Note 1. FINANCIAL STATEMENT REVISION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revision of Previously Issued Consolidated Financial Statements

Checkpoint Systems, Inc. (the "Company") is revising herein its historical financial statements as of December 26, 2010 and for the years ended December 26, 2010 and December 27, 2009. The revision is the result of the Company making corrections for the combined effect of financial statement errors attributable to (i) the intentional misstatement of expenses due to the improper and fraudulent activities of a certain former employee of the Company's Canada sales subsidiary; and (ii) immaterial income tax adjustments recorded in the third quarter of 2010 that should have been recorded in the fourth quarter of 2009. The Company assessed the impact of these errors on its prior interim and annual financial statements and concluded that these errors were not material, individually or in the aggregate, to any of those financial statements. Although the effect of these errors was not material to any previously issued financial statements, the cumulative effect of correcting the newly identified errors in the current year would have been material for the fiscal year 2011. Consequently, the Company has revised its prior period financial statements. All amounts in this Annual Report on Form 10-K affected by the revision adjustments reflect such amounts as revised.

Description of Revision Adjustments

Set forth below is a description of the revision adjustments reflected in the revision of previously issued financial statements.

Overstatement of expenses due to the improper and fraudulent activities of a certain former employee of the Company's Canada sales subsidiary - In December of 2011, we identified errors in our financial statements resulting from improper and fraudulent activities of a certain former employee of our Canada sales subsidiary as part of the transition of our Canadian operations into our shared service environment in North America. Subsequent to the discovery of such errors, we retained outside counsel to undertake an investigation and with the assistance of forensic accountants and internal audit. The results of this investigation concluded that in the period from 2005 through the fourth quarter of 2011, the then Controller of our Canadian operations was able to misappropriate cash through various schemes. The defalcation of cash was concealed by overriding internal controls at the subsidiary which had the effect of misstating certain accounts including cash, accounts receivable, and inventories as well as income taxes and non-income taxes payable and operating expenses. Based on this investigation, it was determined that improper and fraudulent activities by a certain employee of the subsidiary affected the financial reporting of the subsidiary and that the improper and fraudulent activities were contained within the Canada sales subsidiary.

The total cumulative gross financial statement impact of the improper and fraudulent activities was approximately $4.7 million and impacted fiscal years 2005 through 2011 of which $1.1 million of this amount was recovered by the Company from the perpetrator during the fourth quarter of 2011, resulting in a net cumulative financial statement impact of $3.6 million. The fiscal year 2011 financial statement impact was $0.2 million income due to the recovery of $1.1 million offset by expense of $0.9 million. During the fiscal years 2010 and prior, a total cumulative impact of $0.5 million expense had been recorded in the financial statements of the Canada sales subsidiary. The cumulative gross adjustments made to the revised financial statements for the fiscal years ended 2005 through 2010 totaled $3.3 million in the aggregate. We recorded additional operating expense adjustments of $0.4 million and $1.8 million in fiscal years 2010 and 2009, respectively and a cumulative adjustment of $1.1 million ($0.8 million, net of tax) for fiscal years 2008 and prior. The financial statement impacts of the improper and fraudulent Canadian activities have been included in other expense (income) in the Consolidated Statements of Operations. We anticipate filing a claim in 2012 with our insurance provider for the unrecovered amount of the loss.

The improper and fraudulent activities by a certain former employee of the subsidiary included (i) the misappropriation of cash including cash payments to improper vendors; (ii) the intentional overstatement of cash balances; (iii) the intentional understatement of accounts receivable and inventory reserve accounts; (iv) the intentional understatement of income taxes and non-income taxes payable; and (v) recording arbitrary balance sheet adjustments to increase cash and liabilities.

Income tax adjustments recorded in the third quarter of 2010 related to provision-to-return adjustments resulting from the misapplication of tax law to the foreign tax credit calculation associated with the payment of a dividend from one of our wholly owned subsidiaries to the Company – To record the adjustment in the appropriate period, income tax expense was reduced by $0.7 million in fiscal year 2010 and was increased by $0.7 million in fiscal year 2009.

In addition to the revisions described above, the effects of discontinued operations presentation on previously reported amounts have been included in order to reconcile between previously reported amounts and the final amounts as revised in this Annual Report on Form 10-K.

The following table summarized the effects of the adjustments on basic earnings per share, diluted earnings per share, operating income, income taxes, earnings from continuing operations before income taxes, and net earnings attributable to Checkpoint Systems, Inc. for the years ended December 26, 2010 and December 27, 2009, respectively, and on retained earnings as of December 29, 2008 (the first day of fiscal 2009).


	December 26, 2010		December 27, 2009
Earnings (loss) attributable to Checkpoint Systems, Inc. per share	Basic EPS	Diluted EPS	Basic EPS	Diluted EPS
As Previously Reported	$ 0.69	$ 0.68	$ 0.67	$ 0.66
Revision Adjustments:
Canada Adjustments	(0.02)	(0.01)	(0.04)	(0.03)
Income Tax Adjustments	0.02	0.02	(0.02)	(0.02)
As Revised for Revision Adjustments	$ 0.69	$ 0.69	$ 0.61	$ 0.61
Discontinued Operations Adjustments	—	—	—	—
As Revised in this Annual Report on Form 10-K	$ 0.69	$ 0.69	$ 0.61	$ 0.61


