Checkpoint Systems' President and Chief Executive Officer, George Babich, said, “All three lines of business delivered better than expected revenues in the fourth quarter 2012. The previously announced realignment of the Global Sales organization increased our focus and execution and clearly contributed to a solid finish for the year, providing momentum entering 2013. Higher than expected revenue coupled with solid gross profit margins and reduced operating expenses drove operating income margins to the high end of our expectations and previous guidance. In addition, our commitment to better manage working capital resulted in free cash flow of $39 million that significantly exceeded expectations for the fourth quarter and full year.”
Mr. Babich continued, “Undoubtedly, the restructuring and cost savings programs initiated under our profit improvement plan, Project LEAN, were instrumental in improving fourth quarter results. Progress was made in each line of business as we stabilized the new organizational structure, continued to cut costs, improve execution and increase productivity. Previously announced new sales compensation plans that were put in place to drive sales of our electronic article surveillance consumable and Alpha ® products have begun to take effect. Our plans to capture global opportunities in the radio frequency identification (RFID) market continue to make progress as our Merchandise Visibilty™ Solutions business adds more tests throughout the world. And importantly, significant progress was made in Apparel Labeling Solutions, which underwent massive changes in 2012 to support our redefined strategy.”
The Company continues to expect that restructuring and cost savings initiatives that are part of the Expanded Global Restructuring Plan, which includes Global Restructuring Plan, including Project LEAN,and the SG&A Restructuring Plan will generate annual savings of approximately $102 million by the end of 2013. Incremental 2012 cost savings realized through the fourth quarter were $28.6 million, with $19.9 million of savings attributable to SG&A cost reduction actions. This is in addition to $17 million of total savings realized in 2011, of which $15 million was attributable to SG&A.