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CHECKPOINT SYSTEMS, INC. CHALLENGES NARM'S SOURCE TAGGING RECOMMENDATION AS SEVERAL KEY ISSUES REMAIN UNRESOLVED

 THOROFARE, N.J., March 8 /PRNewswire/ -- The following was released today by Checkpoint Systems, Inc. (NASDAQ: CHEK):
 Three of the seven criteria originally established by NARM (the National Association of Recording Merchandisers) and the RIAA (Recording Industry Association of America) have not been thoroughly evaluated.
 The first criteria, according to a May 1992 NARM press release, was that the EAS technology recommended "must have no adverse effect on either audio or video product." Before making a final recommendation, NARM ordered an additional lab test. "Although the purpose of this discrete test was not disclosed, we feel it was directly related to adverse effects caused by acousto-magnetic deactivation of audio tapes," said A.E. Wolf, Checkpoint's president and CEO.
 After the discrete test, and immediately prior to making a recommendation, NARM revised this first criteria to read "compact disc, laser disc, MiniDisc, video tape, Digital Compact Cassette, and Type II and Type IV audio tape when packaged in a Norelco box."
 "It is our understanding that the cassettes not included in the recommendation represent a significant portion of cassette tapes sold," Wolf added. According to the RIAA, cassette tapes represent more than 50 percent of all music media sold.
 The two other criteria still unresolved include number four: "the tag must be applicable on-line by manufacturers for all configurations" (audio cassettes, CDs, digital compact cassettes (DCCs), laser discs, and MiniDiscs); and number six: "the system must be cost-effective."
 "NARM's recommendation is just a recommendation and does not guarantee acceptance by the music industry," Wolf said. "It is our understanding that the RIAA will conduct its own evaluation of the recommended technology based on all seven original criteria. We trust that the RIAA's evaluation will take into consideration the concerns of the artists, the music labels and consumers," he said.
 Consumer concerns were raised when a study conducted by Audits & Surveys revealed that 199 consumers out of 200 consumers heard audio degradation in cassette singles that were passed over an acousto- magnetic deactivation device. Audits & Surveys conducted the double- blind test at a mall testing facility in Pennsylvania.
 Other key issues being ignored include activation and cross-market compatibility. EAS source tagging will require activation in bulk packaging. In the case of acousto-magnetic technology, bulk activation will require larger magnetic fields, a fact that is likely to increase the chance for degradation.
 "Cross-market compatibility is one of the most critical issues being ignored in the NARM controversy. Music products are sold through a variety of retail distribution channels, including supermarkets where acousto-magnetic technology is not suitable for high throughput environments," commented Wolf. In fact, the 1993 Ernst & Young/IMRA Survey of Retail Loss Prevention Expenses and Trends revealed that audio cassettes, CDs and video cassettes are the most shoplifted general merchandise items in supermarkets. Checkpoint's radio frequency technology, which met and exceeded the original criteria tested by NARM, is sold across all retail markets, including supermarkets.
 "A standard technology for source tagging can be implemented only when all the issues have been addressed and resolved to the satisfaction of all concerned parties. There is much work to be done. At Checkpoint, we urge the music industry to thoroughly investigate all the issues."
 Checkpoint Systems, Inc., headquartered in Thorofare, offers a variety of security and loss prevention solutions for the protection of assets in diverse market applications. Checkpoint's Electronic Article Merchandising(SM) (EAM(SM)) and electronic access control systems are based on its Electronic Signatures(R) technology that makes unique radio signals assignable to items or people. Using detectable paper-thin disposable radio frequency (RF) targets that can be deactivated without contact, the company has installed more than 70,000 EAM systems worldwide. Checkpoint's source tagging program, Impulse(SM), embeds its RF targets into products or product packaging at the point of manufacture or packaging.


