Checkpoint Systems, Inc. (NYSE: CKP) today reported
financial results for the second quarter ended June 30, 2013.
Second Quarter GAAP Results:
Net revenues from continuing operations in the second quarter of
2013 decreased 3.1%, 2.5% on a constant dollar basis, to $172.0
million from $177.6 million in the second quarter of 2012. During
the quarter, gross profit margins were 40.5% compared with 39.7% in
the 2012 second quarter.
Selling, general, and administrative (SG&A) expenses in the
second quarter of 2013 decreased $8.4 million or 12.8% to $56.9
million from $65.2 million in the second quarter of 2012. The
second quarter of 2013 included approximately $8.6 million of
additional cost reductions from the global restructuring programs
and continued tight expense control.
Operating income in the second quarter of 2013 was $6.5 million
compared with an operating loss of $84.5 million in the same period
last year. Operating expenses in the second quarter of 2013
included restructuring expenses ($1.6 million), management
transition expenses ($1.2 million), and Shore to Shore acquisition
costs associated with ongoing arbitration ($0.3 million). These
expenses were partially offset by the gain on sale of our interest
in the non-strategic Sri Lanka subsidiary ($0.2 million). The
second quarter of 2012 loss included goodwill impairment charges
($64.4 million), restructuring expenses ($21.3 million), management
transition expenses ($2.9 million), and acquisition costs ($0.1
million).
Foreign exchange loss was $2.0 million during the second quarter
of 2013 compared to $0.4 million during the second quarter of 2012.
The increased foreign exchange loss is primarily attributed to
dollar fluctuations versus currencies in emerging markets where
hedging is either impossible or impractical.
Net earnings from continuing operations during the second
quarter of 2013 were $0.03 per diluted share compared with a loss
of $2.24 per diluted share in the same period last year.
Second Quarter Adjusted non-GAAP Operating Income and
Earnings per Share:
Adjusted non-GAAP operating income from continuing operations
was $9.3 million in the second quarter of 2013 compared with $4.2
million in the same period last year. Adjusted non-GAAP net income
from continuing operations was $0.11 per share compared to a net
loss of $0.16 per share in the second quarter of 2012. The 2013
non-GAAP results exclude restructuring expenses ($1.2 million, net
of tax), management transition expenses ($1.2 million, net of tax),
a make-whole premium on debt ($0.6 million, net of tax), a
valuation allowance adjustment ($0.3 million) acquisition costs
($0.3 million, net of tax), and the gain on sale of our interest in
the non-strategic Sri Lanka subsidiary ($0.2 million, net of tax).
The 2012 results exclude the goodwill impairment charges ($64.4
million, net of tax), restructuring expenses ($17.0 million, net of
tax), management transition expenses ($2.9 million, net of tax), a
valuation allowance adjustment ($0.5 million), and acquisition
costs ($0.1 million, net of tax).
Checkpoint Systems' President and Chief Executive Officer,
George Babich, said, “Revenues in the quarter tracked in line with
our expectations. The main drivers of revenue continued to be
worldwide installations of electronic article surveillance (EAS)
systems. In addition, increased demand drove better than expected
sales in our Hard Tag @ Source™ program and EAS consumables.
Offsetting this was lower demand for our Alpha® high-theft
solutions as certain customers temporarily pulled back orders in
the quarter and an expected decrease in our non-strategic library
business due to the expiration of a licensing agreement in the
U.S.
“In Apparel Labeling Solutions (ALS), despite a 7.1% decline in
revenues, quarter over quarter, which was largely attributable to
mid- 2012 through 2013 actions to streamline operations, we
continued to see strong demand from our key accounts and revenue
was in line with our expectations. Our ALS business has undergone
the most far-reaching changes this past year in order to be
correctly sized and to support our merchandise availability
strategy. As the operations stabilize, the focus is on process
improvement to regain the trust of customers and recapture lost
business.
“Revenues in Retail Merchandising Solutions were also in line
with expectations, reflecting better than expected performance from
our franchise partners tempered by economic softness in
Europe.”
Mr. Babich continued, “Gross margins in the quarter improved
modestly over the previous year's quarter, reflecting improved
manufacturing efficiencies, notably in our ALS and EAS consumables
businesses. Margin improvement remains a top priority in all of our
operations to ensure that we deliver profitable sales.”
