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Checkpoint Systems Inc. Reports Operating Results (10-Q)

May 04, 2010 | About:
10qk

10qk

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Checkpoint Systems Inc. (CKP) filed Quarterly Report for the period ended 2010-05-04.

Checkpoint Systems Inc. has a market cap of $905.9 million; its shares were traded at around $23.17 with a P/E ratio of 25.2 and P/S ratio of 1.2. Checkpoint Systems Inc. had an annual average earning growth of 0.8% over the past 10 years.CKP is in the portfolios of Westport Asset Management, Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

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 $3 million to $4 million, or $0.08 to $0.10 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 by $16.6 million, or 14.7%, during the first three months of 2010 compared to 2009. Foreign currency translation had a positive impact of approximately $5.3 million. The remaining revenue increase was due to growth in our EAS consumables business, Alpha business, and RFID business of $11.0 million, $9.9 million, and $0.5 million, respectively. The increase was partially offset by decreases in our EAS systems, Library business, and CheckView® business of $8.5 million, $0.9 million, and $0.7 million, respectively.

CheckView® revenues decreased $0.7 million during the first quarter of 2010 as compared to the first quarter of 2009. The CheckView® business declined primarily due to decreased revenue in the U.S. and Asia of $1.4 million and $0.3 million, respectively. The decrease in the U.S. revenues was the result of fewer new store openings during the first quarter of 2010 compared to the first quarter of 2009, which was partially offset by an increase in our Banking business. The decrease in Asia was the result of fewer new store openings in Japan during the first quarter of 2010 compared to the first quarter of 2009. The decreases in the U.S. and Japan were partially offset by a $0.8 million increase in International Americas. The increase in International Americas revenues was due to a new large chain roll-out in Canada during the first quarter of 2010 with no such comparable roll-out during 2009.

Apparel Labeling Solutions revenues increased by $11.9 million, or 42.0%, during the first quarter of 2010 as compared to the first quarter of 2009. Foreign currency translation had a positive impact of approximately $1.1 million. Apparel Labeling Solutions benefited $7.6 million during the first quarter of 2010 due to our Brilliant business which was acquired in August 2009. The remaining increase of $3.2 million was due primarily to increases in Europe and the U.S. as a result of higher demand from our apparel retailer customers.

Retail Merchandising Solutions revenues totaled $17.8 million during the first quarter of 2010 and 2009, respectively. Foreign currency translation had a positive impact of approximately $1.5 million. The remaining decrease of $1.5 million in our RMS business was due to a decrease in our revenues from RDS of $1.3 million and a decrease in revenues of HLS of $0.2 million. 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.

As of March 28, 2010, our cash and cash equivalents were $152.6 million compared to $162.1 million as of December 27, 2009. Cash and cash equivalents decreased in 2010 primarily due to $4.4 million of cash used in operating activities and $3.0 million of cash used in investing activities, partially offset by $3.2 million of cash provided by financing activities. Cash provided by operating activities was $28.2 million less during the first quarter of 2010 compared to the first quarter of 2009. In 2010, our cash from operating activities was impacted negatively by increases in inventory and accounts receivable and a decrease in unearned revenues, which was partially offset by an increase in accounts payable. Inventory increased due to increased customer orders during the first quarter of 2010 compared to the first quarter of 2009. Accounts receivable increased due to increased sales during the first quarter of 2010 compared to the first quarter of 2009. Unearned revenues decreased due to the fulfillment of customer orders during the first quarter of 2010 associated with our hard tag at source program. Accounts payable increased due to increased purchases of inventory during the first quarter of 2010. Cash used in investing activities was $6.7 million less during the first quarter of 2010 compared to the first quarter of 2009. This was primarily due to a $6.8 million Alpha payment that was made during the first quarter of 2009. Cash provided by financing activities was $2.7 million greater in the first quarter of 2010 compared to the first quarter of 2009. The increase was primarily due to proceeds from short-term debt and proceeds received from stock issuances, which was partially offset by payments of short-term debt.

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