	Retained Earnings	Net Earnings Attributable to Checkpoint Systems, Inc.		Earnings from Continuing Operations Before Income Taxes		Income Taxes
(amounts in thousands)	Dec. 29, 2008	Dec. 26, 2010	Dec. 27, 2009	Dec. 26, 2010	Dec. 27, 2009	Dec. 26, 2010	Dec. 27, 2009
As Previously Reported	$ 179,809	$ 27,371	$ 26,142	$ 37,022	$ 35,985	$ 9,767	$ 10,290
Revision Adjustments:
Canada Adjustments	(814)	(346)	(1,325)	(446)	(1,793)	(100)	(468)
Income Tax Adjustments	—	705	(705)	—	—	(705)	705
As Revised for Revision Adjustments	$ 178,995	$ 27,730	$ 24,112	$ 36,576	$ 34,192	$ 8,962	$ 10,527
Discontinued Operations Adjustments	—	—	—	1,169	1,467	396	556
As Revised in this Annual Report on Form 10-K	$ 178,995	$ 27,730	$ 24,112	$ 37,745	$ 35,659	$ 9,358	$ 11,083


	Operating Income
(amounts in thousands)	Dec. 26, 2010	Dec. 27, 2009
As Previously Reported	$ 42,648	$ 41,580
Revision Adjustments:
Canada Adjustments	(446)	(1,793)
Income Tax Adjustments	—	—
As Revised for Revision Adjustments	$ 42,202	$ 39,787
Discontinued Operations Adjustments	1,169	1,467
As Revised in this Annual Report on Form 10-K	$ 43,371	$ 41,254

Comparison of revised financial statements to financial statements as originally reported

The following tables compare our previously reported Consolidated Statements of Operations, Stockholders' Equity, Comprehensive Income (Loss), and Cash Flows for the fiscal years ended December 26, 2010 and December 27, 2009 and the previously reported Consolidated Balance Sheet as of December 26, 2010 to the corresponding financial statements for those years as Revised.

CONSOLIDATED BALANCE SHEETS


(amounts in thousands)	December 26, 2010
	As Previously Reported	As Revised in this Annual Report on Form 10-K
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$ 173,802	$ 172,473
Restricted cash	140	140
Accounts receivable, net of allowance of $10,472 and $10,927	178,636	178,076
Inventories	106,974	106,694
Other current assets	32,655	32,542
Deferred income taxes	20,622	20,622
Total Current Assets	512,829	510,547
REVENUE EQUIPMENT ON OPERATING LEASE, net	2,340	2,340
PROPERTY, PLANT, AND EQUIPMENT, net	121,258	121,258
GOODWILL	231,325	231,325
OTHER INTANGIBLES, net	90,823	90,823
DEFERRED INCOME TAXES	52,506	53,425
OTHER ASSETS	24,192	24,192
TOTAL ASSETS	$ 1,035,273	$ 1,033,910

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term debt	$ 22,225	$ 22,225
Accounts payable	63,366	63,585
Accrued compensation and related taxes	29,308	29,308
Other accrued expenses	47,646	47,646
Income taxes	4,395	5,160
Unearned revenues	12,196	12,196
Restructuring reserve	7,522	7,522
Accrued pensions — current	4,358	4,358
Other current liabilities	23,019	23,409
Total Current Liabilities	214,035	215,409
LONG-TERM DEBT, LESS CURRENT MATURITIES	119,724	119,724
ACCRUED PENSIONS	75,396	75,396
OTHER LONG-TERM LIABILITIES	30,502	30,502
DEFERRED INCOME TAXES	11,325	11,325
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 43,843,095 and 43,843,095 shares	4,384	4,384
Additional capital	407,383	407,383
Retained earnings	233,322	230,837
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	10,722	10,470
TOTAL CHECKPOINT SYSTEMS, INC. STOCKHOLDERS' EQUITY	584,291	581,554
NONCONTROLLING INTERESTS	—	—
TOTAL EQUITY	584,291	581,554
TOTAL LIABILITIES AND EQUITY	$ 1,035,273	$ 1,033,910

There is no required discontinued operations impact on the presentation of the As Revised in this Annual Report on Form 10-K amounts.

CONSOLIDATED STATEMENTS OF OPERATIONS


(amounts in thousands, except per share data)	December 26, 2010
Year ended	As Previously Reported	As Revised for Revision Adjustments	As Revised in this Annual Report on Form 10-K
Net revenues	$ 834,498	$ 834,498	$ 821,678
Cost of revenues	487,850	487,850	477,904
Gross profit	346,648	346,648	343,774
Selling, general, and administrative expenses	275,282	274,191	269,625
Research and development	20,507	20,507	20,507
Restructuring expenses	8,211	8,211	8,211
Acquisition costs	—	—	523
Other expense	—	1,537	1,537
Operating income	42,648	42,202	43,371
Interest income	3,118	3,118	3,118
Interest expense	6,507	6,507	6,507
Other gain (loss), net	(2,237)	(2,237)	(2,237)
Earnings from continuing operations before income taxes	37,022	36,576	37,745
Income taxes expense	9,767	8,962	9,358
Net earnings from continuing operations	27,255	27,614	28,387
Loss from discontinued operations, net of tax benefit of $0, $0, and $396	—	—	(773)
Net earnings	27,255	27,614	27,614
Less: loss attributable to non-controlling interests	(116)	(116)	(116)
Net earnings attributable to Checkpoint Systems, Inc.	$ 27,371	$ 27,730	$ 27,730

Basic earnings attributable to Checkpoint Systems, Inc. per share:
Earnings from continuing operations	$ 0.69	$ 0.69	$ 0.71
Loss from discontinued operations, net of tax	$ —	$ —	$ (0.02)
Basic earnings attributable to Checkpoint Systems, Inc. per share	$ 0.69	$ 0.69	$ 0.69
Diluted earnings attributable to Checkpoint Systems, Inc. per share:
Earnings from continuing operations	$ 0.68	$ 0.69	$ 0.71
Loss from discontinued operations, net of tax	$ —	$ —	$ (0.02)
Diluted earnings attributable to Checkpoint Systems, Inc. per share	$ 0.68	$ 0.69	$ 0.69

The As Revised in this Annual Report on Form 10-K amounts include a reclassification of selling, general, and administrative expenses to acquisition costs in order to conform to current period presentation. These amounts also include the effects of discontinued operations presentation on previously reported amounts. Refer to Note 19 to the Consolidated Financial Statements for discontinued operations presentation adjustments to previously reported amounts.

