GAAP restructuring expenses in the fourth quarter were $1.3 million, of which $0.4 million is attributable to non-cash asset impairments. To date, the Expanded Global Restructuring Plan, has recorded $66.0 million in expenses, including $44.8 million in severance and other employee-related charges, $6.8 million in other non-employee related restructuring costs as well as $14.3 million in non-cash asset impairments associated with facilities rationalization and closures. To-date, cumulative headcount reductions from the Expanded Global Restructuring Plan total 1,850 of the approximately 2,400 employees expected to be affected by the plan.

Working Capital, Free Cash Flow and Debt Covenants

Operating income coupled with the impact of working capital initiatives introduced in the second quarter of 2012 generated $39.0 million in free cash flow in the fourth quarter and $49.8 million for the full year. Fourth quarter cash flow was enhanced by the receipt of a $4.7 million insurance settlement against fraudulent activity in Checkpoint's Canadian operations discovered in December 2011. This, plus $3.4 million in proceeds from the sale of non-strategic operations including our Suzhou, China subsidiary and the Banking Security Systems Integration business unit more than offset the $7.2 million in fourth quarter cash expenditures for restructuring, resulting in a cash balance of $118.8 million at year end.

Ray Andrews, Senior Vice President and Chief Financial Officer noted, “Fourth quarter operating results and tight cash and working capital management enabled us to complete the quarter well within the Company's amended debt covenant ratios while not increasing debt. Our focus on improving inventory, accounts receivable and accounts payable resulted in a net improvement in cash flow of $34.6 million since June 2012. This is excellent progress toward our goal of a $50 million to $60 million improvement by June 2013.”

Remediation of Material Weakness

Mr. Andrews noted, “As of December 25, 2011, Company management concluded that we did not maintain effective controls to prevent or detect management override of controls at foreign subsidiaries that were not integrated into our shared service environments in the United States and Europe. The Company's actions during 2012 to implement a program to enhance the annual risk assessment process and treasury controls as well as increase the frequency and scope of detailed reviews of financial transactions and reconciliations at all of our subsidiaries remediated and cured the material weakness.”

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