Checkpoint Systems, Inc. Announces 2001 Second Quarter Results.Business & Technology Editors THOROFARE, N.J.--(BUSINESS WIRE)--July 24, 2001 Checkpoint (programming) checkpoint - Saving the current state of a program and its data, including intermediate results, to disk or other non-volatile storage, so that if interrupted the program could be restarted at the point at which the last checkpoint occurred. Systems, Inc. (NYSE NYSE See: New York Stock Exchange : CKP CKP Checkpoint CKP Crankshaft Position CKP Chandraseniya Kayastha Prabhu (caste of Maharastra, India) CKP Chris Key Players (band) CKP Concept Knowledge Processing ) today reported financial results for the second quarter ended July 1, 2001. The Company's second quarter 2001 net income was $6.2 million, or $0.19 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $4.3 million, or $0.14 per diluted share, before non-recurring integration expenses, in the second quarter 2000. Including pre-tax Meto integration expenses of $4.0 million, the second quarter 2000 net income was $1.9 million, or $0.06 per diluted share. For the second quarter 2001, the Company reported revenue of $162.2 million versus $167.9 million in the prior year period. Excluding the impact of foreign exchange of approximately $7.7 million, revenue increased 1.2% over the comparable quarter in 2000. Gross profit in the second quarter of 2001 was $66.3 million compared to $69.6 million in the second quarter of 2000. Selling, general and administrative expenses (SG&A) were $50.8 million compared to $56.0 million, excluding non-recurring integration expenses, in the comparable period last year. SG&A as a percent of revenue decreased to 31.3% in the second quarter of 2001 from 33.3% in the second quarter of 2000, primarily as a result of the cost saving initiatives implemented in the first half of this year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the second quarter of 2001 grew to $15.6 million, or 9.6% of revenue, compared to $13.7 million, or 8.1% of revenue, excluding non-recurring integration expenses, in the prior year period. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
As of July 1, 2001, cash and short-term investments were $41.8 million, working capital was $155.5 million and funded debt Funded Debt Long-term debt that matures after more than one year. Notes: This is usually issued as a bond or a long-term note. See also: Bond, Debt, Maturity, Note Funded debt Debt maturing after more than one year. was $340.6 million. Michael E. Smith, President and Chief Executive Officer, commented, "Although challenged by the current economic environment, we are generally satisfied with our second quarter performance as we made substantial progress toward achieving our key objectives for the year of growing earnings, generating positive cash flow, and paying down debt. For the second quarter, on a constant currency basis, overall revenue increased moderately as a solid performance from our European businesses was offset by lower sales volumes in our South American operations 'South American' operation Surgical oncology A radical operation for 'frozen' pelvis, which consists of en bloc resection of the uterus and rectum. See Frozen pelvis. Cf 'All-American' and 'North American' operations. and U.S. labeling services business. We effectively reduced our cost structure to generate higher operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and earnings, and we managed our working capital, which allowed us to continue to bring down debt levels." Mr. Smith continued, "Our European business remained strong as we continue to expand our leading positions in the hypermarket hy·per·mar·ket n. A very large commercial establishment that is a combination of a department store and a supermarket. hypermarket Noun a huge self-service store [translation of French and supermarket segment. Our US EAS (Electronic Article Surveillance) A security system for preventing theft in retail stores that uses disposable label tags or reusable hard tags attached to the merchandise. and CCTV CCTV abbr. closed-circuit television CCTV closed-circuit television businesses continued to show strong gross margins in spite of revenue pressure resulting from the slowing economy. In the RFID (Radio Frequency IDentification) A data collection technology that uses electronic tags for storing data. The tag, also known as an "electronic label," "transponder" or "code plate," is made up of an RFID chip attached to an antenna. business, we signed our largest contract to date with the University of Connecticut The University of Connecticut is the State of Connecticut's land-grant university. It was founded in 1881 and serves more than 27,000 students on its six campuses, including more than 9,000 graduate students in multiple programs. UConn's main campus is in Storrs, Connecticut. for the installation of our Intelligent Library System(TM). Demand for labeling services from the apparel industry declined sharply from previous levels, which reflects the sluggish soft goods soft goods pl.n. See dry goods. Noun 1. soft goods - textiles or clothing and related merchandise drygoods commodity, trade good, good - articles of commerce sector of the U.S. retail economy. Further, economic conditions in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , particularly in Argentina, Brazil, and Mexico, have deteriorated dramatically since the first quarter of 2001." Mr. Smith concluded, "Assuming