CONSOLIDATED STATEMENTS OF OPERATIONS


(amounts in thousands, except per share data)	December 27, 2009
Year ended	As Previously Reported	As Revised for Revision Adjustments	As Revised in this Annual Report on Form 10-K
Net revenues	$ 772,718	$ 772,718	$ 762,251
Cost of revenues	441,434	441,434	433,478
Gross profit	331,284	331,284	328,773
Selling, general, and administrative expenses	262,649	263,157	258,609
Research and development	20,354	20,354	20,354
Restructuring expenses	5,401	5,401	5,401
Litigation settlement	1,300	1,300	1,300
Acquisition costs	—	—	570
Other expense	—	1,285	1,285
Operating income	41,580	39,787	41,254
Interest income	1,971	1,971	1,971
Interest expense	7,386	7,386	7,386
Other gain (loss), net	(180)	(180)	(180)
Earnings from continuing operations before income taxes	35,985	34,192	35,659
Income taxes expense	10,290	10,527	11,083
Net earnings from continuing operations	25,695	23,665	24,576
Loss from discontinued operations, net of tax benefit of $0, $0, and $556	—	—	(911)
Net earnings	25,695	23,665	23,665
Less: loss attributable to non-controlling interests	(447)	(447)	(447)
Net earnings attributable to Checkpoint Systems, Inc.	$ 26,142	$ 24,112	$ 24,112

Basic earnings attributable to Checkpoint Systems, Inc. per share:
Earnings from continuing operations	$ 0.67	$ 0.61	$ 0.63
Loss from discontinued operations, net of tax	$ —	$ —	$ (0.02)
Basic earnings attributable to Checkpoint Systems, Inc. per share	$ 0.67	$ 0.61	$ 0.61
Diluted earnings attributable to Checkpoint Systems, Inc. per share:
Earnings from continuing operations	$ 0.66	$ 0.61	$ 0.63
Loss from discontinued operations, net of tax	$ —	$ —	$ (0.02)
Diluted earnings attributable to Checkpoint Systems, Inc. per share	$ 0.66	$ 0.61	$ 0.61

CONSOLIDATED STATEMENTS OF EQUITY


(amounts in thousands)	Retained Earnings		Accumulated Other Comprehensive Income		Total Equity
	As Previously Reported	As Revised in this Annual Report on Form 10-K	As Previously Reported	As Revised in this Annual Report on Form 10-K	As Previously Reported	As Revised in this Annual Report on Form 10-K
Balance, December 28, 2008	$ 179,809	$ 178,995	$ 16,150	$ 16,236	$ 511,135	$ 510,407
Net earnings (loss)	26,142	24,112			25,695	23,665
Exercise of stock-based compensation and awards released					845	845
Tax shortfall on stock-based compensation					(481)	(481)
Stock-based compensation expense					7,135	7,135
Deferred compensation plan					1,415	1,415
Amortization of pension plan actuarial losses, net of tax			84	84	84	84
Change in realized and unrealized gains on derivative hedges, net of tax			(1,182)	(1,182)	(1,182)	(1,182)
Recognized gain on pension, net of tax			1,934	1,934	1,934	1,934
Foreign currency translation adjustment			11,617	11,379	11,974	11,736
Balance, December 27, 2009	$ 205,951	$ 203,107	$ 28,603	$ 28,451	$ 558,554	$ 555,558
Net earnings (loss)	27,371	27,730			27,255	27,614
Exercise of stock-based compensation and awards released					6,022	6,022
Tax benefit on stock-based compensation					133	133
Stock-based compensation expense					8,751	8,751
Deferred compensation plan					2,112	2,112
Repurchase of non-controlling interests					(692)	(692)
Amortization of pension plan actuarial losses, net of tax			103	103	103	103
Change in realized and unrealized gains on derivative hedges, net of tax			679	679	679	679
Recognized loss on pension, net of tax			(3,405)	(3,405)	(3,405)	(3,405)
Foreign currency translation adjustment			(15,258)	(15,358)	(15,221)	(15,321)
Balance, December 26, 2010	$ 233,322	$ 230,837	$ 10,722	$ 10,470	$ 584,291	$ 581,554

There is no required discontinued operations impact on the presentation of the As Revised in this Annual Report on Form 10-K amounts.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


(amounts in thousands)	December 26, 2010		December 27, 2009
Year ended	As Previously Reported	As Revised in this Annual Report on Form 10-K	As Previously Reported	As Revised in this Annual Report on Form 10-K
Net earnings	$ 27,255	$ 27,614	$ 25,695	$ 23,665
Amortization of pension plan actuarial losses, net of tax	103	103	84	84
Change in realized and unrealized gains (losses) on derivative hedges, net of tax	679	679	(1,182)	(1,182)
Recognized (loss) gain on pension, net of tax	(3,405)	(3,405)	1,934	1,934
Foreign currency translation adjustment	(15,221)	(15,321)	11,974	11,736
Comprehensive income	$ 9,411	$ 9,670	$ 38,505	$ 36,237
Less: comprehensive loss attributable to non-controlling interests	(834)	(834)	(90)	(90)
Comprehensive income attributable to Checkpoint Systems, Inc.	$ 10,245	$ 10,504	$ 38,595	$ 36,327

There is no required discontinued operations impact on the presentation of the As Revised in this Annual Report on Form 10-K amounts.