Mr. Babich concluded, “Checkpoint has made steady progress from
a year ago when our plans to improve our profitability were first
laid out. These plans included redefining our strategic direction,
expanding global restructuring to generate annual savings of $35
million in addition to the $67 million previously identified, and a
commitment to improve working capital management by $50 million to
$60 million. We are pleased to report that the latter objective has
been met and we expect to achieve targeted annual cost savings by
year end.
"The next step in our plan was to stabilize revenues in 2013. We
expected a slight decline in the first half of the year followed by
growth in the second half. In fact first half revenue increased as
compared with adjusted 2012 first half results. Demand for our core
theft protection solutions remains strong supporting our goal to be
a front runner in this business and our Merchandise Visibility™
(RFID) business is on plan to more than double in 2013. Several
retailers are expanding their RFID testing parameters or scaling up
projects into multi-store deployments. Based on our order pipeline,
we anticipate a strong second half of the year for this
business.
"Finally, despite incurring approximately $2.6 million, or $0.06
EPS in unfavorable foreign exchange through the first half of the
year, we are pleased to reaffirm our full year EPS guidance of
$0.65 to $0.75 per share.”
Global Restructuring
We continue to expect that restructuring and cost savings
initiatives under the Expanded Global Restructuring Plan will
generate annual savings in cost of goods sold and SG&A of
approximately $102 million by the end of 2013. The restructuring
initiatives lowered costs in the second quarter of 2013 by an
additional $14.5 million when compared with the reductions achieved
through the second quarter of 2012, with $8.6 million of the
additional reductions attributable to SG&A. Cost reductions
since the inception of the restructuring plan total $78.0 million,
with $55.5 million attributable to SG&A.
GAAP restructuring expenses in the second quarter of 2013 were
$1.6 million. To date, the Expanded Global Restructuring Plan has
recorded $69.6 million in expenses, including $46.1 million in
severance and other employee-related charges, $15.0 million in
non-cash asset impairments associated with facilities
rationalization and closures as well as $8.5 million in
non-employee-related restructuring costs. To date, headcount
reductions from the Expanded Global Restructuring Plan total 2,482
of the approximately 2,500 positions expected to be affected by the
plan.
Working Capital, Free Cash Flow and Debt Covenants
We generated $1.9 million in free cash flow in the second
quarter of 2013. Our focus on improving inventory, accounts
receivable and accounts payable resulted in a net improvement in
those components of cash flow of $75.8 million since June 2012,
significantly exceeding the goal of a $50 million to $60 million
year-over-year improvement.
Jeff Richard, Executive Vice President and Chief Financial
Officer noted, “Exceeding a stated goal is always gratifying and we
are delighted to highlight the improvements made by our teams in
managing inventories, receivables and payables.
“We completed the second quarter well within our amended debt
covenant ratios and we expect this to continue through the
remainder of the year. Additionally, our strong cash position
combined with the sale of our 51% interest in the Apparel Labeling
Sri Lanka subsidiary enabled us to reduce our outstanding debt from
the end of the fourth quarter of 2012 by $17.1 million to $96.2
million at the end of the second quarter of 2013.”
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 Second Quarter 2013
Results
- Net revenues decreased 3.1% to $172.0
million compared with $177.6 million for the second quarter of
2012, principally due to a 2.5% organic decrease. Foreign currency
effects resulted in a 0.6% decrease in net revenues, driven
principally by the strengthened dollar versus the euro.
- Gross profit margin was 40.5% compared
with 39.7% for the second quarter of 2012. The increase was
principally due to higher gross margins in Shrink Management
Solutions (SMS), notably in the EAS consumables and Alpha®
businesses, and ALS.
- SG&A expenses were $56.9 million
compared with $65.2 million in the second quarter of 2012. The
second quarter of 2013 included cost reductions totaling
approximately $8.6 million from the Expanded Global Restructuring
Plan, including Project LEAN.
- Operating income was $6.5 million
compared with a loss of $84.5 million in the second quarter of
2012.
- Non-GAAP operating income excluding
restructuring expenses, management transition expenses, acquisition
costs, and the gain on sale of our interest in the non-strategic
Sri Lanka subsidiary was $9.3 million, or 5.4% of net revenues,
compared with non-GAAP operating income of $4.2 million, or 2.4% of
net revenues, in the second quarter of 2012. (See accompanying
Reconciliation of GAAP to Non-GAAP Financial Measures.)
- Restructuring expense was $1.6 million
resulting from the Expanded Global Restructuring Plan, including
Project LEAN. Restructuring expense since its inception totals
$69.6 million ($15.0 million non-cash).
