Checkpoint Systems, Inc. Announces 2002 Second Quarter Results.Business Editors THOROFARE, N.J.--(BUSINESS WIRE)--July 23, 2002 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 June 30, 2002. The Company's second quarter 2002 net income was $6.0 million, or $0.18 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 $6.2 million, or $0.19 per diluted share, in the second quarter 2001. Second quarter 2002 net income included operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of $2.8 million pre-tax, or $0.04 per diluted share after-tax, related to compensation costs associated with executive management changes and legal fees for the ID Security Systems Canada Inc. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . For the second quarter 2002, the Company reported revenue of $160.9 million versus $162.2 million in the prior year period. Gross profit in the second quarter of 2002 was $66.1 million, or 41.1% of revenue, compared to $66.3 million, or 40.9% of revenue, in the second quarter of 2001. "Our performance in the second quarter is evidence that our business remains robust, despite a challenging economic environment," commented George Off, Interim Chief Executive Officer. "Notwithstanding the softness in the global retail market, we benefited from successful sales and marketing efforts and continued to see our gross margins improve as a result of our cost reduction initiatives." Mr. Off added, "Our Labeling Services business in the U.S. continued to demonstrate positive trends and source tagging revenue increased worldwide. Our Electronic Article Surveillance See EAS. (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. ) sales volume in Europe, however, remained soft, reflecting a mixed economic environment in the region." Selling, general, and administrative expenses (SG&A) were $54.0 million compared to $50.8 million in the same period last year. SG&A as a percent of revenue increased to 33.5% in the second quarter of 2002 from 31.3% in the second quarter of 2001. Excluding expenses associated with executive management changes and legal fees, SG&A as a percent of revenue was 31.8%. Excluding the amortization of goodwill, SG&A for the second quarter of 2001 was 29.8% of revenue. 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 2002 decreased to $12.1 million, or 7.5% of revenue, compared to $15.6 million, or 9.6% of revenue, 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 June 30, 2002, cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments were $51.8 million, working capital was $133.0 million and total debt was $271.6 million. Craig Burns, Executive Vice President, Chief Financial Officer and Treasurer, commented "We continue reporting solid gross margins, generating strong cash flow and paying down debt, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite revenue pressure resulting from the slowing economy. We generated $32.2 million in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and repaid $20.6 million in debt during the second quarter of 2002." Mr. Off added, "In June, we filed a Motion for Post-Trial Relief in the lawsuit lawsuit: see procedure; tort. brought by ID Security Systems Canada, Inc. The post-trial and appeal process will take place during the next eighteen to twenty-four months. We will vigorously pursue all available appeal rights and believe that the company will be vindicated as a consequence of this process." Mr. Off concluded, "Going forward, we will remain focused on improving top-line results and delivering on our stated goals to maximize cash flow and reduce debt levels. Based on the current market conditions, we expect third quarter 2002 revenue of between $160 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 $0.20 and $0.24 per share. Also, we are confident that we will exceed our original debt reduction goal of $55 million for the year 2002." For the six months ended June 30, 2002, the Company reported revenue of $304.4 million, compared to $325.9 million in the same period of 2001. Operating income was $21.7 million for the first six months of 2002, compared to $26.4 million for the same period of 2001. Net income was $10.1 million, or $0.31 per diluted share for the first half of fiscal 2002, versus $9.7 million, or $0.31 per diluted share, for the first six months of 2001. Checkpoint Systems will host a conference call today, July 23, 2002, at 10:00 a.m. Eastern Time, to discuss its 2002 second quarter results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the live webcast at the Company's homepage, 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 To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. The webcast will be archived at the Company's homepage beginning approximately 90 minutes after the call ends until the next quarterly conference call. Checkpoint Systems, Inc. is a 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 EAS and 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. systems, source tagging, barcode labeling systems, hand-held labeling systems and retail merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. systems. Applications include automatic identification, retail security and pricing and promotional labels. Operating directly in 30 countries, Checkpoint has a global network of subsidiaries and provides professional customer service and technical support around the world. 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 press release 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 Operations
(Amounts in thousands except per share amounts)
(unaudited)
Quarter Ended Six Months Ended
(13 Weeks) (26 Weeks)
June 30, July 1, June 30, July 1,
2002 2001 2002 2001
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Net revenues $160,924 $162,182 $304,378 $325,910
Cost of revenues 94,842 95,858 178,864 192,440
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Gross profit 66,082 66,324 125,514 133,470
Selling, general,
and administrative
expenses 53,967 50,771 103,799 105,484
Other operating
expenses - - - 1,607
---------------------------------------------------
Operating income 12,115 15,553 21,715 26,379
Interest income 454 685 869 1,510
Interest expense 3,902 5,723 7,627 11,829
Other income/
(loss), net 131 (317) (100) (22)
---------------------------------------------------
Earnings before
income taxes 8,798 10,198 14,857 16,038
Income taxes 2,815 3,977 4,754 6,255
Minority interest 16 42 22 52
---------------------------------------------------
Net earnings $ 5,967 $ 6,179 $10,081 $ 9,731
===================================================
Earnings per share
before other
operating expenses:
Basic $ 0.19 $ 0.20 $ 0.32 $ 0.35
Diluted $ 0.18 $ 0.19 $ 0.31 $ 0.33
Net earnings per share:
Basic $ 0.19 $ 0.20 $ 0.32 $ 0.32
Diluted $ 0.18 $ 0.19 $ 0.31 $ 0.31
Checkpoint Systems, Inc.
Summary Balance Sheet
(Amounts in thousands)
June 30, December 30,
2002 2001
---- ----
(unaudited)
preliminary
Cash and Short-term
Investments $ 51,783 $ 43,698
Working Capital $132,955 $126,615
Current Assets $315,714 $313,573
Total Debt $271,611 $293,511
Shareholders' Equity $276,416 $240,263
Total Assets $774,420 $752,653
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