CONSOLIDATED STATEMENTS OF CASH FLOWS


(amounts in thousands)	December 26, 2010		December 27, 2009
Year ended	As Previously Reported	As Revised in this Annual Report on Form 10-K	As Previously Reported	As Revised in this Annual Report on Form 10-K
Cash flows from operating activities:
Net earnings	$ 27,255	$ 27,614	$ 25,695	$ 23,665
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	34,477	34,477	32,325	32,325
Deferred taxes	(2,227)	(2,859)	(7,109)	(6,911)
Stock-based compensation	8,751	8,751	7,135	7,135
Excess tax benefit on stock compensation	(1,662)	(1,662)	(12)	(12)
Provision for losses on accounts receivable	123	123	(117)	(117)
Loss on disposal of fixed assets	133	133	314	314
(Increase) decrease in current assets, net of the effects of acquired companies:
Accounts receivable	(9,467)	(8,753)	27,308	27,464
Inventories	(20,707)	(20,535)	17,078	17,033
Other current assets	51	162	8,993	8,993
Increase (decrease) in current liabilities, net of the effects of acquired companies:
Accounts payable	2,491	2,705	(6,348)	(6,348)
Income taxes	(5,253)	(5,653)	3,584	3,483
Unearned revenues	(9,750)	(9,750)	11,654	11,654
Restructuring reserve	3,044	3,044	459	459
Other current and accrued liabilities	(16,355)	(16,070)	(6,133)	(6,092)
Net cash provided by operating activities	10,904	11,727	114,826	113,045

Cash flows from investing activities:
Acquisition of property, plant, and equipment and intangibles	(23,712)	(23,712)	(13,757)	(13,757)
Acquisitions of businesses, net of cash acquired	(300)	(300)	(25,535)	(25,535)
Change in restricted cash	504	504	516	516
Other investing activities	323	323	131	131
Net cash used in investing activities	(23,185)	(23,185)	(38,645)	(38,645)

Cash flows from financing activities:
Proceeds from stock issuances	6,022	6,022	845	845
Excess tax benefit on stock compensation	1,662	1,662	12	12
Proceeds from short-term debt	7,621	7,621	11,215	11,215
Payment of short-term debt	(12,344)	(12,344)	(12,941)	(12,941)
Proceeds from long-term debt	141,747	141,747	93,793	93,793
Payment of long-term debt	(114,458)	(114,458)	(144,650)	(144,650)
Net change in factoring and bank overdrafts	1,413	1,413	5,380	5,380
Debt issuance costs	(1,991)	(1,991)	(3,970)	(3,970)
Repurchase of non-controlling interests	(781)	(781)	—	—
Net cash provided by (used in) financing activities	28,891	28,891	(50,316)	(50,316)
Effect of foreign currency rate fluctuations on cash and cash equivalents	(4,905)	(4,970)	4,010	3,830
Net increase in cash and cash equivalents	11,705	12,463	29,875	27,914
Cash and cash equivalents:
Beginning of year	162,097	160,010	132,222	132,096
End of year	$ 173,802	$ 172,473	$ 162,097	$ 160,010

There is no required discontinued operations impact on the presentation of the As Revised in this Annual Report on Form 10-K amounts.

Nature of Operations

We are a multinational manufacturer and marketer of identification, tracking, security and merchandising solutions primarily for the retail industry. We provide technology-driven integrated supply chain solutions to brand, track, and secure goods for retailers and consumer product manufacturers worldwide. We are a leading provider of, and earn revenues primarily from the sale of, electronic article surveillance (EAS), custom tags and labels (Apparel Labeling Solutions), store monitoring solutions (CheckView®), hand-held labeling systems (HLS), retail merchandising systems (RMS), and radio frequency identification (RFID) systems and software. Applications of these products include primarily retail security, asset and merchandise visibility, automatic identification, and pricing and promotional labels and signage. Operating directly in 35 countries, we have a global network of subsidiaries and distributors, and provide customer service and technical support around the world.

During the second quarter of 2010, we identified an error in the accounting for a deferred tax liability related to a 2005 transaction. Specifically, we concluded that an existing deferred tax liability in the amount of $5.9 million should have been recognized as income in 2005 rather than remain as a liability on our Consolidated Balance Sheet at that time. We have assessed the materiality of this item on prior periods in accordance with the SEC's Staff Accounting Bulletin ("SAB") No. 99 and concluded that the error was not material to any such periods. We also concluded that the impact of correcting the error in the quarter ended June 27, 2010 would have been misleading to the users of the financial statements and therefore, have not recorded an adjustment in the current year. In this regard, in accordance with SAB 108, we have revised our Consolidated Balance Sheet as of December 27, 2009 to increase retained earnings and reduce long term deferred tax liabilities in the amount of $5.9 million. This revision results in no other change to our Consolidated Financial Statements presented in this report. We will make corresponding revisions to retained earnings and long term deferred tax liabilities in prior periods the next time those financial statements are filed.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Checkpoint Systems, Inc. and its majority-owned subsidiaries (Company). All inter-company transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fiscal Year

Our fiscal year is the 52 or 53 week period ending the last Sunday of December. References to 2011, 2010, and 2009, are for the 52 weeks ended December 25, 2011, December 26, 2010, and December 27, 2009, respectively.

Reclassifications

Certain reclassifications and retrospective adjustments have been made to prior period information to conform to current period presentation. These reclassifications and retrospective adjustments result from our adoption of an accounting standard codified within Financial Accounting Standards Board ("FASB") Accounting Standards Codification™ ("ASC") 810, "Consolidation," related to non-controlling interests, and our change in segment reporting to conform to our current management structure, respectively.

