has the right to put the shares back to the Company at the stock price at the
date of issuance.

Certain issues regarding the final purchase price of these acquisitions are
still subject to ongoing negotiations. The final adjustments to purchase price
will be reflected as an increase or decrease to excess of cost over net assets
acquired.

NOTE 4. RELATED PARTY TRANSACTIONS

Included in prepaid expenses and other at December 31, 1996 and 1995, was
approximately $747 and $362, respectively, of advances to Geneva Waterfront,
Inc., which is owned by a stockholder of the Company. Interest is charged on
these balances at the prime rate.

Stockholders' equity has been reduced by approximately $660 and $670 for
notes receivable from employees at December 31, 1996 and 1995, respectively. The
notes are noninterest-bearing demand notes collateralized by Class B common
stock.

The Company has approximately $5,765 in notes payable at December 31, 1996
and 1995, respectively, payable to certain stockholders. The notes bear interest
at 5%. Interest expense related to these notes was $288, $328 and $100 for 1996,
1995 and 1994, respectively. These notes were paid on February 7, 1997.

NOTE 5. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
------ -------
<S> <C> <C>
Raw materials............................................... $1,512 $ 6,432
Work in process............................................. 2,898 6,565
Finished goods.............................................. -- 4,522
------ -------
4,410 17,519
Less: LIFO reserve.......................................... (735) (713)
------ -------
$3,675 $16,806
====== =======
</TABLE>

F-10
<PAGE> 56

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 6. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Land and improvements....................................... $ 522 $ 2,315
Building and improvements................................... 7,794 35,998
Machinery and equipment..................................... 47,370 85,067
Leasehold improvements...................................... 3,209 2,786
Building and improvements under capital leases.............. 7,500 7,500
-------- --------
66,395 133,666
Accumulated depreciation and amortization................... (38,942) (57,126)
-------- --------
$ 27,453 $ 76,540
======== ========
</TABLE>

Accumulated depreciation and amortization includes $2,331 and $1,916 for
building and improvements under capital leases at December 31, 1996 and 1995,
respectively. Depreciation and amortization expense for property and equipment
was $6,407 (continuing operations only), $13,937 and $12,868 in 1996, 1995 and
1994, respectively.

NOTE 7. ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
------ -------
<S> <C> <C>
Accrued compensation and payroll taxes...................... $3,629 $ 6,970
Accrued income taxes........................................ -- 879
Other....................................................... 5,157 3,901
------ -------
$8,786 $11,750
====== =======
</TABLE>

NOTE 8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Revolving credit facility................................... $22,500 $28,800
Series A senior note payable................................ 10,000 10,000
Series B senior note payable................................ 30,000 30,000
Other....................................................... -- 1,974
------- -------
62,500 70,774
Less: Current portion....................................... -- (867)
------- -------
$62,500 $69,907
======= =======
</TABLE>

The revolving credit facility bears interest at the offshore borrowing rate
(5.6875% at December 31, 1996) of the lead lender plus 0.40% to 0.875% based on
a financial statement ratio of the Company or the Lender's alternative base rate
(8.25% at December 31, 1996), as determined by the Company. The revolving

F-11
<PAGE> 57

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

credit facility was repaid in its entirety (and the credit facility canceled) on
February 7, 1997 from the proceeds of the sale of the Plastics business.

The Company entered into an interest rate swap agreement to hedge the
impact of changes in interest rates on its revolving credit facility. The
agreement converts the interest rate on the revolving credit facility to a fixed
rate of 5.81%. The agreement applies to $16,000 of the outstanding principal
balance, decreasing by $2,000 each quarter until termination in October 1997
($8,000 at December 31, 1996). Net amounts paid or received on interest rate
swap agreements that qualify as hedges are recognized over the term of the
agreement as an adjustment to interest expense. Realized gains and losses
resulting from the termination of interest rate swap agreements are recognized
in the period the agreement is terminated. The swap agreement was canceled on
February 7, 1997, with no significant gain or loss realized.

