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Checkpoint Systems Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 4, 2011 11:17AM
Checkpoint Systems Inc. (CKP) filed Quarterly Report for the period ended 2011-03-27. Checkpoint Systems Inc. has a market cap of $759.7 million; its shares were traded at around $19.05 with a P/E ratio of 19.1 and P/S ratio of 0.9.
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 fiscal 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 $0.50 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.
Shrink Management Solutions (SMS) revenues decreased $4.0 million, or 3.0%, during the first quarter of 2011 compared to the first quarter of 2010. Foreign currency translation had a positive impact of approximately $1.1 million. The decrease in Shrink Management Solutions was due to declines in organic growth in EAS consumables, EAS systems, and Merchandise Visibility (RFID) of $5.8 million, $1.3 million, and $0.9 million, respectively. These decreases were partially offset by increases in other SMS businesses including $1.4 million in CheckView® and $1.1 million in Alpha.
During the first quarter of 2011, gross profit decreased $10.2 million, or 12.6%, from $80.6 million to $70.4 million. The positive impact of foreign currency translation on gross profit was approximately $0.3 million. Gross profit, as a percentage of net revenues, decreased from 43.0% to 38.1%.
As of March 27, 2011, our cash and cash equivalents were $188.6 million compared to $173.8 million as of December 26, 2010. Cash and cash equivalents increased in 2011 primarily due to $11.0 million of cash provided by operating activities and $1.7 million of cash provided by financing activities, partially offset by $4.6 million of cash used in investing activities.
Acquisition of property, plant, and equipment during the first three months of 2011 totaled $4.3 million compared to $3.1 million during 2010. During the first three months of 2011, our acquisition of property, plant, and equipment included $2.1 million of capitalized internal-use software costs related to an ERP system implementation, without a comparable amount during the first three months of 2010. We anticipate our remaining capital expenditures, used primarily to upgrade information technology and improve our production capabilities, to approximate $31 million in 2011.
On December 30, 2009, we entered into a new Hong Kong banking facility. The banking facility includes a trade finance facility, a revolving loan facility, and a term loan. The maximum availability under the facility is $7.9 million (HKD 61.6 million). The banking facility is secured by all plant, machinery, fittings and equipment. The book value of the collateral as of March 27, 2011 is $8.1 million (HKD 63.5 million). As of March 27, 2011, the Company has outstanding $4.3 million (HKD 33.6 million) against the term loan, $2.0 million (HKD 15.6 million) against the trade finance facility, and $0.4 million (HKD 3.0 million) against the revolving loan facility. The banking facility is subject to the bank s right to call the liabilities at any time, and is therefore included in short-term borrowings in the accompanying Consolidated Balance Sheets.
Stocks Discussed: CKP,