the economy does not deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. further and exchange rates remain stable, we expect third quarter 2001 revenue of between $158 million and $165 million, and diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. between $0.17 and $0.22 per share. For the full year 2001, we are currently forecasting revenue between $660 million and $675 million and diluted EPS between $0.82 and $0.92 per share. We will maintain our focus on reducing costs and maximizing cash flow generation, and expect to meet our goal of a $35 million reduction in long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ." For the six months ended July 1, 2001, the Company reported revenue of $325.9 million, compared to $331.3 million in the same period of 2000. Excluding the impact of foreign exchange of $16.4 million, revenue increased 3.3% for the first six months of year 2001 over the comparable period for year 2000. Operating income, excluding integration and non-recurring expenses, was $28.0 million for the first six months of 2001, compared to $17.4 million for the same period of 2000. Net income, excluding integration and non-recurring expenses, was $10.7 million, or $0.33 per diluted share, for the first half of fiscal 2001, versus $3.7 million, or $0.12 per diluted share, for the first six months of 2000. Including integration and non-recurring expenses, net income for the first half of year 2001 was $9.7 million, or $0.31 per diluted share, versus $0.3 million, or $0.01 per diluted share, for the first half of year 2000. The reported net loss for the first half of year 2000, including the cumulative effect of change in accounting principle in the amount of $5.0 million, was $4.7 million, or a net loss of $0.16 per diluted share. Checkpoint Systems will host a conference call to discuss second quarter results today at 10:00 a.m. Eastern Time. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the webcast at the Company's homepage, http://www.checkpointsystems.com, by clicking on the "Conference Calls" link or entering the "Investors" section of this site. Please allow 15 minutes prior to the call to visit the site and download and install any necessary audio software. The webcast will be archived at this site until the next quarterly conference call. Checkpoint Systems, Inc. is a $700 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 industries. Operating in 30 countries, Checkpoint has a global network of subsidiaries and provides logistical lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation and supply chain solutions for retail chains and apparel companies requiring high-quality graphic identification and branding worldwide. Checkpoint is a leading provider of digital RF EAS RF EAS Radio Frequency Electronic Article Surveillance and RFID systems, source tagging, barcode labeling systems, hand-held labeling systems, and retail merchandising systems. Applications include automatic identification, retail security, and pricing and promotional labels. Checkpoint Systems, Inc.'s web site is located at www.checkpointsystems.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This presentation may include information that could constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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
(Amounts in thousands except per share amounts)
(unaudited)
Quarter Ended Six Months Ended
(13 weeks) (26 Weeks)
July 1, June 25, July 1, June 25,
2001 2000 2001 2000
---- ----- ---- ----
Net revenues $162,182 $167,891(1) $325,910 $331,315(1)
Cost of revenues 95,858 98,251(1) 192,440 195,670(1)
-------- -------- ------- -------
Gross profit 66,324 69,640 133,470 135,645
Selling, general
and administrative
expenses 50,771 55,964 105,484 118,231
Integration
expenses - 3,992 1,607 5,578
--------- -------- ---------- ---------
Income from
operations 15,553 9,684 26,379 11,836
Interest income 685 1,063 1,510 2,530
Interest expense 5,723 5,787 11,829 11,892
Other income
(expense) (317) (1,754) (22) (2,010)
--------- -------- ---------- ---------
Income before
taxes 10,198 3,206 16,038 464
Income tax
expense 3,977 1,282 6,255 185
Minority interest ( 42) 10 (52) 33
---------- ---------- ---------- -----------
Earnings before
cumulative effect 6,179 1,934 9,731 312
Cumulative effect
of change - - - (5,020)
in accounting
principle ----------- ------------ ------------ -----------
Net earnings (loss) $ 6,179 $ 1,934 $ 9,731 $ (4,708)
========== ========= ========= =========
Earnings per share before
integration expenses
and cumulative effect
of change in accounting principle:
Basic $ 0.20 $ 0.14 $ 0.35 $ 0.12
Diluted $ 0.19 $ 0.14 $ 0.33 $ 0.12
Earnings per share before
cumulative effect
of change in accounting
principle:
Basic $ 0.20 $ 0.06 $ 0.32 $ 0.01
Diluted $ 0.19 $ 0.06 $ 0.31 $ 0.01
Earnings (loss)
per share:
Basic $ 0.20 $ 0.06 $ 0.32 $ (0.16)
Diluted $ 0.19 $ 0.06 $ 0.31 $ (0.16)
(1) Amounts have been restated to conform with Emerging Issues Task
Force (EITF) 00-10, Accounting for Shipping and Handling Fees and
Costs.
Checkpoint Systems, Inc.
Summary Balance Sheet
(Amounts in thousands)
July 1, December 31,
2001 2000
---- -----
(unaudited)
preliminary
Cash and Investments $ 41,755 $ 28,121
Working Capital $155,502 $153,074
Current Assets $339,197 $371,155
Long-term Debt $315,173 $347,011
Shareholders' Equity $235,557 $237,679
Total Assets $795,603 $872,005
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