Discontinued Operations

We evaluate our businesses and product lines periodically for their strategic fit within our operations. In December 2011, we began actively marketing our Banking Security Systems Integration business unit. In connection with the decision to sell this business, for all periods presented, the operating results associated with this business have been reclassified into earnings from discontinued operations, net of tax in the Consolidated Statements of Operations, and the assets and liabilities associated with this business have been adjusted to fair value, less costs to sell, and reclassified into assets of discontinued operations, net of tax and liabilities of discontinued operations, net of tax, as appropriate, in the Consolidated Balance Sheets. Refer to Note 19 of the Consolidated Financial Statements.

Non-controlling Interests

On May 16, 2011, Checkpoint Holland Holding B.V., a wholly-owned subsidiary of the Company, acquired 51% of the outstanding voting shares of Shore to Shore PVT Ltd. (Sri Lanka) in exchange for $1.7 million in cash. The fair value of the non-controlling interest was estimated by applying a market approach. Key assumptions include control premiums associated with guideline transactions of entities deemed to be similar to Shore to Shore PVT Ltd. (Sri Lanka), and adjustments because of the lack of control that market participants would consider when measuring the fair value of the non-controlling interest.

On July 1, 1997, Checkpoint Systems Japan Co. Ltd. (Checkpoint Japan), a wholly-owned subsidiary of the Company, issued newly authorized shares to Mitsubishi Materials Corporation (Mitsubishi) in exchange for cash. In February 2006, Checkpoint Japan repurchased 26% of these shares from Mitsubishi in exchange for $0.2 million in cash. In August 2010, Checkpoint Manufacturing Japan Co., LTD. repurchased the remaining 74% of these shares from Mitsubishi in exchange for $0.8 million in cash. No changes in the ownership interests of Checkpoint Japan occurred during the year ended December 27, 2009.

We have classified non-controlling interests as equity on our Consolidated Balance Sheets as of December 25, 2011 and December 26, 2010 and presented net income attributable to non-controlling interests separately on our Consolidated Statements of Operations for the years ended December 25, 2011, December 26, 2010, and December 27, 2009.

Subsequent Events

We perform a review of subsequent events in connection with the preparation of our financial statements. The accounting for and disclosure of events that occur after the balance sheet date, but before our financial statements are issued or available to be issued are reflected where appropriate or required in our financial statements. Refer to Note 7 "Long-Term Debt" for discussion of the amendments to certain debt agreements dated February 17, 2012.

Cash and Cash Equivalents

Cash in excess of operating requirements is invested in short-term, income-producing instruments or used to pay down debt. Cash equivalents include commercial paper and other securities with original maturities of 90 days or less at the time of purchase. Book value approximates fair value because of the short maturity of those instruments.

Restricted Cash

We classify restricted cash as cash that cannot be made readily available for use. Restrictions may include legally restricted deposits held as compensating balances against short-term borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits. As of December 25, 2011, the unused portion of a grant from the Chinese government of $0.3 million (RMB 1.8 million) was recorded within restricted cash in the accompanying Consolidated Balance Sheets.

Accounts Receivable

Accounts receivables are recorded at net realizable values. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. These allowances are based on specific facts and circumstances surrounding individual customers as well as our historical experience. Provisions for the losses on receivables are charged to income to maintain the allowance at a level considered adequate to cover losses. Receivables are charged off against the reserve when they are deemed uncollectible. From time to time, we sell customer related receivables to third party financial institutions and evaluate these transactions to determine if they meet the criteria for sale treatment in accordance with ASC 860 "Accounting for Transfers and Servicing of Financial Assets." If it is determined that the criteria for sale treatment is met, the receivables are removed from the Consolidated Balance Sheet and earnings are reported on the Consolidated Statement of Operations. If it is determined that the criteria for sale treatment is not met, the receivables remain on the Consolidated Balance Sheet and the transaction is treated as a secured financing.

During 2011, cash proceeds from the sale of accounts receivable related to sales-type lease extensions with customers to third party financial institutions totaled $38.0 million. Proceeds from the initial sale of the accounts receivables are used to fund operations. We have presented the earnings recognized on the sales of the receivables separately under the line item captioned other operating income on our Consolidated Statements of Operations for the year ended December 25, 2011.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market. A provision is made to reduce excess or obsolete inventory to its net realizable value.

Revenue Equipment on Operating Lease

The cost of the equipment leased to customers under operating leases is depreciated on a straight-line basis over the lesser of the length of the contract or estimated useful life of the asset, which is usually between three and five years.

Property, Plant, and Equipment

Property, plant, and equipment is carried at cost less accumulated depreciation. Maintenance, repairs, and minor renewals are expensed as incurred. Additions, improvements, and major renewals are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Assets subject to capital leases are depreciated over the lesser of the estimated useful life of the asset or length of the contract. Buildings, equipment rented to customers, and leased equipment on capitalized leases use the following estimated useful lives of fifteen to thirty years, three to five years, and five years, respectively. Machinery and equipment estimated useful lives range from three to ten years. Leasehold improvement useful lives are the lesser of the minimum lease term or the useful life of the item. The cost and accumulated depreciation applicable to assets retired are removed from the accounts and the gain or loss on disposition is included in income.

We review our property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If it is determined that an impairment, based on expected future undiscounted cash flows, exists, then the loss is recognized on the Consolidated Statements of Operations. The amount of the impairment is the excess of the carrying amount of the impaired asset over its fair value.

Internal-Use Software

Included in fixed assets is the capitalized cost of internal-use software. We capitalize costs incurred during the application development stage of internal-use software and amortize these costs over their estimated useful lives, which generally range from three to five years. Costs incurred related to design or maintenance of internal-use software is expensed as incurred.