- The effective tax rate for the second
quarter of 2013 was 37.4% as compared with negative 6.5% for the
second quarter of 2012. The second quarter of 2013 effective tax
rate was high due to the mix of income among subsidiaries and a
valuation allowance of $0.3 million recorded on Portugal's net
deferred tax assets. The 2013 rate was also impacted by losses in
countries with valuation allowances that do not result in a tax
benefit, causing the overall tax expense as a percentage of income
to increase. In the second quarter of 2013, we accounted for the
U.S. operations by applying an estimated annual effective-rate
methodology. We determined that if the U.S. operations are included
in the estimated annual effective tax rate, small changes in
estimated pretax earnings would no longer result in significant
fluctuations in the tax rate.
- Cash flow provided by operating
activities was $3.8 million compared with $4.1 million in the
second quarter of 2012.
- As of June 30, 2013, cash and cash
equivalents were $123.1 million compared with $118.8 million as of
December 30, 2012, and total debt was $96.2 million compared
with $113.3 million as of December 30, 2012. Capital
expenditures were $1.9 million in the second quarter of 2013.
Outlook for 2013
Based on an assessment of current market conditions, and
assuming continuation of current foreign exchange rates, we are
updating certain components of guidance for 2013, with the changes
noted below. This guidance does not include the impact of
acquisitions, divestitures, restructuring and one-time or unusual
charges resulting from debt refinancing, litigation, certain tax
reserves and gains or losses generated by non-routine operating
matters which we may record during the year.
Projected income taxes for the year can be impacted by changes
in the mix of pre-tax income and losses in the countries in which
we operate, which can also impact earnings per share. The valuation
allowance on U.S. deferred tax assets results in a GAAP tax rate on
U.S. pre-tax income or losses of essentially 0%. If the mix of
income or losses shifts from the U.S. to a country where the income
tax rate is in the normal range, that in some cases approaches 30%,
this can have a significant impact on the amount of reported income
tax expense when compared with the projections that are the basis
of our outlook.
- Net revenues are expected to be in the
range of $685 million to $700 million. Prior guidance was net
revenues in the range of $675 million to $695 million.
- Gross profit margins are expected to be
in the range of 40.9% to 41.6%. Prior guidance was gross profit
margins in the range of 41.2% to 42.2%.
- Operating expenses are expected to be
in the range of $233 million to $239 million. Prior guidance was
operating expenses in the range of $233 million to $243
million.
- Non-GAAP operating income is expected
to be $47 million to $52 million. Prior guidance was non-GAAP
operating income in the range of $45 million to $50 million.
- Full year non-GAAP effective income tax
rate is expected to be approximately 26% to 28%. Prior guidance was
full year non-GAAP effective income tax rate in the range of 27% to
29%.
- Non-GAAP diluted net earnings per share
attributable to Checkpoint Systems, Inc. are expected to be in the
range of $0.65 to $0.75, which is unchanged from prior
guidance.
- Free cash flow (cash flow from
operations less capital expenditures) is expected to be in the
range of $50 million to $60 million, which is unchanged from prior
guidance.
Financial Summary (a) (Unaudited)
Quarter (13 weeks) Ended June 30,
June 24, (amounts in millions, except per share data)
2013 2012 Net revenues $ 172.0
$ 177.6
From
Continuing From Discontinued Total
Operations Operations Company June 30,
June 24, June 30, June 24,
June 30, June 24, 2013
2012 2013 2012
2013 2012 Quarter As Reported (GAAP)
Net earnings (loss) (b) $ 1.2 $ (91.8 ) $ (14.3 ) $ (2.4 ) $ (13.1
) $ (94.2 ) Diluted earnings (loss) per share (b) $ 0.03 $ (2.24 )
$ (0.34 ) $ (0.06 ) $ (0.31 ) $ (2.30 ) Non-GAAP (c) Net earnings
(loss) (b) $ 4.5 $ (6.8 ) $ (14.3 ) $ (2.4 ) $ (9.8 ) $ (9.2 )
Diluted earnings (loss) per share (b) $ 0.11 $
(0.16 ) $ (0.34 ) $ (0.06 ) $ (0.23 ) $
(0.22 ) (a) See accompanying reconciliation of GAAP to
Non-GAAP financial measures. (b) Attributable to Checkpoint
Systems, Inc. (c) 2013 excludes restructuring expenses, management
transition expenses, a make-whole premium on debt, a valuation
allowance adjustment, acquisition costs, and the gain on sale of
our interest in the non-strategic Sri Lanka subsidiary.