The Company entered into a senior note agreement for $10,000 Series A
senior notes and $30,000 Series B senior notes. The Series A notes bear interest
at 6.58% and are payable in installments of $5 million in 1999 and 2000. The
Series B notes bear interest at 6.98% and are payable in installments of $6
million from 2001 to 2004. The notes are subject to prepayment in whole or in
part on or after August 18, 1996. Borrowings under the Series A and B senior
notes are unsecured but are subject to certain restrictive covenants. In
addition, the agreement requires the Company to maintain certain net worth and
other financial ratio requirements. The fair value of the senior notes
approximates the carrying value at December 31, 1996.

Interest paid on long-term debt during the years ended December 31, 1996,
1995 and 1994 was approximately $4,561, $5,071 and $5,375, respectively.

Annual maturities of all long-term debt at December 31, 1996 are as
follows:

<TABLE>
<S> <C>
1997............................................... $ --
1998............................................... --
1999............................................... 5,000
2000............................................... 27,500
2001............................................... 6,000
Thereafter......................................... 24,000
-------
$62,500
=======
</TABLE>

The Company has an unsecured $10 million line of credit with a bank in the
United States and unsecured $5.5 million line of credit with a bank in Canada to
provide financing and working capital flexibility. Advances under the Canadian
line of credit bear interest at either the Canadian prime rate or the bank's
cost of funds plus 0.625% at the option of the Company. The interest rates on
the Canadian advances at December 31, 1996, range from 3.85% to 4.73%. At
December 31, 1996, the amounts outstanding under the United States line of
credit and the Canadian line of credit are $4.4 million and $5.2 million,
respectively. Both facilities are due on demand.

F-12
<PAGE> 58

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 9. STOCKHOLDERS' EQUITY

Stockholders' equity includes the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1995
------ ------
<S> <C> <C>
Common stock:
Class A voting, $0.008 par value, 40,000,000 shares
authorized; 20,034,030 and 19,559,771 shares issued at
December 31, 1996 and 1995, respectively; 19,915,693 and
19,310,840 shares outstanding at December 31, 1996 and
1995, respectively........................................ $ 159 $ 156
Class B nonvoting, $0.05 par value, 200,000 shares
authorized; 172,281 shares issued at December 31, 1996 and
1995; 133,324 and 135,310 shares outstanding at December
31, 1996 and 1995, respectively........................... 9 9
------ ------
$ 168 $ 165
====== ======
Preferred stock, 1,000,000 shares authorized:
Series A, $0.01 par value, 17,600 and 19,800 shares issued
and outstanding at December 31, 1996 and 1995,
respectively.............................................. $ -- $ --
Series B, $0.01 par value, 5,207 shares issued and
outstanding at December 31, 1996 and 1995................. -- --
------ ------
$ -- $ --
====== ======
Treasury stock:
118,337 and 248,931 shares Class A at December 31, 1996
and 1995, respectively, and 38,957 and 36,971 shares
Class B at December 31, 1996 and 1995, respectively, at
cost................................................... $1,523 $2,695
====== ======
</TABLE>

On December 30, 1994, the Company issued 22,000 shares of Series A
preferred stock and 5,207 shares of Series B preferred stock. The Series A
preferred shares are mandatorily redeemable by the Company on December 31, 2004,
or, at the option of the Board, on any December 31 through December 31, 2003, by
issuing to the holder for each share of Series A Preferred Stock the number of
shares of Class A Common Stock equal to the sum of $1,000 plus an amount equal
to all accumulated and unpaid dividends per share divided by $13.80, or cash in
the amount of the fair market value, as defined, of the number of shares of
Class A Common Stock. On December 30, 1996 and 1995, the Company issued 159,420
Class A common shares in exchange for 2,200 shares of Series A preferred stock.
The Series B preferred shares are mandatorily redeemable by the Company on
December 31, 1999, under the same redemption formula as Series A. The Series B
shares are also mandatorily redeemable on the date of the consummation of any
offering or private placement of the Company's debt or equity the gross proceeds
of which exceed $25,000. The Company shall redeem all outstanding shares of
Series B preferred stock with respect to each such share $1,000 in cash plus all
accumulated and unpaid dividends per share. Dividends shall accrue on each share
of preferred stock at the rate of 5.0% per year and are payable quarterly.
Holders of preferred shares are entitled to limited voting rights.

