Gross profit was $41.9 million in the second quarter of 2011, a decrease of $4.9 million from the second quarter of 2010. Second-quarter 2011 gross profit as a percentage of sales decreased to 37.0 percent from 39.7 percent in the 2010 second-quarter period. The decline in gross profit percent was largely driven by the reduced operating leverage resulting from the lower period-over-period revenue.
Selling, general and administrative (SG&A) expenses decreased approximately $0.4 million to $30.0 million in the second quarter of 2011 from $30.4 million in the second quarter of 2010 principally driven by lower revenue year over year.
During the second quarter of 2011, the Company reported business and systems integration expenses of $2.1 million compared to $0.2 million in the prior-year comparable period. As previously disclosed, these expenses relate to the Company's ongoing information technology and business process improvement initiative.
Acquisition integration and restructuring expenses increased from $0.5 million in the second quarter of 2010 to $0.7 million in the second quarter of 2011. The charges in the 2011 second quarter arose from the Company's continued focus on consolidating, reducing and re-aligning its work force and operations and are for employee terminations and other associated costs. These actions are expected to result in annualized savings of approximately $0.9 million, with approximately $0.6 million to be realized during 2011.
Additionally, the Company recorded expense of $1.8 million during the quarter as a result of its decision to terminate participation in a union supplemental retirement and disability fund in California.
The Company reported operating income of $7.0 million in the 2011 second quarter compared to $16.0 million in the second quarter of 2010. The decrease in operating income compared to the prior-year period was primarily the result of the decrease in gross margin driven by lower revenue coupled with increased business and systems integration expenses and pension withdrawal expenses.
The Company reported income tax expense of $1.8 million for the second quarter of 2011 compared to an income tax benefit of $1.6 million in the second quarter of 2010. The increase in tax expense over the prior-year period was primarily due to discrete period tax benefits from the release of uncertain tax positions in the second quarter of 2010.
Net income in the second quarter of 2011 was $4.0 million, or $0.15 per diluted share, compared to $15.8 million, or $0.61 per diluted share, in the second quarter of 2010. Excluding the after-tax effects of certain financial impacts detailed within the non-GAAP tables at the end of this earnings release, second-quarter 2011 Adjusted net income was $6.9 million, or $0.26 per diluted share, compared to $10.4 million, or $0.40 per diluted share, on a comparable basis for the prior-year period.
Adjusted EBITDA and Management Adjusted EBITDA Performance Adjusted EBITDA for the second quarter of 2011 was $12.1 million compared to $21.0 million for the second quarter of 2010. Management adjusted EBITDA for the second quarter of 2011 was $17.0 million compared to $21.4 million for the second quarter of 2010. Please refer to the "Reconciliation of Non-GAAP Adjusted EBITDA and Management Adjusted EBITDA" table attached at the end of this earnings release for a reconciliation of these measures.
Conference Call Schawk invites you to join its second-quarter 2011 earnings conference call on Thursday, August 4, 2011, at 9:00 a.m. Central time. To participate in the conference call, please dial 800-259-0251or 617-614-3671 at least five minutes prior to the start time and ask for the Schawk, Inc. conference call, or on the Internet, go to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=82169&eventID=4159865 . If you are unavailable to participate on the live call, a replay will be available through August 11 at 11:59 p.m. Central time. To access the replay, dial 888-286-8010 or 617-801-6888, enter conference ID 49017471, and follow the prompts. The replay will also be available on the Internet for 30 days at the following address http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=82169&eventID=4159865.