Checkpoint Systems will host a conference call today, August 6,
2013, at 8:30 a.m. Eastern Time, to discuss its second quarter 2013
results. The conference call will be simultaneously broadcast live
over the Internet. Listeners may access a webcast of the call at
http://ir.checkpointsystems.com. A
replay will be available following the event.
Checkpoint Systems, Inc.
Checkpoint Systems is a global leader in shrink management,
merchandise visibility and apparel labeling solutions. Checkpoint
enables retailers and their suppliers to reduce shrink, improve
shelf availability and leverage real-time data to achieve
operational excellence. Checkpoint solutions are built upon 40 plus
years of RF technology expertise, diverse shrink management
offerings, a broad portfolio of apparel labeling solutions,
market-leading RFID applications, innovative high-theft solutions
and its Web-based Check-Net® data management platform. As a result,
Checkpoint customers enjoy increased sales and profits by improving
supply-chain efficiencies, by facilitating on-demand label printing
and by providing a secure open-merchandising environment enhancing
the consumer's shopping experience. For more information, visit
www.checkpointsystems.com.
Caution Regarding Forward-Looking
Statements
This press release includes information that constitutes
forward-looking statements. Forward-looking statements often
address our expected future business and financial performance, and
often contain words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “seek,” or “will.” By their nature,
forward-looking statements address matters that are subject to
risks and uncertainties. Any such forward-looking statements may
involve risk and uncertainties that could cause actual results to
differ materially from any future results encompassed within the
forward-looking statements. Factors that could cause or contribute
to such differences include: the impact upon operations of legal
and tax compliance matters or internal controls review, improvement
and remediation, including the detection of wrongdoing, improper
activities, or circumvention of internal controls; our ability to
successfully implement our strategic plan; the impact of our
working capital improvement initiatives; our ability to manage
growth effectively including our ability to integrate acquisitions
and to achieve our financial and operational goals for our
acquisitions; our ability to manage risks associated with business
divestitures; changes in economic or international business
conditions; foreign currency exchange rate and interest rate
fluctuations; lower than anticipated demand by retailers and other
customers for our products; slower commitments of retail customers
to chain-wide installations and/or source tagging adoption or
expansion; possible increases in per unit product manufacturing
costs due to less than full utilization of manufacturing capacity
as a result of slowing economic conditions or other factors; our
ability to provide and market innovative and cost-effective
products; the development of new competitive technologies; our
ability to maintain our intellectual property; competitive pricing
pressures causing profit erosion; the availability and pricing of
component parts and raw materials; possible increases in the
payment time for receivables as a result of economic conditions or
other market factors; our ability to comply with covenants and
other requirements of our debt agreements; changes in regulations
or standards applicable to our products; our ability to
successfully implement global cost reductions in operating expenses
including, field service, sales, and general and administrative
expense, and our manufacturing and supply chain operations without
significantly impacting revenue and profits; our ability to
maintain effective internal control over financial reporting; risks
generally associated with information systems upgrades and our
company-wide implementation of an enterprise resource planning
(ERP) system and additional matters disclosed in our Securities and
Exchange Commission filings. We do not undertake to update our
forward-looking statements, except as required by applicable
securities laws.
Checkpoint Systems, Inc. Consolidated
Balance Sheets (amounts in thousands) (unaudited)
June 30, December 30,
2013 2012 * ASSETS CURRENT
ASSETS: Cash and cash equivalents $ 123,125 $ 118,829 Accounts
receivable, net of allowance of $13,512 and $13,242 138,705 177,173
Inventories 84,002 82,154 Other current assets 33,202 36,147
Deferred income taxes 8,938 8,930 Assets of discontinued operations
held for sale — 29,864 Total Current
Assets 387,972 453,097 REVENUE
EQUIPMENT ON OPERATING LEASE, net 1,336 1,748 PROPERTY, PLANT, AND
EQUIPMENT, net 94,759 107,184 GOODWILL 180,524 182,741 OTHER
INTANGIBLES, net 70,186 74,950 DEFERRED INCOME TAXES 25,742 26,843
OTHER ASSETS 10,948 13,246 TOTAL ASSETS
$ 771,467 $ 859,809
LIABILITIES AND
EQUITY CURRENT LIABILITIES: Short-term borrowings and current
portion of long-term debt $ 423 $ 4,367 Accounts payable 71,983
68,929 Accrued compensation and related taxes 20,296 28,258 Other
accrued expenses 45,508 54,425 Income taxes — 2,560 Unearned
revenues 9,345 17,035 Restructuring reserve 4,393 9,579 Accrued
pensions — current 4,610 4,687 Other current liabilities 17,558
25,855 Liabilities of discontinued operations held for sale
— 9,688 Total Current Liabilities
174,116 225,383 LONG-TERM DEBT, LESS CURRENT
MATURITIES 95,757 108,921 ACCRUED PENSIONS 93,913 95,839 OTHER
LONG-TERM LIABILITIES 32,708 36,540 DEFERRED INCOME TAXES 15,013
15,580 COMMITMENTS AND CONTINGENCIES CHECKPOINT SYSTEMS, INC.
