Information about Checkpoint Systems' use of non-GAAP financial information is provided under "Reconciliation of Non-GAAP Financial Measures in Accordance with SEC Regulation G” below.Selected Discussion and Analysis of Fourth Quarter 2012 Results
- Net revenues from continuing operations decreased 11.1% to $200.2 million, principally due to 9.5% organic decline in all segments. Foreign currency effects resulted in a 1.6% decrease in net revenues, driven principally by the strengthened dollar versus the euro.
- Gross profit margin was 39.3% compared with 41.1% for the fourth quarter of 2011. The decrease was principally due to lower gross margins in Shrink Management Solutions, notably in the EAS consumables and Merchandise Visibility (RFID) businesses where high margin transactions in 2011 were not repeated in 2012.
- Selling, general and administrative (SG&A) expenses were $61.4 million compared with $71.1 million in the fourth quarter of 2011. The fourth quarter of 2012 included savings totaling $7.1 million from the Expanded Global Restructuring Plan, including Project LEAN.
- Operating loss from continuing operations was $19.7 million compared with income of $8.3 million in the fourth quarter of 2011. Adjusted non-GAAP operating income from continuing operations excluding goodwill impairment expenses, restructuring expenses and other items was $14.0 million, or 7.0% of net revenues, compared with adjusted non-GAAP operating income of $18.2 million, or 8.1% of net revenues in the fourth quarter of 2011. (See accompanying Reconciliation of GAAP to Non-GAAP Financial Measures.)
- Restructuring expense was $1.3 million ($0.4 million non-cash) resulting from the implementation of the Expanded Global Restructuring Plan. Restructuring expense for this plan totals $66.0 million ($14.3 million non-cash) since inception.
- Income tax expense was $8.3 million compared with $20.8 million in the fourth quarter of 2011. Income taxes and effective income tax rates in both years were impacted by the valuation allowance on U.S. deferred tax assets initially recorded in the third quarter of 2011.
- Cash flow provided by operating activities was $41.0 million compared with $5.5 million in the fourth quarter of 2011.
- At December 30, 2012, cash and cash equivalents were $118.8 million compared with $93.5 million at December 25, 2011, and total debt was $113.3 million compared with $150.5 million at December 25, 2011. Capital expenditures were $2.0 million in the fourth quarter of 2012.
|(amounts in millions, except percents)||2012 Original Guidance||Discontinued Operations CheckView ®||2012 Adjusted Guidance|
|Non-GAAP operating income||0.6||%||1.0||%||(1.4||)%||0.8||%||1.3||%|
|Non-GAAP income taxes||$||7.5||$||5.5||$||0.2||$||7.3||$||5.3|
|Non-GAAP diluted loss per share attributable to Checkpoint Systems, Inc.||$||(0.19||)||$||(0.27||)||$||(0.03||)||$||(0.16||)||$||(0.24||)|