Checkpoint Systems and Philips Form Strategic RFID Alliance.

Business Editors/High-Tech Writers

BRUSSELS, Belgium--(BUSINESS WIRE)--May 25, 2004

Philips and Checkpoint Combine Expertise to Delivering RFID Solutions

in Support of the Retail Supply Chain

Checkpoint Systems (NYSE:CKP), the leading provider of RF-based product identification and shrink management solutions for retailers and consumer packaged goods manufacturers and Royal Philips Electronics (NYSE:PHG)(AEX:PHI), one of the world's largest electronics companies, today announced a strategic alliance to jointly provide RFID-enabled tags and readers combined with system integration services to retailers and fast moving consumer products companies at a time when RFID is fast becoming the de facto technology for ensuring speed, efficiency and reliability of data in the supply chain.

Working together, Checkpoint and Philips will combine their industry expertise to address the growing need for RFID-based technology in day-to-day business processes and operations. As a result, full-scale implementation of RFID will be made available to the large number of retailers and suppliers whose objective is to meet industry mandate deadlines some of which are set for 2005. The two companies are already working together on several projects in the European retail industry, including the Metro Group in Germany.

Within the scope of the agreement, Checkpoint Systems Europe will be building and integrating applications and solutions for the retail industry and its supply chain based on Philips' HF and UHF RFID chip solutions including EPC. In addition to collaborating on tags and readers, the two companies will deliver system integration services that address the specific needs of retailers seeking to adopt RFID in their supply chains.

"Philips is forging this alliance because we believe Checkpoint is uniquely positioned in the retail sector," said Christophe Duverne, vice president marketing and sales for the Identification Business at Philips Semiconductors. "RFID brings tremendous opportunities for value creation, in particular to the retail sector and this partnership will focus on capturing these opportunities."

"Checkpoint has recently deployed RFID solutions based on Philips RFID chips in more than 12 in-store and supply chain applications thus far in 2004. Our plans for additional turn-key and custom applications, to be launched throughout the year, will continue to take advantage of Philips' significant research, development and manufacturing capabilities as a leader in the RFID industry," said Albert Roger, vice president and general manager RFID Checkpoint Systems Europe.

In addition, Checkpoint and Philips will combine their expertise and development efforts resulting in synergies that could lead to a significant lowering of the cost of RFID tags in the foreseeable future through some of the most advanced RFID tag manufacturing techniques and processes.

Through Checkpoint Systems' CheckNet Services, which comprise Checkpoint's tag, label and service bureau solutions, companies will now have a phased and easy to integrate approach to RFID implementation. By leveraging Checkpoint Systems' retail market leadership with Philips' expertise and technology strengths, both companies will gain greater scope, interaction and feedback from current and potential retail supply chain customers.

About Checkpoint Systems, Inc.

Checkpoint Systems, Inc. is an international company that specializes in product identification and shrink management solutions for the retail industry and its supply chain. Checkpoint's solutions provide its customers greater efficiencies from the point of manufacture to the point of sale and improve the consumer shopping experience.

Listed on the NYSE, the company employs more than 4,000 personnel worldwide, has direct sales in 30 countries, and has distributors in 50 countries. Checkpoint is the world's leading provider of RF (Radio Frequency) technology, producing billions of RF tags and manufacturing and installing tens of thousands of RF antennas annually. The company's extensive product portfolio includes digital RF/EAS (Electronic Article Surveillance) and RFID (Radio Frequency Identification) systems, RF source tagging, barcode and labelling systems, including a global network of 29 service bureaus, and solutions for retail merchandising.

Checkpoint's European Website is located at www.checkpointeurope.com.

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of $32.8 billion (EUR 29 billion) in 2003. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 164,500 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol:PHG), Amsterdam and other stock exchanges. News from Philips is located at www.semiconductors.philips.com.