STOCKHOLDERS’ EQUITY: Preferred stock, no par value, 500,000 shares
authorized, none issued — — Common stock, par value $.10 per share,
100,000,000 shares authorized, issued 45,202,617 and 44,763,404
shares 4,520 4,476 Additional capital 430,535 424,715 Accumulated
(deficit) earnings (966 ) 18,392 Common stock in treasury, at cost,
4,035,912 and 4,035,912 shares (71,520 ) (71,520 ) Accumulated
other comprehensive income, net of tax (2,609 ) 795
TOTAL CHECKPOINT SYSTEMS, INC. STOCKHOLDERS’ EQUITY 359,960
376,858 NON-CONTROLLING INTERESTS — 688
TOTAL EQUITY 359,960 377,546 TOTAL
LIABILITIES AND EQUITY $ 771,467 $ 859,809
* Derived from the Company’s audited Consolidated Financial
Statements at December 30, 2012.
Checkpoint Systems, Inc. Consolidated
Statements of Operations (amounts in thousands, except per
share data) (unaudited) Quarter Six
Months (13 weeks) Ended (26 weeks) Ended June
30, June 24, June 30, June
24, 2013 2012
2013 2012 Net revenues $ 172,018 $ 177,604 $
320,853 $ 321,798 Cost of revenues 102,399
107,080 197,293 198,253 Gross
profit 69,619 70,524 123,560 123,545 Selling, general, and
administrative expenses 56,850 65,220 112,137 130,823 Research and
development 4,627 4,020 9,320 8,474 Restructuring expenses 1,629
21,266 3,645 22,984 Goodwill impairment — 64,437 — 64,437
Litigation settlement — — (6,584 ) — Acquisition costs 280 96 441
110 Other expense — — — 745 Other operating income 248
— 578 — Operating
income (loss) 6,481 (84,515 ) 5,179 (104,028 ) Interest income 405
395 804 895 Interest expense 2,822 1,939 4,881 3,874 Other gain
(loss), net (1,966 ) (146 ) (2,511 )
(296 ) Earnings (loss) from continuing operations before income
taxes 2,098 (86,205 ) (1,409 ) (107,303 ) Income taxes expense
(benefit) 784 5,624 1,063
(4,572 ) Net earnings (loss) from continuing operations
1,314 (91,829 ) (2,472 ) (102,731 ) Loss from discontinued
operations, net of tax (benefit) expense of $(66), $77, $68 and
$(3) (14,329 ) (2,357 ) (16,885 )
(2,725 ) Net loss (13,015 ) (94,186 ) (19,357 ) (105,456 ) Less:
gain (loss) attributable to non-controlling interests 59
(25 ) 1 (304 ) Net loss
attributable to Checkpoint Systems, Inc. $ (13,074 )
$ (94,161 ) $ (19,358 ) $ (105,152 )
Basic
loss attributable to Checkpoint Systems, Inc. per share:
Earnings (loss) from continuing operations $ 0.03 $ (2.24 ) $ (0.06
) $ (2.50 ) Loss from discontinued operations, net of tax
(0.35 ) (0.06 ) (0.41 ) (0.07 )
Basic loss
attributable to Checkpoint Systems, Inc. per share $
(0.32 ) $ (2.30 ) $ (0.47 ) $ (2.57 )
Diluted loss attributable to Checkpoint Systems, Inc. per
share: Earnings (loss) from continuing operations $ 0.03 $
(2.24 ) $ (0.06 ) $ (2.50 ) Loss from discontinued operations, net
of tax (0.34 ) (0.06 ) (0.41 ) (0.07 )
Diluted loss attributable to Checkpoint Systems, Inc. per
share $ (0.31 ) $ (2.30 ) $ (0.47 )
$ (2.57 )
Reconciliation of Non-GAAP Financial Measures in Accordance
with SEC Regulation G
Checkpoint Systems, Inc. reports financial results in accordance
with U.S. GAAP and herein provides some Non-GAAP measures. These
Non-GAAP measures are not in accordance with, nor are they a
substitute for, GAAP measures. These Non-GAAP measures are intended
to supplement presentation of our financial results that are
prepared in accordance with GAAP. We use the Non-GAAP measures
presented to evaluate and manage our operations internally. We are
also providing this information to assist investors in performing
additional financial analysis that is consistent with financial
models developed by research analysts who follow us.