In the event of liquidation, dissolution or winding up of the Company, the
holders of Series A preferred stock are entitled to be paid out of the assets of
the Company available for distribution to its stockholders before any payment to
any holders of common stock or any holders of Series B preferred stock an amount
equal to $1,000 per share plus all accumulated and unpaid dividends.

F-13
<PAGE> 59

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Upon the liquidation, dissolution or winding up of the Company, the holders
of Class A and Class B Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding preferred stock,
until the holders of Class B Common Stock have received distributions (maximum
amount of $10) equal to the par value of their shares. Thereafter, all
distributions shall be made for the benefit of the holders of Class A Common
Stock. Subsequent to December 31, 1996, the Board of Directors authorized the
cancellation of all Class B Common Stock.

NOTE 10. INCOME TAXES

The provision (credit) for income taxes for continuing operations is
comprised of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Current:
Federal................................................ $ 102 $1,445 $ --
State.................................................. 376 255 722
Foreign................................................ (5) -- --
------ ------ ------
473 1,700 722
Deferred:
Federal................................................ 2,767 (642) 2,629
State.................................................. 18 (113) 371
Foreign................................................ 272 -- --
------ ------ ------
3,057 (755) 3,000
------ ------ ------
Total.......................................... $3,530 $ 945 $3,722
====== ====== ======
</TABLE>

On December 30, 1994, Schawk, Inc. recorded a $3,000 deferred income tax
charge related to the termination of the S Corporation status of the Old Schawk
Companies. The 1995 income tax provision includes a benefit of $1,632 for
utilization of net operating loss carryforwards for which no tax benefit was
previously recorded.

Components of deferred income tax assets and liabilities (continuing
operations in 1996) are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Current deferred income taxes:
Inventory................................................. $ 51 $ 256
Accruals and reserves not currently deductible............ 539 2,045
Other..................................................... -- (797)
------- -------
Net current asset........................................... $ 590 $ 1,504
======= =======
Noncurrent deferred income taxes:
Depreciation.............................................. $ 667 $(1,253)
Property and equipment acquisition basis differences...... (1,537) (3,040)
Net operating losses and other credit carryforwards....... -- 1,100
Other..................................................... (2,317) (993)
Valuation allowance....................................... -- (550)
------- -------
Noncurrent liability........................................ $(3,187) $(4,736)
======= =======
</TABLE>

F-14
<PAGE> 60

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

A reconciliation between the provision for income taxes for continuing
operations computed by applying the federal statutory tax rate to income before
income taxes and minority interest and the actual provision is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1995 1994
----- ------ ------
<S> <C> <C> <C>
Income taxes at statutory rate.............................. 34.0% 34.0% 34.0%
Income exempt from income tax............................... -- -- (34.0)
Net operating loss carryforward not previously benefited.... -- (22.5) --
Nondeductible expenses...................................... 1.7 -- --
State income taxes.......................................... 4.4 2.3 4.5
Deferred tax related to S Corporation termination........... -- -- 18.8
Other....................................................... (1.1) (0.8) --
---- ----- -----
39.0% 13.0% 23.3%
==== ===== =====
</TABLE>

The undistributed earnings of foreign subsidiaries were approximately $402
at December 31, 1996. No income taxes are provided on the undistributed earnings
because they are considered permanently invested. The foreign component of
income before income taxes and minority interest was $669 for 1996 (there was no
foreign component of income before taxes and minority interest in 1995 and
1994.)

Income taxes paid during the years ended December 31, 1996, 1995 and 1994
were approximately $3,702, $1,379 and $959, respectively.

