Fourth Quarter GAAP Results - Continuing Operations:
Net revenues from continuing operations in the fourth quarter of 2012 decreased 11.1%, 9.5% on a constant currency basis, to $200.2 million from $225.1 million in the fourth quarter of 2011. Gross profit margins were 39.3% compared with 41.1% in the 2011 fourth quarter. SG&A expenses of $61.4 million decreased by $9.7 million, or 13.6% compared with the same period last year, driven by $7.1 million of incremental savings from the global restructuring programs, as well as continued tight expense control.
The operating loss of $19.7 million decreased $28.0 million from the same period last year, even though the 2012 loss included a non-cash $38.3 million goodwill impairment in Retail Merchandising Solutions as well as restructuring, litigation settlement and acquisition expenses. These were partially offset by an insurance settlement received against fraudulent activities in Checkpoint's Canadian operations discovered in 2011, a gain on the sale of our non-strategic Suzhou, China subsidiary, and tax valuation allowance adjustments.
Net loss from continuing operations was $0.76 per diluted share compared with a loss of $0.35 per diluted share in the same period last year. In addition to the items noted above, the loss from continuing operations was impacted in both 2012 and 2011 by a valuation allowance on U.S. deferred tax assets recorded in 2011 that creates higher than normal volatility in income tax expense, depending on the mix of pre-tax income and losses in the countries in which Checkpoint operates.
Fourth Quarter Adjusted non-GAAP Operating Income and Earnings per Share - Continuing Operations:
Adjusted non-GAAP operating income from continuing operations was $14.0 million in the fourth quarter of 2012, compared with $18.2 million in the same period last year. Adjusted non-GAAP net income from continuing operations was $0.09 per share compared with a net loss from continuing operations of $0.12 per share in the fourth quarter of 2011.
These results exclude the impact of goodwill impairment in Retail Merchandising Solutions, as well as restructuring, litigation settlement and acquisition expenses. Also excluded are the impacts of an insurance settlement received against fraudulent activities in our Canadian operations discovered in 2011, a gain on the sale of our non-strategic Suzhou, China subsidiary, and tax valuation allowance adjustments.
Checkpoint Systems' President and Chief Executive Officer, George Babich, said, “All three lines of business delivered better than expected revenues in the fourth quarter 2012. The previously announced realignment of the Global Sales organization increased our focus and execution and clearly contributed to a solid finish for the year, providing momentum entering 2013.
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