Set forth below is a reconciliation of the Non-GAAP financial
measures used in this release to the most directly comparable
measures based on GAAP.
Checkpoint Systems, Inc. Reconciliation of
GAAP to Non-GAAP Financial Measures (amounts in thousands,
except percents) (unaudited) Quarter
Six Months (13 weeks) Ended (26 weeks) Ended
June 30, June 24, June 30,
June 24,
Reconciliation of GAAP to Non-GAAP
Operating Income (Loss):
2013 2012 2013
2012 Net Revenues $ 172,018 $ 177,604
$ 320,853 $ 321,798 GAAP
operating income (loss) 6,481 (84,515 ) 5,179 (104,028 )
Non-GAAP Adjustments: Management transition expense 1,173
2,942 1,173 2,942 Restructuring expenses 1,629 21,266 3,645 22,984
Goodwill impairment — 64,437 — 64,437 Litigation settlement — —
(6,584 ) — Acquisition costs 280 96 441 110 Other expense (a) — — —
745 Other income (b) (248 ) — (248 )
— Adjusted Non-GAAP operating income (loss) $
9,315 $ 4,226 $ 3,606 $
(12,810 ) GAAP operating margin 3.8 % (47.6 )% 1.6 % (32.3 )%
Adjusted Non-GAAP operating margin 5.4 % 2.4 % 1.1 % (4.0 )%
(a) Represents the income statement impacts of the legal and
forensic costs incurred due to the improper and fraudulent
activities of a certain former employee of our Canada sales
subsidiary. (b) Represents the gain on sale of our interest in the
non-strategic Sri Lanka subsidiary.
Checkpoint
Systems, Inc. Reconciliation of GAAP to Non-GAAP Financial
Measures continued (amounts in thousands, except per share
data) (unaudited) Quarter Six
Months (13 weeks) Ended (26 weeks) Ended
Reconciliation of GAAP to Non-GAAP earnings (loss) from
continuing operations attributable to Checkpoint Systems, Inc.:
June 30, 2013 June 24,
2012 June 30, 2013 June
24, 2012 Earnings (loss) from continuing operations
attributable to Checkpoint Systems, Inc., as reported $
1,255 $ (91,804 ) $ (2,473 ) $ (102,427
) Non-GAAP Adjustments: Management transition
expense, net of tax 1,173 2,942 1,173 2,942 Restructuring expenses,
net of tax 1,222 17,006 2,903 18,563 Goodwill impairment, net of
tax — 64,427 — 64,427 Litigation settlement, net of tax — — (6,584
) — Acquisition costs, net of tax 280 96 441 110 Other expense, net
of tax (a) —
—
— 549 Other operating income, net of tax (b) (248 )
—
(248 ) — Make-whole premium on debt, net of tax 577 — 577 —
Valuation allowance adjustment 298 489
298 489 Adjusted net earnings (loss)
from continuing operations attributable to Checkpoint Systems, Inc.
$ 4,557 $ (6,844 ) $ (3,913 ) $
(15,347 ) Reported diluted shares 41,730 40,973 41,330
40,893 Adjusted diluted shares 41,730 40,973 41,330 40,893
Reported net earnings (loss) from continuing operations
attributable to Checkpoint Systems, Inc., per share - diluted $
0.03 $ (2.24 ) $ (0.06 ) $ (2.50 ) Adjusted net earnings (loss)
from continuing operations attributable to Checkpoint Systems,
Inc., per share - diluted $ 0.11 $ (0.16 ) $ (0.09 ) $ (0.37 )
(a) Represents the income statement impacts of the legal and
forensic costs incurred due to the improper and fraudulent
activities of a certain former employee of our Canada sales
subsidiary. (b) Represents the gain on sale of our interest in the
non-strategic Sri Lanka subsidiary.
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