NOTE 11. LEASES AND COMMITMENTS

The Company leases land and a building from an unrelated party. This lease
requires monthly installments of approximately $48 through January 2010. A
related party has an option to purchase the land and building in January 2000.

The Company also leases land and a building from a related party, with
monthly installments of approximately $32 through June 2002. The agreement
contains an option to purchase the land and building at the end of the lease for
90% of fair market value at the end of the lease. The Company is required to pay
utilities, real estate taxes, and insurance on the property on both leases.
These leases are recorded as capital leases.

The Company also leases various plant facilities and equipment under
noncancellable operating leases that expire at various dates through February
2010. Total rent expense incurred under all operating leases was approximately
$660, $1,076 and $808 for the years ended December 31, 1996, 1995 and 1994,
respectively.

F-15
<PAGE> 61

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Future minimum payments under leases with terms of one year or more are as
follows at December 31, 1996:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1997........................................................ $ 959 $ 766
1998........................................................ 959 284
1999........................................................ 959 178
2000........................................................ 959 228
2001........................................................ 959 169
Thereafter.................................................. 4,860 503
------ ------
9,655 $2,128
======
Less: Amounts representing interest......................... 3,979
------
5,676
Less: Current portion....................................... 391
------
$5,285
======
</TABLE>

NOTE 12. EMPLOYEE BENEFIT PLANS

The Company has various defined-contribution plans for the benefit of its
employees. The plans provide a 100% match of employee contributions ranging from
2% to 5% of wages (as defined) depending on the division. Contributions to the
plans were $435 (continuing operations only), $1,534 and $1,516 in 1996, 1995
and 1994, respectively.

The Company is required to contribute to certain defined-contribution union
pension plans under various labor contracts covering union employees. Pension
expense related to the union plans of continuing operations, which is determined
based upon payroll data, was approximately $545, $566, and $558 in 1996, 1995
and 1994, respectively.

NOTE 13. STOCK/EQUITY OPTION PLANS

The Company has an Equity Option Plan that provides for the granting of
options to purchase up to 2,252 shares of Class A Common Stock to key employees.
The Company also adopted an Outside Directors' Formula Stock Option Plan
authorizing grants thereunder of options to purchase shares of Class A Common
Stock to nonemployee directors. In addition, options totaling 192 shares were
granted to former employees. Options granted under these plans have an exercise
price equal to the market price of the underlying stock at the date of grant and
are exercisable for a period of ten years from the date of grant and vest over a
three-year period.

F-16
<PAGE> 62

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

A summary of options outstanding at the end of each of the three years
ended December 31, 1996, 1995 and 1994, and other data for the three years then
ended under all option plans, including options granted to the Employees' Stock
Bonus Plan and Trust, follows:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
TO PURCHASE CLASS A WEIGHTED AVERAGE
COMMON STOCK OF EXERCISE PRICE
------------------- -----------------
<S> <C> <C>
Balance, December 31, 1993......................... 846 $8.17
Granted............................................ 364 9.64
Exercised.......................................... (22) 6.00
Canceled........................................... (258) 6.08
-------
Balance, December 31, 1994......................... 931 9.37
Granted............................................ 146 7.82
Exercised.......................................... -- --
Canceled........................................... (27) 9.78
-------
Balance, December 31, 1995......................... 1,050 9.11
Granted............................................ 185 7.14
Exercised.......................................... (10) 6.00
Canceled........................................... (53) 9.47
-------
Balance, December 31, 1996......................... 1,172 $8.80
</TABLE>

The following table summarizes information concerning outstanding and
exercisable options at December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------ -------------------------
WEIGHTED
AVERAGE WEIGHTED
RANGE OF REMAINING WEIGHTED AVERAGE OF
EXERCISE NUMBER CONTRACTUAL AVERAGE NUMBER EXERCISABLE
PRICE OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE PRICE
- -------- ----------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$6-$9 682 6.2 $ 7.17 519 $ 7.14
9-12 361 7.1 9.76 361 9.76
12-15 129 1.2 14.78 129 14.78
----- -----
1,172 1,009
</TABLE>

Options available for grant under the plans were 588, 773, and 920, at
December 31, 1996, 1995 and 1994, respectively.

