PROVISION FOR RESTRUCTURING

During the second quarter of 2012, in conjunction with our strategic shift, we launched a new profit improvement initiative, Project LEAN, which is designed to restructure the Company to support a more focused product range while positioning Checkpoint to return to profitable growth. Project LEAN will be reported as part of the Global Restructuring Plan. This plan focuses on consolidating certain manufacturing facilities and administrative functions to improve efficiency.

The expanded Global Restructuring Plan including Project LEAN and the SG&A Restructuring Plan will impact over 2,400 existing employees. Total costs of the Global Restructuring Plan including Project LEAN and the SG&A Restructuring Plan are expected to approximate $70 million to $75 million by the end of 2013, with $52 million to $55 million in total anticipated costs for the Global Restructuring Plan and approximately $19 million of costs incurred for the SG&A Restructuring Plan, which is substantially complete.

Restructuring expense for the three and nine months ended September 23, 2012 and September 25, 2011 was as follows:



	Quarter						Nine Months
	(13 weeks) Ended						(39 weeks) Ended
(amounts in thousands)	September 23, 2012			September 25, 2011			September 23, 2012			September 25, 2011
Global Restructuring Plan (including LEAN)
Severance and other employee-related charges	2,442			5,972			16,661			5,972
Asset impairments	859			7,479			6,156			7,479
Other exit costs	1,174			—			3,680			—
SG&A Restructuring Plan
Severance and other employee-related charges	(288		)	3,661			608			6,120
Other exit costs	—			216			66			826
Manufacturing Restructuring Plan
Severance and other employee-related charges	—			(49		)	—			(90		)
Other exit costs	(75		)	—			(75		)	64
Total	$	4,112		$	17,279		$	27,096		$	20,371

Restructuring accrual activity for the nine months ended September 23, 2012 was as follows:



(amounts in thousands)	Accrual at Beginning of Year		Charged to Earnings		Charge Reversed to Earnings			Cash Payments			Exchange Rate Changes			Accrual at September 23, 2012
Global Restructuring Plan (including LEAN)
Severance and other employee-related charges	9,710		18,106		(1,445		)	(13,969		)	89			12,491
Other exit costs⁽¹⁾	—		3,680		—			(3,151		)	—			529
SG&A Restructuring Plan
Severance and other employee-related charges	6,718		805		(197		)	(4,860		)	(13		)	2,453
Other exit costs⁽²⁾	1,109		66		—			(859		)	(9		)	307
Manufacturing Restructuring Plan
Other exit costs	75		—		(75		)	—			—			—
Total	$	17,612	$	22,657	$	(1,717	)	$	(22,839	)	$	67		$	15,780


⁽¹⁾	During the first nine months of 2012, there was a net charge to earnings of $3.7 million primarily due to lease termination costs, inventory and equipment moving costs, restructuring agent costs, legal costs, and gains/losses on sale of assets in connection with the restructuring plan.


⁽²⁾	During the first nine months of 2012, there was a net charge to earnings of $0.1 million primarily due to lease termination costs, and inventory and equipment moving costs, in connection with the restructuring plan.

Global Restructuring Plan (including LEAN)

During September 2011, we initiated the Global Restructuring Plan focused on further reducing our overall operating expenses by including manufacturing and other cost reduction initiatives, such as consolidating certain manufacturing facilities and administrative functions to improve efficiencies. This plan was further expanded in the first quarter of 2012 and again during the second quarter of 2012 to include Project LEAN. The first phase of this plan was implemented in the third quarter of 2011 with the remaining phases of the plan expected to be substantially complete by the end of 2013.

For the nine months ended September 23, 2012, the net charge to earnings of $26.5 million represents the current year activity related to the Global Restructuring Plan including Project LEAN. The anticipated total costs related to the plan are expected to approximate $52 million to $55 million, of which $45.9 million have been incurred. The total number of employees planned to be affected by the Global Restructuring Plan including Project LEAN is 2,296, of which 1,263 have been terminated. Termination benefits are planned to be paid one month to 24 months after termination.

SG&A Restructuring Plan

During 2009, we initiated the SG&A Restructuring Plan focused on reducing our overall operating expenses by consolidating certain administrative functions to improve efficiencies. The first phase of this plan was implemented in the fourth quarter of 2009 with the remaining phases of the plan substantially completed by the end of the first quarter of 2012.

For the nine months ended September 23, 2012, the net charge to earnings of $0.7 million represents the current year activity related to the SG&A Restructuring Plan. The implementation of the SG&A Restructuring Plan is substantially complete, with total costs incurred of approximately $19 million. The total number of employees planned to be affected by the SG&A Restructuring Plan is 369, of which 363 have been terminated. Termination benefits are planned to be paid one month to 24 months after termination.

Manufacturing Restructuring Plan

In August 2008, we announced a manufacturing and supply chain restructuring program designed to accelerate profitable growth in our Apparel Labeling Solutions (ALS) business, formerly Check-Net^®, and to support incremental improvements in our EAS systems and labels businesses. For the nine months ended September 23, 2012, there was a $0.1 million charge reversed to earnings recorded in connection with the Manufacturing Restructuring Plan.

The total number of employees planned to be affected by the Manufacturing Restructuring Plan is 420, all of which have been terminated. As of September 23, 2012 the implementation of the Manufacturing Restructuring Plan is substantially complete, with total costs incurred of $4.1 million.