Checkpoint Systems, Inc. Announces First Quarter 2007 Results.THOROFARE, N.J. -- 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 first quarter ended April 1, 2007. Revenue for the first quarter of 2007 was $171.2 million, 22.3% higher when compared to revenue of $140.0 million in the first quarter of the prior year. Excluding revenue from our ADS acquisition, revenue increased 18.5%. Foreign currency had a positive impact of 5.3% on revenues. Earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the first quarter were $5.0 million, or $0.12 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 earnings from continuing operations of $30 thousand or $0.00 per diluted share in the first quarter of 2006. Included in earnings from continuing operations for the first quarter of 2007 is a charge of $0.3 million related to the Company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities. In the first quarter of 2006, earnings from continuing operations included a charge of $0.1 million associated with restructuring initiatives. "We made good progress during the first quarter in line with our expectations," said George Off, Chairman and Chief Executive Officer of Checkpoint. "Financial results were strong as we saw a continuation of the performance achieved last quarter after considering the normal first quarter seasonal effect on our business. Compared with the same quarter last year, our results reflect improvements across each business segment and geography. We achieved 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. of $6.2 million compared with an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. reported in the same quarter of the prior year." Mr. Off continued, "Our improved revenue performance in the quarter was primarily driven by a constant dollar increase of 16% growth in our CheckNet([R]) service bureau business, excluding revenue from the acquisition of ADS, and 13% growth in our 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. business. Our business also benefited from the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign exchange rates during the quarter." "We achieved growth in Europe of 13% on a constant dollar basis, excluding revenue from our acquisition of ADS, which reflects the improvement in the operational issues we have been addressing in that market," continued Mr. Off. "Operations in France continued to improve and contributed to our performance." Mr. Off continued, "In line with our renewed focus on key markets and customers, we continue to win additional business across the globe with some of the world's most important retailers. We are also making the necessary investments in our business to develop new avenues for growth by expanding into new vertical markets and developing innovative new products. As an example, we recently introduced the Evolve[TM] family of labels, a dual-function EAS-EPC label for security and inventory management applications. Evolve[TM] labels will help retailers improve their inventory visibility at the case and item level, while at the same time maximizing the benefits of their EAS security systems." Financial highlights for the first quarter ended April 1, 2007: * Revenue for the first quarter of 2007 was $171.2 million, compared to revenue of $140.0 million in the first quarter of last year, a 22.3% increase. Foreign exchange had a positive impact on revenue of $7.4 million, or 5.3%, in the first quarter 2007 as compared to the first quarter of 2006. The acquisition of ADS contributed $5.4 million of revenue in the first quarter of 2007. * Gross profit was $70.3 million, or 41.1% of revenue, in the first quarter of 2007, compared to $56.4 million, or 40.3% of revenue, in the first quarter of 2006. The gross profit increase is primarily attributable to an increase in volumes in our EAS business. * Selling, general, and administrative expenses (SG&A) were $59.8 million, compared with $52.9 million for the first quarter of 2006. SG&A expenses generated by the recently acquired ADS operations accounted for $2.0 million of the increase over the prior year. Foreign currency translation increased SG&A by approximately $2.4 million. Also included in the first quarter of 2007 was approximately $1.6 million of expenses related to the company's restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior period results. As a percentage of revenue, SG&A expenses decreased to 34.9% in the first quarter of 2007, versus 37.8% in the first quarter of 2006. * Research and development expenses for the fourth quarter of 2007 were $4.0 million, or 2.3% of revenue, compared with $4.4 million, or 3.1% of revenue, in the first quarter of 2006. * GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). operating income in the first quarter of 2007 was $6.2 million, compared to $1.1 million operating loss in the prior year period. Excluding restructuring expense, operating income in the first quarter of 2007 was $6.5 million, or 3.8% of revenue. Excluding restructuring expense, operating loss in the first quarter of 2006 was $0.9 million. (See attached table "Reconciliation of GAAP to Non-GAAP Measures"). * Other gain (loss) for the first quarter of 2007 was a loss of $0.5 million primarily due to foreign exchange losses. * Income tax expense for the first quarter of 2007 was 24.4% of pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. . * The GAAP reported earnings from continuing operations for the first quarter of 2007 was $5.0 million, or $0.12 per diluted share, compared to $30 thousand, or $0.00 per diluted share, for the first quarter of 2006. * The GAAP reported net earnings for the first quarter of 2007 was $5.0 million, or $0.12 per diluted share, compared to net earnings of $1.6 million, or $0.04 per diluted share, for the first quarter of 2006. * Excluding restructuring expense, earnings from continuing operations for the first quarter of 2007 were $5.2 million, or $0.13 per diluted share. Excluding restructuring expense, earnings from continuing operations for the first quarter of 2006 were $0.2 million, or $0.00 per diluted share a year ago. (See attached table "Reconciliation of GAAP to Non-GAAP Measures"). * 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 was $10.1 million in the first quarter of 2007 compared to negative cash flow from operations of $30.5 million in the first quarter of 2006. * At April 1, 2007 cash and cash equivalents were $152.9 million, working capital was $283.5 million and 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. was $16.5 million. Capital expenditures in the quarter were $2.0 million. Mr. Off concluded, "Although we are pleased with our recent operational and financial performance, we remain cautious about the softness in the retail market given the indicators we're currently seeing in the marketplace, and this is reflected in our expectations for performance for 2007. In addition, we have more work to do to effectively execute our strategy and make the necessary investments in our business that will position us for future growth and profitability for the remainder of 2007 and beyond." Based on current market conditions, Checkpoint Systems provided the following guidance for its 2007 full year financial results: * Revenues, at current exchange rates, up 5% to 8% versus 2006 * Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations of between $1.20 and $1.30, excluding any restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. * An annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. tax rate of approximately 25% * Free cash flow (cash flow from operations less capital expenditures) of between $50 million and $60 million This guidance does not include the impact of unusual charges, such as restructuring charges, that the Company may incur during the year, and assumes a continuation of current exchange rates. Checkpoint Systems will host a conference call today, May 3, 2007, at 10:00 A.M. Eastern Time, to discuss its first quarter 2007 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 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 manufacturer and marketer of integrated systems solutions for retail security, labeling, and 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. . 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, hand-held labeling systems and retail merchandising systems. Applications include automatic identification, retail security and pricing, and promotional labels. Operating directly in 31 countries, Checkpoint has a global network of subsidiaries and provides professional customer service and technical support around the world. Checkpoint Systems, Inc.'s website 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. [TABLE OMITTED] [TABLE OMITTED] Reconciliation of Non-GAAP Financial Measures in Accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SEC Regulation G Checkpoint Systems, Inc. reports financial results in accordance with U.S. GAAP and herein provides some non-GAAP measures. These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP measures are intended to supplement the Company's presentation of its financial results that are prepared in accordance with GAAP. The Company uses the non-GAAP measures presented to evaluate and manage the Company's operations internally. The Company is also providing this information to assist investors in performing additional financial analysis that is consistent with financial models developed by research analysts who follow the Company. The reconciliation set forth below is provided in accordance with Regulation G and reconciles the non-GAAP financial measures with the most directly comparable GAAP financial measures. [TABLE OMITTED] [TABLE OMITTED] |
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