The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25), in accounting for its
employee stock options because, as discussed below, the alternative fair value
accounting provided for under FASB statement No. 123, "Accounting for Stock-
Based Compensation," requires the use of option-valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of the Company's employee stock options approximates the market
price of the underlying stock on the date of grant, no compensation is
recognized. Pro forma information regarding net income and earnings per share is
required by Statement 123 as if the Company has accounted for its employee stock
options granted subsequent to December 31, 1994, under the fair value method of
that Statement. For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options vesting period.

F-17
<PAGE> 63

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The Company's pro forma information follows:

<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Net income from continuing operations....................... $5,526 $6,298
Pro forma net income from continuing operations............. $5,397 $6,257
Earnings per share from continuing operations............... $ 0.22 $ 0.26
Pro forma earnings per share from continuing operations..... $ 0.21 $ 0.26
</TABLE>

Because Statement 123 is applicable only to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until 1997.

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option valuation model with the following assumptions:

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Expected dividend yield.................................... 3.0% 3.0%
Expected stock price volatility............................ 39.7% 31.7%
Risk-free interest rate range.............................. 5.5% - 6.6% 6.4% - 7.7%
Weighted-average expected life of options.................. 7 years 7 years
</TABLE>

Option valuation models require the input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate in management's
opinion, the existing method does not necessarily provide a reliable single
measure of the fair value of its employee stock options.

In March 1997, the Company paid $794 to Plastics Group employees and
canceled 610 options in connection with the sale of the Plastics Group. The cash
paid was included in the loss on disposal of discontinued operations presented
in the statement of operations for the year ended December 31, 1996.

NOTE 14. DISCONTINUED OPERATIONS

On December 30, 1994, the Old Schawk Companies merged with and into
Filtertek, the Plastics business segment (the Merger). Pursuant to the Merger,
Filtertek issued an aggregate of 16,245,399 shares of Class A Common Stock,
22,000 shares of Series A preferred stock, and 5,207 shares of Series B
preferred stock to the stockholders of the Old Schawk Companies, and the shares
of Filtertek's Class A Common Stock previously held by Old Schawk (which had a
controlling interest prior to the Merger) were canceled.

Because Old Schawk owned a controlling interest of Filtertek prior to the
Merger, AICPA Accounting Interpretation 26 of Accounting Principles Board
Opinion No. 16 required that the Merger be accounted for as if the Old Schawk
Companies acquired all the remaining Class A Common Stock of Filtertek.

The Company's consolidated balance sheet beginning December 31, 1994,
reflects the accounting as described in the previous paragraph as of the date of
the Merger and includes purchase accounting adjustments for the portion of
Filtertek (40%) not owned by Old Schawk prior to the Merger.

On February 7, 1997, the Company sold its Plastics business segment for
cash proceeds of $92 million plus or minus working capital adjustments. The
Company recorded a loss of $33 million to adjust the carrying value of the net
assets of this business to net realizable value at December 31, 1996, and to
reflect the related settlement of stockholder litigation. The consolidated
statements of operations for 1996, 1995 and 1994 have been restated to segregate
the discontinued operations, and the accounts of the discontinued operations
have been segregated in the balance sheet at December 31, 1996.

F-18
<PAGE> 64

SCHAWK, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following is a summary of the Plastics business segment historical
results:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Net sales............................................. $77,752 $85,086 $82,256
Operating income...................................... 3,572 2,615 3,964
Income taxes.......................................... 118 209 127
Income from discontinued operations (net of minority
interest of $1,717 in 1994)......................... 2,490 638 1,200
</TABLE>

The difference between the income tax expense of the Plastics Group at the
federal statutory rate and the actual rate is due to nondeductible amortization
and depreciation of purchase accounting adjustments and the lower tax rates of
its Puerto Rico and European divisions.