During 2009, we announced that we were in the initial stages of implementing a company-wide ERP system to handle the business and finance processes within our operations and corporate functions. The total amount of internal-use software costs capitalized since the beginning of the ERP implementation as of December 25, 2011 and December 26, 2010 were $21.4 million and $13.1 million, respectively. As of December 25, 2011, $15.4 million was recorded in machinery and equipment related to portions of the ERP system that were placed in service. The remaining costs of $6.0 million and $12.7 million as of December 25, 2011 and December 26, 2010, respectively, are capitalized as construction-in-progress until such time as the these portions of the ERP system have been placed in service.

Goodwill

Goodwill is carried at cost and is not amortized. We test goodwill for impairment on an annual basis as of fiscal month end October of each fiscal year, relying on a number of factors including operating results, business plans and anticipated future cash flows. Company management uses its judgment in assessing whether goodwill has become impaired between annual impairment tests. Reporting units are primarily determined as the geographic areas comprising the Company's business segments, except in situations when aggregation of the reporting units is appropriate. Recoverability of goodwill is evaluated using a two-step process. The first step involves a comparison of the fair value of a reporting unit with its carrying value. If the carrying amount of the reporting unit exceeds its fair value, then the second step of the process involves a comparison of the implied fair value and carrying value of the goodwill of that reporting unit. If the carrying value of the goodwill of a reporting unit exceeds the fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess.

The fair value of our reporting units is dependent upon our estimate of future discounted cash flows and other factors. Our estimates of future cash flows include assumptions concerning future operating performance and economic conditions and may differ from actual future cash flows. Estimated future cash flows are adjusted by an appropriate discount rate derived from our market capitalization plus a suitable control premium at the date of evaluation. The financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital that we use to determine our discount rate and through our stock price that we use to determine our market capitalization. Therefore, changes in the stock price may also affect the amount of impairment recorded. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the average market price of our common stock over a 30-day period before each assessment date. We use this 30-day duration to consider inherent market fluctuations that may affect any individual closing price. We believe that our market capitalization alone does not fully capture the fair value of our business as a whole, or the substantial value that an acquirer would obtain from its ability to obtain control of our business. As such, in determining fair value, we add a control premium to our market capitalization. To estimate the control premium, we considered our unique competitive advantages that would likely provide synergies to a market participant. In addition, we considered external market factors which we believe contributed to the decline and volatility in our stock price that did not reflect our underlying fair value. Refer to Note 5 of the Consolidated Financial Statements.

Other Intangibles

Indefinite-lived intangible assets are carried at cost and are not amortized, but are subject to tests for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Definite-lived intangibles are amortized on a straight-line basis over their useful lives (or legal lives if shorter). We review our other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

If it is determined that an impairment, based on expected future cash flows, exists, then the loss is recognized on the Consolidated Statements of Operations. The amount of the impairment is the excess of the carrying amount of the impaired asset over the fair value of the asset. The fair value represents expected future cash flows from the use of the assets, discounted at the rate used to evaluate potential investments. Refer to Note 5 of the Consolidated Financial Statements.

Other Assets

Included in other assets are $11.2 million and $15.6 million of net long-term customer-based receivables at December 25, 2011 and December 26, 2010, respectively.

Deferred Financing Costs

Financing costs are capitalized and amortized to interest expense over the life of the debt. The net deferred financing costs at December 25, 2011 and December 26, 2010 were $2.8 million and $3.9 million, respectively. The financing cost amortization expense was $1.1 million, $1.2 million, and $1.0 million, for 2011, 2010, and 2009, respectively.

Revenue Recognition

We recognize revenue when revenue is realized or realizable and earned. Revenue is realized or realizable and earned when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price to the buyer is fixed or determinable; and collectability is reasonably assured.

We enter into contracts to sell our products and services, and, while the majority of our sales agreements contain standard terms and conditions, there are agreements that contain multiple elements or non-standard terms and conditions. As a result, significant contract interpretation is sometimes required to determine the appropriate accounting, including whether the deliverables specified in a multiple element arrangement should be treated as separate units of accounting for revenue recognition purposes, and, if so, how the selling price should be allocated among the elements and when to recognize revenue for each element.

For arrangements with multiple elements, we allocate total arrangement consideration to all deliverables based on their relative selling price using a specific hierarchy and recognize revenue when each element's revenue recognition criteria are met. The hierarchy is as follows: vendor-specific objective evidence ("VSOE"), third-party evidence of selling price ("TPE") or best estimate of selling price ("BESP"). VSOE of fair value for each element is established based on the price charged when the same element is sold separately. We recognize revenue when installation is complete or other post-shipment obligations have been satisfied. Unearned revenue is recorded when payments are received in advance of performing our service obligations and is recognized over the service period.

Products leased to customers under sales-type leases are accounted for as the equivalent of a sale. The present value of such lease revenues is recorded as net revenues, and the related cost of the products is charged to cost of revenues. The deferred finance charges applicable to these leases are recognized over the terms of the leases. Rental revenue from products under operating leases is recognized over the term of the lease. Installation revenue from SMS EAS products is recognized when the systems are installed. Service revenue is recognized, for service contracts, on a straight-line basis over the contractual period, and, for non-contract work, as services are performed.

Revenues from software license agreements are recognized when persuasive evidence of an agreement exists, delivery of the product has occurred, no significant vendor obligations are remaining to be fulfilled, the fee is fixed or determinable, and collection is probable. Revenue from software contracts for both licenses and professional services that require significant production, modification, customization, or implementation are recognized together using the percentage of completion method based upon the ratio of labor incurred to total estimated labor to complete each contract. In instances where there is a term license combined with services, revenue is recognized ratably over the term.