UNRESOLVED ISSUES RELATED TO NARM'S EAS SOURCE TAGGING RECOMMENDATION
 These are three key issues that remain unresolved:
 1. The EAS technology recommended has not satisfied the first criteria established in May 1992 by the National Association of Recording Merchandisers (NARM) and the Recording Industry Association of America (RIAA).
 2. NARM has not thoroughly evaluated the fourth original criteria concerning on-line applicability of the EAS technology.
 3. An in-depth financial analysis to determine the cost- effectiveness of the recommended EAS technology has not been conducted.
 AN EXPLANATION OF EACH ISSUE
 1. The first criteria established by NARM and the RIAA was that "the system must have no adverse effect on audio or video product."
 -- NARM tabled its decision and ordered an additional lab test after two independent studies and a survey of consumers revealed degradation of audio cassette tapes caused by acousto-magnetic deactivation.
 -- One week after tabling its decision, the NARM board met on the evening of March 4. NARM revised its original criteria to read "NARM recommends the acousto-magnetic EAS technology for source tagging the following configurations of prerecorded product: compact disc, laser disc, MiniDisc, videotape, Digital Compact Cassette tape, and Type II and Type IV audio tape when packaged in a Norelco box."
 -- Type I and Type III audio cassettes represent more than 85 percent of cassette tapes sold.
 -- According to the RIAA 1992 mid-year statistics, cassette tapes represent more than 50 percent of all music media sold.
 2. NARM originally stated the fourth criteria as: "the tag must be applicable on-line by manufacturers for all configurations."
 -- According to NARM's press release, dated March 5, 1993: "The Board is currently soliciting feedback from the music manufacturing community with respect to the automation of acousto-magnetic targets on the various configurations recommended for source tagging."
 3. NARM's original criteria stated that "the system must be cost- effective."
 -- acousto-magnetic technology requires significant modifications in current CD jewel box packaging, as well as other music formats. RF technology can work with all current packaging designs without any modifications, including digital compact cassette and MiniDisc formats.
 -- an in-depth financial analysis has not been conducted to determine the long-term costs associated with applying acousto-magnetic tags on-line.
 -- it hasn't been determined whether acousto-magnetic tags can be applied using standard, off-the-shelf label applicators.
 ADDITIONAL ISSUES RELATED TO SOURCE TAGGING OF EAS
 1. In a source tagging environment, all products will undergo the deactivation process, whether they are source tagged or not. Because the tags will be hidden, sales personnel will not know which products are protected and which aren't. For example, sales personnel will not have the knowledge or time to determine whether an audio cassette is Type I or Type II or Type III or Type IV.
 2. The technology selected must be compatible across all retail markets because:
 a. Music products are sold through a variety of retail channels,
 including music stores, mass merchandisers, drugstores, and
 supermarkets (according to the 1993 Ernst & Young/IMRA Survey of
 Retail Loss Prevention Expenses and Trends, audio cassettes, CDs
 and videotapes are the most shoplifted general merchandise items
 in supermarkets). Virtually all other product lines require
 supermarket compatibility as well.
 3. NARM did not test the effects of target activation or deactivation in bulk packaging. Bulk activation and deactivation with acousto-magnetic technology will require larger magnetic fields which are likely to increase degradation.
 These issues must be resolved to the satisfaction of all concerned parties (music manufacturers, artists and consumers) before a standard can be established for source tagging of EAS in the music industry.
 To voice your concern, call NARM at 609-596-2221. If you would like more information about these issues contact Checkpoint Systems, Inc., at 800-257-5540, ext. 2308.
 /delval/
 -0- 3/8/93
 /CONTACT: Glenda Laudisio, 609-384-2411, or Kevin Dowd, 609-384-2407, both of Checkpoint Systems/
 (CHEK)


CO: Checkpoint Systems, Inc.; Recording Industry Association of
 America; National Association of Recording Merchandisers ST: New Jersey, Pennsylvania IN: REA SU:


CC-LJ -- PH008 -- 4035 03/08/93 12:52 EST
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