NOTE 15. EARNINGS PER SHARE

Earnings per share for 1996 and 1995 is computed by dividing net income
less preferred dividends (of $1,250 and $1,360, respectively) by the weighted
average number of common shares outstanding and common stock equivalents that
are primarily stock options. Fully diluted earnings per share is not different
than primary earnings per share.

Historical earnings per share for 1994 is computed by dividing net income
adjusted only for pro forma income taxes by the historical weighted-average
number of common shares outstanding of the Old Schawk Companies. The historical
earnings per share for 1994 adjusted only for pro forma income taxes is as
follows:

<TABLE>
<S> <C>
Net income.................................................. $ 13,469
Pro forma income taxes...................................... 7,071
Pro forma net income adjusted only for income taxes......... 10,247
Primary and fully diluted common shares outstanding......... 507,328
Primary and fully diluted earnings per share adjusted only
for income taxes.......................................... $ 20.20
</TABLE>

Because of the Merger with Filtertek on December 30, 1994, the Company does
not consider the historical earnings per share calculation shown above to be
meaningful information.

F-19
<PAGE> 65

SCHAWK, INC.

CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
Assets
Current assets:
Cash and cash equivalents................................. $ 1,878
Short term investments.................................... 18,967
Trade accounts receivable, less allowance for doubtful
accounts of $598....................................... 22,012
Inventories............................................... 5,287
Prepaid expenses and other................................ 2,460
Deferred income taxes..................................... 472
--------
Total current assets........................................ 51,076
Marketable securities....................................... 33,354
Property and equipment, net................................. 27,795
Excess of cost over net assets acquired, less accumulated
amortization of $4,179.................................... 12,414
Other assets................................................ 4,912
--------
Total assets................................................ $129,551
========
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable.................................... $ 3,633
Accrued expenses.......................................... 9,819
Income taxes payable...................................... 7,654
Notes payable to banks.................................... 4,200
Current portion of long-term debt and capital lease
obligations............................................ 391
--------
Total current liabilities................................... 25,697
Long-term debt.............................................. 40,000
Capital lease obligations................................... 4,963
Other....................................................... 1,116
Deferred income taxes....................................... 4,372
Stockholders' equity:
Common stock.............................................. 159
Preferred stock........................................... --
Additional paid-in-capital................................ 78,318
Retained earnings (deficit)............................... (23,491)
Unrealized gain on available for sale securities.......... 1,558
Cumulative foreign currency translation adjustment........ (212)
--------
56,332
Treasury stock, at cost................................... (2,929)
--------
53,403
--------
Total liabilities and stockholders' equity.................. $129,551
========
</TABLE>

See accompanying notes.

F-20
<PAGE> 66

SCHAWK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Net sales................................................... $85,157 $63,881
Cost of sales............................................... 47,853 36,398
Selling, general, and administrative expenses............... 23,527 17,953
------- -------
Operating income............................................ 13,777 9,530
Other income (expense)
Interest and dividend income.............................. 2,149 326
Interest expense.......................................... (2,791) (3,299)
Other..................................................... 563 85
------- -------
(79) (2,888)
------- -------
Income from continuing operations before income taxes....... 13,698 6,642
Income tax provision........................................ 5,479 2,487
------- -------
Income from continuing operations........................... 8,219 4,155
Income from discontinued operations......................... -- 1,866
------- -------
Net income.................................................. 8,219 6,021
Preferred dividends......................................... 855 939
------- -------
Net income available for common shares...................... $ 7,364 $ 5,082
======= =======
Primary and fully diluted earnings per share:
Continuing operations..................................... $ 0.37 $ 0.17
Discontinued operations................................... -- 0.09
------- -------
Total....................................................... $ 0.37 $ 0.26
======= =======
Weighted average number of common and common equivalent
shares outstanding........................................ 19,879 19,463
Dividends per Class A common share.......................... $ 0.195 $ 0.195
</TABLE>

See accompanying notes.