We record estimated reductions to revenue for customer incentive offerings, including volume-based incentives and rebates. The accrual for these incentives and rebates, which are included in the Other Accrued Expenses section of our Consolidated Balance Sheet, was $11.7 million and $12.4 million as of December 25, 2011 and December 26, 2010, respectively. We record revenues net of an allowance for estimated return activities. Return activity was immaterial to revenue and results of operations for all periods presented.

Shipping and Handling Fees and Costs

Shipping and handling fees are accounted for in net revenues and shipping and handling costs in cost of revenues.

Cost of Revenues

The principal elements of cost of revenues are product cost, field service and installation cost, freight, and product royalties paid to third parties.

Warranty Reserves

We provide product warranties for our various products. These warranties vary in length depending on product and geographical region. We establish our warranty reserves based on historical data of warranty transactions.

The following table sets forth the movement in the warranty reserve which is located in the Other Accrued Expenses section of our Consolidated Balance Sheet:

(amounts in thousands)	December 25, 2011	December 26, 2010
Balance at beginning of year	$ 6,170	$ 6,116
Accruals for warranties issued	5,882	5,940
Settlements made	(6,194)	(5,735)
Foreign currency translation adjustment	(1)	(151)
Balance at end of period	$ 5,857	$ 6,170

Royalty Expense

Royalty expenses related to security products approximated $0.2 million, $0.1 million, and $0.2 million, in 2011, 2010, and 2009, respectively. These expenses are included as part of cost of revenues.

Research and Development Costs

Research and development costs are expensed as incurred and consist of development work associated with the Company's existing and potential products and processes. The Company's research and development expenses relate primarily to payroll costs for engineering personnel, costs associated with various projects, including testing, developing prototypes and related expenses.

Stock Options

We recognize stock-based compensation expense for all share-based payments net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest. Stock compensation expense is recognized for all share-based payments on a straight-line basis over the requisite service period of the award.

We use the Black-Scholes option pricing model to value all stock options. The table below presents the weighted average expected life in years. The expected life computation is based on historical exercise patterns and post-vesting termination behavior. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of share-based payment units was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values as follows:

	Year Ended, December 25, 2011		Year Ended, December 26, 2010		Year Ended, December 27, 2009
Weighted-average fair value of grants	$ 9.74		$ 7.51		$ 3.59
Valuation assumptions:
Expected dividend yield	0.00	%	0.00	%	0.00	%
Expected volatility	.4991		.4829		.4474
Expected life (in years)	4.98		4.93		4.86
Risk-free interest rate	2.138	%	1.845	%	1.700	%

Refer to Note 8 of the Consolidated Financial Statements.

Income Taxes

Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and the tax basis of assets and liabilities, using enacted statutory tax rates in effect at the balance sheet date. Changes in enacted tax rates are reflected in the tax provision as they occur. A valuation allowance is recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted.

We utilize a two-step approach to recognizing and measuring uncertain tax positions (tax contingencies). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We include interest and penalties related to our tax contingencies in income tax expense.

Taxes and Value Added Collected from Customers

Sales and value added taxes collected from customers are excluded from revenues. The obligation is included in other current liabilities until the taxes are remitted to the appropriate taxing authorities.

Foreign Currency Translation and Transactions

Our balance sheet accounts of foreign subsidiaries are translated into U.S. dollars at the rate of exchange in effect at the balance sheet dates. Revenues, costs, and expenses of our foreign subsidiaries are translated into U.S. dollars at the year-to-date average rate of exchange. The resulting translation adjustments are recorded as a separate component of shareholders' equity. Gains or losses on certain long-term inter-company transactions are excluded from the net earnings (loss) and accumulated in the cumulative translation adjustment as a separate component of Consolidated Stockholders' Equity. All other foreign currency transaction gains and losses are included in net earnings (loss) on our Consolidated Statement of Operations

Accounting for Hedging Activities

We enter into certain foreign exchange forward contracts in order to hedge anticipated rate fluctuations in Western Europe, Canada, Japan and Australia. Transaction gains or losses resulting from these contracts are recognized at the end of each reporting period. We use the fair value method of accounting, recording realized and unrealized gains and losses on these contracts. These gains and losses are included in other gain (loss), net on our Consolidated Statements of Operations.

We enter into various foreign currency contracts to reduce our exposure to forecasted Euro-denominated inter-company revenues. These cash flow hedging instruments are marked to market and the changes are recorded in other comprehensive income. Amounts recorded in other comprehensive income are recognized in cost of goods sold as the inventory is sold to external parties. Any hedge ineffectiveness is charged to other gain (loss), net on our Consolidated Statements of Operations.

We enter, on occasion, into interest rate swaps to reduce the risk of significant interest rate increases in connection with floating rate debt. This cash flow hedging instrument is marked to market and the changes are recorded in other comprehensive income. Any hedge ineffectiveness is charged to interest expense. Refer to Note 14 of the Consolidated Financial Statements.

Recently Adopted Accounting Standards

In October 2009, the FASB issued ASU 2009-13, "Multiple-Deliverable Revenue Arrangements, (amendments to ASC Topic 605, Revenue Recognition)" (ASU 2009-13) and ASU 2009-14, "Certain Arrangements That Include Software Elements, (amendments to ASC Topic 985, Software)" (ASU 2009-14). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-14 removes tangible products from the scope of software revenue guidance and provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are covered by the scope of the software revenue guidance. ASU 2009-13 and ASU 2009-14 are effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, which for us was December 27, 2010, the first day of our 2011 fiscal year. The adoption of these standards did not have a material impact on our Consolidated Results of Operations and Financial Condition.

