Checkpoint Systems, Inc. Announces 2003 Second Quarter Results.Business Editors THOROFARE, N.J.--(BUSINESS WIRE)--July 22, 2003 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 June: see month. 29, 2003. The Company's second quarter 2003 net earnings were $10.9 million, or $0.30 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 net earnings of $6.0 million, or $0.18 per diluted share, in the second quarter 2002. Revenues for the second quarter 2003 were $175.7 million versus $160.9 million for the second quarter 2002. Foreign exchange had a positive impact on revenues of approximately $18.3 million in the second quarter of 2003 as compared to the second quarter of 2002. "We are pleased with our results for the second quarter and first half of 2003, given the soft retail environment," commented George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). Off, Chairman and Chief Executive Officer of Checkpoint. "The security segment in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia Pacific continued to
perform well, with the decline in the retail merchandising merchandisingElement 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. segment also continuing in the second quarter. We are pleased with the performance of our U.S. closed-circuit television closed-circuit television Noun a television system used within a limited area such as a building Noun 1. closed-circuit television (CCTV CCTV abbr. closed-circuit television CCTV closed-circuit television ) division as it continued to show strong growth in revenues and earnings. Also, the gross margins in 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. ) products have improved as a result of our continuing focus on manufacturing efficiency. Our EAS margins have also benefited from the effects of foreign exchange." Gross profit for the second quarter 2003 was $75.6 million, or 43.0% of revenues, compared to $66.1 million, or 41.1% of revenues, for the second quarter 2002. Selling, general, and administrative expenses (SG&A) were $56.6 million, or 32.2% of revenues, for the second quarter 2003, compared to $54.0 million, or 33.5% of revenues, in the same period last 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. was $19.0 million in the second quarter 2003, or 10.8% of revenues, compared to operating income of $12.1 million, or 7.5% of revenues, in the second quarter 2002. 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 for the second quarter 2003 was $20.9 million versus $32.2 million in the second quarter 2002. As of June 29, 2003, cash and cash equivalents were $48.2 million, working capital was $119.0 million and total debt was $189.2 million. Capital expenditures in the second quarter were $2.0 million compared to $1.7 million a year ago. Craig Craig , Edward Gordon 1872-1966. British theatrical producer, director, and designer whose innovative productions and simplified stage designs influenced modern theater. Burns, Executive Vice President, Chief Financial Officer, Finance and Operations, commented, "In the second quarter, we paid down a net amount of $8.6 million in debt, which brings our year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. debt repayment total to $26.2 million. We remain confident in our ability to achieve our debt repayment goal of $50 to $60 million for 2003." Mr. Off stated, "During the second quarter, Checkpoint gained momentum on a number of new initiatives. Our Liberty series of EAS antennas continued to be well received by our global customer base. In Europe, our global ticketing and sourcing business added 18 new customers in the first half of 2003, several of which are utilizing our fully integrated tagging solution. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , our CCTV, fire and intrusion business continues to deliver strong revenue and earnings growth as retailers have shifted some of their emphasis to CCTV from EAS. On the marketing front, we have begun demonstrating some of the latest 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. technologies at our newly-opened Solutions Center in Thorofare and at prominent industry trade shows. We have also been working with leading retailers to develop pilot projects to test new concepts for inventory tracking, merchandising, and security." Mr. Off concluded, "Looking forward, we believe the economic challenges and fluctuations in foreign exchange that we have witnessed in the first half of 2003 are likely to continue into the second half of the year. We plan to step up spending in the second half to improve our future business and still expect earnings growth of between 5% and 10% for the year." For the six months ended June 29, 2003, the Company reported revenue of $332.1 million, compared to $304.4 million in the same period of 2002. Foreign exchange had a positive impact on revenue of approximately $33.5 million for the first six months of 2003 compared to 2002. Operating income was $27.2 million for the first six months of 2003, compared to $21.7 million for the same period of 2002. Net income was $15.1 million, or $0.43 per diluted share, for the first half of fiscal 2003 compared to a net loss of $62.8 million, or $1.55 per diluted share, for the first six months of 2002. Earnings before cumulative effect of change in accounting principle for the first six months of 2002 was $10.1 million, or $0.31 per diluted share. Checkpoint Systems will host a conference call today, July July: see month. 22, 2003, at 10:00 a.m. Eastern Time, to discuss its 2003 second quarter results. The conference call will be simultaneously broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . 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 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. 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
(Thousands except per share amounts)
(unaudited)
Quarter Ended Six Months Ended
(13 Weeks) (26 Weeks)
June 29, June 30, June 29, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Net revenues $175,720 $160,924 $332,137 $304,378
Cost of revenues 100,109 94,842 193,377 178,864
--------- --------- --------- ---------
Gross profit 75,611 66,082 138,760 125,514
Selling, general, and
administrative expenses 56,623 53,967 111,520 103,799
--------- --------- --------- ---------
Operating income 18,988 12,115 27,240 21,715
Interest income 385 454 724 869
Interest expense 2,928 3,902 5,971 7,627
Other (loss)/gain, net (209) 131 539 (100)
--------- --------- --------- ---------
Earnings before income taxes 16,236 8,798 22,532 14,857
Income taxes 5,357 2,815 7,435 4,754
Minority interest 17 16 34 22
--------- --------- --------- ---------
Earnings before cumulative
effect of change in accounting
principle 10,862 5,967 15,063 10,081
Cumulative effect of change in
accounting principle - - - (72,861)
--------- --------- --------- ---------
Net earnings $ 10,862 $ 5,967 $ 15,063 $(62,780)
========= ========= ========= =========
Earnings per share before
cumulative effect of change in
accounting principle:
Basic $ 0.33 $ 0.19 $ 0.46 $ 0.31
Diluted $ 0.30 $ 0.18 $ 0.43 $ 0.31
Net earnings per share:
Basic $ 0.33 $ 0.19 $ 0.46 $ (1.96)
Diluted $ 0.30 $ 0.18 $ 0.43 $ (1.55)
Weighted average common stock
outstanding 32,762 32,232 32,743 32,088
Weighted average common stock
and dilutive stock outstanding 39,791 39,478 39,567 39,342
Checkpoint Systems, Inc.
Summary Consolidated Balance Sheet
(Thousands)
June December
29, 29,
2003 2002
--------- ---------
(unaudited)
preliminary
Cash and Cash Equivalents $ 48,179 $ 54,670
Working Capital $119,035 $111,187
Current Assets $305,635 $297,866
Total Debt $189,178 $209,325
Shareholders' Equity $257,486 $225,246
Total Assets $700,376 $678,382
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