F-21
<PAGE> 67

SCHAWK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 8,219 $ 6,021
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization............................. 5,309 11,759
Deferred income taxes..................................... 1,303 491
Gain realized on sale of marketable securities............ (567) --
Changes in operating assets and liabilities, net of
effects from acquisitions:
Trade accounts receivable.............................. (2,718) 2,851
Inventories............................................ (1,612) (2,274)
Prepaid expenses and other............................. 3,798 162
Trade accounts payable and accrued expenses............ (3,394) 426
Income taxes payable................................... (6,432) --
-------- --------
Net cash provided by operating activities................... 3,906 19,436
INVESTING ACTIVITIES
Proceeds from disposal of operating division................ 93,485 5,000
Proceeds from sale of marketable securities................. 2,789 --
Proceeds from disposal of property and equipment............ 441 --
Purchase of marketable securities........................... (52,985) --
Purchases of property and equipment......................... (5,458) (9,912)
Acquisitions, net of cash acquired.......................... -- (6,826)
Other....................................................... (749) (1,441)
-------- --------
Net cash provided by (used in) investing activities......... 37,523 (13,179)
FINANCING ACTIVITIES
Proceeds from long-term note collected...................... -- 4,034
Proceeds from sale of common stock.......................... 390 --
Proceeds from debt.......................................... -- 3,035
Principal payments on debt.................................. (27,886) (7,590)
Principal payments on capital lease obligations............. (322) --
Principal payments on notes payable to stockholders......... (5,765) --
Cash dividends.............................................. (4,723) (2,618)
Purchase of common stock.................................... (1,389) (1,269)
Other....................................................... (127) 70
-------- --------
Net cash used in financing activities....................... (39,822) (4,338)
Effect of foreign currency exchange rates................... (212) (397)
-------- --------
Net increase in cash and cash equivalents................... 1,395 1,522
Cash and cash equivalents beginning of period............... 483 1,917
-------- --------
Cash and cash equivalents end of period..................... $ 1,878 $ 3,439
======== ========
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:
Dividends issued in the form of Class A Common Stock........ $ 6 $ 2,104
Cash paid for interest...................................... 3,091 3,336
Cash paid for income taxes.................................. 10,876 2,689
Note received for sale of operating division................ -- 2,619
Class A Common Stock issued in connection with
acquisitions.............................................. -- 3,800
</TABLE>

See accompanying notes.

F-22
<PAGE> 68

SCHAWK, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

NOTE 1. BASIS OF PRESENTATION

The condensed consolidated financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes the disclosures included are adequate to make the
information presented not misleading. In the opinion of management, all
adjustments necessary for a fair presentation for the periods presented have
been reflected and are of a normal recurring nature. These financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto for the three years ended December 31, 1996.

The Company consummated the sale of its Plastics business segment on
February 7, 1997 for cash of $93,485 plus or minus working capital adjustments.
The Company recorded a loss of $33 million in the fourth quarter of 1996 to
adjust the carrying value of the net assets of this business to net realizable
value at December 31, 1996, and to reflect the related settlement of stockholder
litigation. The condensed consolidated statements of operations for the nine
months ended September 30, 1996 has been restated to segregate the discontinued
operations.

NOTE 2. INTERIM RESULTS

Results of operations for the interim periods are not necessarily
indicative of the results to be expected for the year.

NOTE 3. DESCRIPTION OF BUSINESS

Schawk, Inc. is a leading provider of digital imaging prepress services for
the consumer products industry in the United States and Canada. The Company
offers its clients a complete line of prepress services, digital image
management, digital photography and art production. The Company also provides
services for point-of-sale, advertising and direct mail.

