Checkpoint Announces 2000 First Quarter Results.

Business Editors

THOROFARE, N.J.--(BUSINESS WIRE)--April 27, 2000

Integration of Meto on Schedule

Checkpoint Systems, Inc. (NYSE: CKP), today reported financial results for the first quarter ended March 26, 2000. The company reported a net loss of $669,000 or $.02 per diluted share exclusive of non-recurring integration expenses and the cumulative effect of the implementation of SEC Staff Accounting Bulletin No. 101. Net earnings for the first quarter of 1999 were $1,392,000 or $0.05 per diluted share.

Including pre-tax integration expenses of $1,586,000 and the cumulative effect of $5,020,000 from the implementation of SEC Staff Bulletin No. 101, the net loss for the 2000 first quarter as reported was $6,642,000 or $0.22 per diluted share.

The company reported revenue for the first quarter 2000 of $162,561,000 versus $81,754,000 for the first quarter of 1999. The results of the first quarter of the year 2000 include the Meto business which was acquired in December 1999.

Gross margin for the first quarter of 2000 was 40.6% as compared to 38.1% for the first quarter of 1999. This increase in gross margin was due to favorable product mix and cost savings from the field service and manufacturing organizations.

Selling, general and administrative expenses (SG&A), excluding integration expenses, were $62,267,000 for the first quarter of 2000 or 38.3% of revenue. Amortization of $2,754,000 related to the Meto acquisition is included in SG&A expenses for the first quarter of year 2000. For the first quarter of 1999, SG&A expenses were $27,305,000, or 33.4% of revenue.

Operating income, excluding non-recurring integration expenses, was $3,738,000 in the first quarter of 2000 as compared to operating income in the first quarter of 1999 of $3,822,000.

Cash earnings for the first quarter of 2000 were $7,069,000 or $0.21 per diluted share. The Company defines cash earnings as net income before the cumulative effect of change in accounting principle plus depreciation and amortization of $12,350,000 less capital expenditures of $3,659,000.

As of March 26, 2000 cash and short-term investments were $75,755,000, working capital was $171,568,000 and funded debt was $407,348,000.

Kevin P. Dowd, President and Chief Executive Officer, commented, "During the quarter we received orders from some of the most prestigious retailers around the world including Wal-Mart, Carrefour, Target, and TJ Maxx. Additionally, we received orders across all product lines from customers such as Auchan and LeClerc in France, as well as Edeka, Metro, Rewe and Karstadt in Germany. We are beginning to realize the cross-selling opportunities between organizations."

Mr. Dowd continued, "We are also extremely pleased with continuing growth in source tagging. Unit sales grew approximately 46% during the quarter and 59 new product manufacturers joined the source tagging program. This trend continues the success of our source tagging program and builds on the momentum begun in the third and fourth quarters of 1999."

Regarding the integration of Checkpoint and Meto, Mr. Dowd commented, "We are pleased with the progress of the integration of the Meto business. We are on-schedule to achieve the projected year 2000 operating expense savings of $18 million, and we expect the year 2001 savings to be in excess of $31 million. Through March 31, we have reduced the worldwide headcount by 234 employees which is over 50% of our targeted reduction for year 2000. As we complete the operational integration throughout the year, we will continue to focus on the cross-selling opportunities resulting from the acquisition of Meto, using our extensive product solutions to expand our reach within existing and new retailers."

In accordance with SEC Staff Accounting Bulletin No. 101 issued in December 1999, the Company has changed its accounting method for recognizing revenue on the sale of equipment where post-shipment obligations exist. Previously, the company recognized revenue for equipment when shipped. Beginning with the first quarter of year 2000, the company began recognizing revenue when installation is complete or other post-shipment obligations have been satisfied. The cumulative effect of the change in accounting method is a non-cash reduction in earnings of $5,020,000, or $0.17 per diluted share.

Checkpoint Systems, Inc. is a $750 million multinational company that manufactures and markets labeling systems designed to improve efficiency, reduce costs and provide value-added label solutions for customers across many markets and industries. Checkpoint is a leading provider of RF source tagging, bar labeling systems EAS, handheld labeling systems, and retail merchandising systems. Applications include automatic identification, retail security, and pricing and promotional labels. Operating in 27 countries, Checkpoint has a global network of subsidiaries and provides professional customer service and technical support around the world.

Safe Harbor Statement

This presentation may include information that could constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. 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 those matters disclosed in the Company's Security and Exchange Commission filings.

                       Checkpoint Systems, Inc.
                   Consolidated Statements of Income
                (In thousands except per share amounts)
                              (unaudited)

                                     Quarter Ended
                                       (13 weeks)

                                  March 26,   March 28,
                                    2000       1999

Net Revenues                     $162,561    $81,754
Cost of Revenues                   96,556     50,627
     Gross Profit                  66,005     31,127

Selling, general and
  administrative expenses          62,267     27,305

Integration expenses                1,586          0
Income from operations              2,152      3,822

Interest income                     1,467      1,058
Interest expense                    6,105      2,283
Other income (expense)               (256)      (633)
Income before taxes                (2,742)     1,964

Income tax expense (benefit)       (1,097)       599
Minority Interest                      23         27
Earnings before cumulative effect  (1,622)     1,392

Cumulative effect of
 change in accounting principle    (5,020)      ----

Net Earnings (Loss)               ($6,642)    $1,392

Earnings (Loss) per share before
 integration expenses and cumulative
 effect of change in
 accounting principle:
Basic                              ($0.02)    $0.05
Diluted                            ($0.02)    $0.05

Earnings (Loss) per share
 before cumulative effect
 of change in accounting principle:
Basic                             ($0.05)     $0.05
Diluted                           ($0.05)     $0.05

Earnings (Loss) per share:
Basic                             ($0.22)     $0.05
Diluted                           ($0.22)     $0.05


                       Checkpoint Systems, Inc.
                         Summary Balance Sheet

                                     March 26,     December 26,
                                       2000          1999

Cash and Investments                $  75,755     $  87,718
Working Capital                     $ 171,568     $ 183,186
Current Assets                      $ 388,205     $ 419,800
Long-term Debt                      $ 371,751     $ 383,595
Shareholder's Equity                $ 257,179     $ 255,795
Total Assets                        $ 911,056     $ 944,873