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Checkpoint Systems Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2010 12:39PM
Checkpoint Systems Inc. (CKP) filed Quarterly Report for the period ended 2010-09-26.
Highlight of Business Operations:
During 2009, we initiated a plan focused on reducing our overall operating expenses by consolidating certain administrative functions to improve efficiencies. The first phase of this plan was implemented in the fourth quarter of 2009 with subsequent phases initiated during the first nine months of 2010. In September 2010, we announced the remaining phases of the plan in which we anticipate the total plan to result in restructuring charges of approximately $20 million to $25 million, or $0.49 to $0.62 per diluted share. We expect implementation of this program to be substantially complete by the end of 2011 and to result in total cost savings of approximately $20 million to $25 million. We expect to realize approximately $15 million to $17 million of the total cost savings in 2011 and the remainder of the savings in 2012.
In August 2008, we announced a manufacturing and supply chain restructuring program designed to accelerate profitable growth in our ALS business and to support incremental improvements in our EAS systems and labels businesses. We anticipate this program to result in total restructuring charges of approximately $4 million to $5 million, or $0.10 to $0.12 per diluted share. We expect implementation of this program to be substantially complete by the end of 2010 and to result in annualized cost savings of approximately $6 million.
Shrink Management Solutions revenues increased $6.3 million, or 4.5%, during the third quarter of 2010 compared to 2009. Foreign currency translation had a negative impact of approximately $3.5 million. The remaining revenue increase was due to growth in our Alpha business and CheckView® business of $14.0 million and $3.6 million, respectively. The increase was partially offset by decreases in our EAS consumables, EAS systems, Library, and Merchandise Visibility (RFID) business of $4.0 million, $3.2 million, $0.3 million and $0.3 million, respectively.
Our Alpha business revenues increased $14.0 million during the third quarter of 2010 as compared to the third quarter of 2009. The increase was due to increases in revenues in all regions, including $7.8 million in the U.S., $4.7 million in Europe, $0.9 million in Asia, and $0.6 million in International Americas. The increase in the U.S. was primarily due to an increase in volumes with several large chain customers. The increases in Europe and Asia were the result of a general increase in demand for Alpha products as market conditions for high theft prevention products improved during the third quarter of 2010. The increase in Europe was also due to new large chain customer orders in the U.K. in the third quarter of 2010, with no such comparable orders during 2009. The increase in International Americas was primarily due to a new large chain customer order in Mexico in the third quarter of 2010 with no such comparable orders during 2009.
Apparel Labeling Solutions revenues increased $3.8 million, or 10.9%, during the third quarter of 2010 as compared to the third quarter of 2009. Foreign currency translation had a negative impact of approximately $1.5 million. Included in the third quarter of 2010 were $4.6 million of non-comparable Brilliant revenues since our Brilliant business was acquired in August 2009. The remaining increase of $0.7 million was due primarily to an increase in Europe of $1.4 million as a result of higher demand from our apparel retailer customers, partially offset by a decrease in the U.S. of $0.7 million due to a large customer order in 2009 coupled with the delay of a large customer order until the fourth quarter of 2010.
Retail Merchandising Solutions (“RMS”) revenues decreased $0.9 million, or 4.9%, during the third quarter of 2010 as compared to the third quarter of 2009. Foreign currency translation had a negative impact of approximately $1.2 million. The remaining increase of $0.3 million in our RMS business was due to an increase in revenues of hand-held labeling systems (“HLS”) of $0.5 million, partially offset by a decrease in revenues from retail display systems (“RDS”) of $0.2 million. HLS revenues increased due to an increase in sales to a large customer in Malaysia and due to a new customer order in Italy. RDS declined due to a general reduction of store remodel work in Europe as a result of the current economic environment. We anticipate RDS and HLS to continue to face difficult revenue trends in 2010 due to the impact of current economic conditions on the RDS business and continued shifts in market demand for HLS products.