In April 2010, FASB issued ASU 2010-13 "Compensation-Stock Compensation (Topic 718) Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades" (ASU 2010-13). Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this standard are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, which for us was December 27, 2010, the first day of our 2011 fiscal year. The guidance should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings for all outstanding awards as of the beginning of the fiscal year in which the amendments are initially applied. The adoption of the standard did not have a material impact on our Consolidated Results of Operations and Financial Condition.

In December 2010, FASB issued ASU 2010-28 "Intangibles - Goodwill and Other (Topic 350)" (ASU 2010-28). Topic 350 is amended to clarify the requirement to test for impairment of goodwill. Topic 350 has required that goodwill be tested for impairment if the carrying amount of a reporting unit exceeds its fair value. Under ASU 2010-28, when the carrying amount of a reporting unit is zero or negative an entity must assume that it is more likely than not that a goodwill impairment exists, perform an additional test to determine whether goodwill has been impaired and calculate the amount of that impairment. The modifications to ASC Topic 350 resulting from the issuance of ASU 2010-28 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010, which for us was December 27, 2010, the first day of our 2011 fiscal year. The adoption of the standard did not have a material impact on our Consolidated Results of Operations and Financial Condition.

In December 2010, the FASB issued ASU 2010-29 "Business Combinations (Topic 805) - Disclosure of Supplementary Pro Forma Information for Business Combinations" (ASU 2010-29). This standard update clarifies that, when presenting comparative financial statements, SEC registrants should disclose revenue and earnings of the combined entity as though the current period business combinations had occurred as of the beginning of the comparable prior annual reporting period only. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for material (either on an individual or aggregate basis) business combinations entered into in fiscal years beginning on or after December 15, 2010, which for us was December 27, 2010, the first day of our 2011 fiscal year. The adoption of the standard did not have a material impact on our Consolidated Financial Statements.

In January 2011, the FASB issued ASU 2011-01 "Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20" (ASU 2011-01). This standard update defers the effective date of new disclosure requirements for troubled debt restructurings prescribed by ASU 2010-20, "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses." ASU 2011-01 is effective upon issuance. The adoption of the standard did not have a material impact on our Consolidated Results of Operations and Financial Condition.

In April 2011, the FASB issued ASU 2011-02 "A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring" (ASU 2011-02). The amendments to Topic 310 (Receivables) clarify the guidance on a creditor's evaluation of whether a debtor is experiencing financial difficulties and when a loan modification or restructuring is considered a troubled debt restructuring. In determining whether a loan modification represents a troubled debt restructuring, an entity should consider whether the debtor is experiencing financial difficulty and the lender has granted a concession to the borrower. ASU 2011-02 is effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. The adoption of the standard did not have a material impact on our Consolidated Results of Operations and Financial Condition.

New Accounting Pronouncements and Other Standards

In April 2011, the FASB issued ASU 2011-03 "Reconsideration of Effective Control for Repurchase Agreements" (ASU 2011-03). The amendments to Topic 860 (Transfers and Servicing) affect all entities that enter into agreements to transfer financial assets that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity. The amendments do not affect other transfers of financial assets. The amendments remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. ASU 2011-03 is effective for the first interim or annual periods beginning on or after December 15, 2011, and should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. We do not expect the adoption of the standard to have a material impact on our Consolidated Results of Operations and Financial Condition.

In May 2011, the FASB issued ASU 2011-04 "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" (ASU 2011-04). The amendments to Topic 820 (Fair Value Measurement) establish common requirements for measuring fair value and related disclosures in accordance with accounting principles generally accepted in the United Sates and international financial reporting standards. This amendment did not require additional fair value measurements. ASU 2011-04 is effective for the first interim and annual periods beginning after December 15, 2011, and should be applied prospectively. We do not expect the adoption of the standard to have a material effect on our Consolidated Results of Operations and Financial Condition.

In June 2011, the FASB issued ASU 2011-05 "Presentation of Comprehensive Income" (ASU 2011-05). The amendments to Topic 220 (Comprehensive Income) eliminate the option of presenting the components of other comprehensive income as part of the statement of changes in stockholders' equity, require consecutive presentation of the statement of net income and other comprehensive income and require reclassification adjustments from other comprehensive income to net income to be shown on the financial statements. In December 2011, the FASB issued ASU 2011-12, "Comprehensive Income -- Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in ASU 2011-05," to defer the effective date of the provision requiring entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. However, the remaining requirements of ASU 2011-05 are effective for the first interim and annual periods beginning after December 15, 2011. We do not expect the adoption of the standard to have a material effect on our Consolidated Results of Operations and Financial Condition.

In September 2011, the FASB issued ASU 2011-08, "Intangibles - Goodwill and Other," (ASU 2011-08), which amends current guidance to allow a company to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The amendment also improves previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We do not expect the adoption of the standard to have a material effect on our Consolidated Results of Operations and Financial Condition.

In September 2011, the FASB issued ASU 2011-09, "Compensation -- Retirement Benefits -- Multiemployer Plans (Subtopic 715-80)," (ASU 2011-09). ASU 2011-09 requires that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The additional quantitative and qualitative disclosures will provide users with more detailed information about an employer's involvement in multiemployer pension plans. ASU 2011-09 is effective for fiscal years ending after December 15, 2011. The adoption of this standard will not have a material effect on our Consolidated Results of Operations and Financial Condition.

In December 2011, the FASB issued ASU 2011-11, "Balance Sheet – Disclosures about Offsetting Assets and Liabilities (Topic 210-20)," (ASU 2011-11). ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, with retrospective application for all comparable periods presented. The adoption of this standard will not have a material effect on our Consolidated Results of Operations and Financial Condition.