NOTE 4. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
Raw materials............................................... $1,336
Work in process............................................. 4,686
------
6,022
Less: LIFO reserve.......................................... (735)
------
$5,287
======
</TABLE>

F-23
<PAGE> 69

SCHAWK, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
Land and improvements....................................... $ 522
Building and improvements................................... 7,794
Machinery and equipment..................................... 52,828
Leasehold improvements...................................... 3,209
Building and improvements under capital leases.............. 7,500
--------
71,853
Accumulated depreciation and amortization................... (44,058)
--------
$ 27,795
========
</TABLE>

NOTE 6. EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings Per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact is not expected to have a material
impact on primary or fully diluted earnings per share for the nine-month period
ended September 30, 1997.

NOTE 7. INVESTMENTS

The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 115, Accounting for Certain Investments in Debt and Equity Securities, which
requires that investments in debt securities and marketable equity securities be
designated as trading, held-to-maturity or available-for-sale. Management
determines the appropriate classification of its securities at the time of
purchase and reevaluates such designation as of each balance sheet date. At
September 30, 1997 all of the Company's investments were classified as available
for sale. Unrealized appreciation on these securities totaled $2,597 ($1,558 net
of tax effects) at September 30, 1997 and is included as a separate component of
stockholders' equity. Available-for-sale securities are carried at fair value,
with unrealized gains and losses, net of income taxes, reported in a separate
component of stockholders' equity. Realized gains and losses and declines in
value judged to be other-than-temporary on available for sale securities are
included in investment income. The cost of securities sold is based on the
specific identification method. Interest and dividends on securities classified
as available-for-sale are included in investment income.

The following table is a summary of available for sale securities at
September 30, 1997:

<TABLE>
<CAPTION>
GROSS
UNREALIZED ESTIMATED
COST GAINS FAIR VALUE
------- ---------- ----------
<S> <C> <C> <C>
Equity securities and equity mutual funds.............. $ 8,297 $2,158 $10,455
U.S. Treasury and U.S. Government notes................ 6,323 23 6,346
Corporate bonds........................................ 3,285 15 3,300
Bond mutual funds...................................... 31,819 401 32,220
------- ------ -------
$49,724 $2,597 $52,321
======= ====== =======
</TABLE>

F-24
<PAGE> 70

SCHAWK, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

During the nine-month period ended September 30, 1997 marketable equity
available-for-sale securities were sold with a fair value at date of sale of
$2,789 with a gross realized gain of $567.

The following table is a summary of available-for-sale securities by
maturity date:

<TABLE>
<CAPTION>
ESTIMATED
COST FAIR VALUE
------- ----------
<S> <C> <C>
Due in one year or less..................................... $20,077 $20,245
Due after one year through five years....................... 20,841 21,107
Due after five years through ten years...................... 509 514
------- -------
Total debt securities....................................... 41,427 41,866
Equity securities........................................... 8,297 10,455
------- -------
$49,724 $52,321
======= =======
</TABLE>

Amounts shown as short-term investments on the balance sheet at September
30, 1997 represent management's estimates of amounts available for current
operations.

F-25
<PAGE> 71

============================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................... 3
Incorporation of Certain Information by
Reference................................. 3
Cautionary Statement Regarding
Forward-Looking Information............... 4
Prospectus Summary.......................... 5
Risk Factors................................ 9
The Company................................. 14
Use of Proceeds............................. 15
Price Range of Class A Common Stock......... 16
Dividend Policy............................. 17
Capitalization.............................. 18
Selected Consolidated Financial Data........ 19
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 20
Business.................................... 26
Management.................................. 36
Principal and Selling Stockholders.......... 38
Certain Transactions........................ 39
Description of Capital Stock................ 40
Shares Eligible for Future Sale............. 43
Underwriting................................ 44
Legal Matters............................... 45
Experts..................................... 45
Index to Consolidated Financial
Statements................................ F-1
</TABLE>

============================================================

3,000,000 SHARES

[SCHAWK LOGO]

CLASS A COMMON STOCK

---------------------------

PROSPECTUS

FEBRUARY 3, 1998

---------------------------
LEHMAN BROTHERS

MCDONALD & COMPANY
SECURITIES, INC.

============================================================