COMPANY CONTACT:
Checkpoint Systems, Inc.
Craig Burns
Executive Vice President,
Chief Financial Officer,
Finance and Operations
(856) 848-1800
INVESTOR RELATIONS CONTACTS:
Christine Mohrmann, Lindsay Hatton
Financial Dynamics
(212) 850-5600
For Immediate Release
- ---------------------
Checkpoint Systems, Inc. Announces 2003 Third Quarter Results
Thorofare, New Jersey, October 23, 2003 - Checkpoint Systems, Inc. (NYSE: CKP)
today reported financial results for the third quarter ended September 28, 2003.
The Company's third quarter 2003 net earnings were $10.0 million, or $0.27 per
diluted share, compared to net earnings of $6.4 million, or $0.19 per diluted
share, in the third quarter 2002.
Revenues for the third quarter 2003 were $177.2 million versus $158.8 million
for the third quarter 2002. Foreign exchange had a positive impact on revenues
of approximately $12.0 million in the third quarter of 2003 as compared to the
third quarter of 2002.
"We are pleased that sales in the third quarter of 2003 showed growth over the
third quarter of last year on a constant currency basis," commented George Off,
Chairman and Chief Executive Officer of Checkpoint. "Many of the trends we
witnessed in the first half of 2003 continued into the third quarter, as our
U.S. closed circuit television (CCTV) division continued to perform particularly
well, compensating for weaker sales in the U.S. electronic article surveillance
(EAS) business. Our EAS business showed improvements in Europe, where we also
realized the positive overall impact of our successful initiatives to reduce
operating expenses."
Gross profit for the third quarter 2003 was $73.1 million, or 41.3% of revenues,
compared to $65.6 million, or 41.3% of revenues, for the third quarter 2002.
Selling, general, and administrative expenses (SG&A) were $56.1 million, or
31.7% of revenues, for the third quarter 2003, compared to $53.3 million, or
33.6% of revenues, in the same period last year.
Operating income was $17.1 million in the third quarter 2003, or 9.6% of
revenues, compared to operating income of $13.2 million, or 8.3% of revenues, in
the third quarter 2002.
Cash flow from operations for the third quarter 2003 was $4.8 million versus
$17.6 million in the third quarter 2002.
As of September 28, 2003, cash and cash equivalents were $47.2 million, working
capital was $126.8 million and total debt was $184.8 million. Capital
expenditures in the third quarter were $2.2 million compared to $1.5 million a
year ago.
Craig Burns, Executive Vice President, Chief Financial Officer, Finance and
Operations, commented, "In the third quarter, we paid down a net amount of $5.0
million in debt, which brings our year-to-date debt repayment total to $31.1
million. We still expect to achieve a total net debt repayment for 2003 in
excess of $50 million. Refundable tax payments and higher customer receivables
due to increased sales activity at the end of the quarter reduced cash flow from
operations in the third quarter compared to the same period last year. During
the quarter, we announced our intention to redeem $35 million of our convertible
subordinated debentures on November 8, 2003."
Mr. Off stated, "Consistent with our expectations, we increased spending on
marketing and research and development during the third quarter, particularly in
RFID, to support the industry's EPC initiatives. Also, we are actively
evaluating both internal and external sources of growth to strengthen and
improve our business."
Mr. Off concluded, "Although some parts of our business remain affected by slow
economic conditions, we are raising our previous guidance for fiscal 2003. We
believe we will beat our sales goal for the year, exceeding last year's revenues
on a constant currency basis. We plan to make additional investments and incur
additional expenses in the upcoming fourth quarter and now expect to achieve
earnings per diluted share of between $0.82 and $0.87 for fiscal 2003. During
the fourth quarter, we will conduct our annual assessment of goodwill, and our
guidance for the full fiscal year excludes any impairment charge that may be
incurred."
For the nine months ended September 28, 2003, the Company reported revenue of
$509.4 million, compared to $463.2 million in the same period of 2002. Foreign
exchange had a positive impact on revenue of approximately $45.5 million for the
first nine months of 2003 compared to 2002. Operating income was $44.3 million
for the first nine months of 2003, compared to $34.9 million for the same period
of 2002. Net income was $25.1 million, or $0.70 per diluted share, for the first
nine months of fiscal 2003 compared to a net loss of $56.4 million, or $1.36 per
diluted share, for the first nine months of 2002. Earnings before cumulative
effect of change in accounting principle for the first nine months of 2002 was
$16.5 million, or $0.49 per diluted share.
Checkpoint Systems will host a conference call today, October 23, 2003, at 5:00
p.m. Eastern Time, to discuss its 2003 third 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 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 Statement
This press release may include information that could constitute forward-looking
statements made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act 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.
(Two Tables Follow)
Checkpoint Systems, Inc.
Consolidated Statements of Operations
(Thousands except per share amounts)
(unaudited)
Quarter Ended Nine Months Ended
(13 Weeks) (39 Weeks)
Sept 28, Sept 29, Sept 28, Sept 29,
2003 2002 2003 2002
-------- -------- -------- --------
Net revenues $177,229 $158,800 $509,366 $463,178
Cost of revenues 104,039 93,187(1) 297,416 272,051(1)
-------- -------- -------- --------
Gross profit 73,190 65,613 211,950 191,127
Selling, general, and administrative expenses 56,118 53,337 167,638 157,136
Other operating income - 904(2) - 904(2)
-------- -------- -------- --------
Operating income 17,072 13,180 44,312 34,895
Interest income 307 444 1,031 1,313
Interest expense 2,632 3,836 8,603 11,463
Other gain/(loss), net 271 (366) 810 (466)
-------- -------- -------- --------
Earnings before income taxes 15,018 9,422 37,550 24,279
Income taxes 4,956 3,015 12,391 7,769
Minority interest 40 33 74 55
-------- -------- -------- --------
Earnings before cumulative effect of
change in accounting principle 10,022 6,374 25,085 16,455
Cumulative effect of change in
accounting principle - - - (72,861)
-------- -------- -------- --------
Net earnings $ 10,022 $ 6,374 $ 25,085 $(56,406)
======== ======== ======== ========
Earnings per share before cumulative effect of
change in accounting principle:
Basic $ 0.31 $ 0.20 $ 0.77 $ 0.51
Diluted $ 0.27 $ 0.19 $ 0.70 $ 0.49
Net earnings per share:
Basic $ 0.31 $ 0.20 $ 0.77 $(1.75)
Diluted $ 0.27 $ 0.19 $ 0.70 $(1.36)
Weighted average common stock outstanding 32,847 32,403 32,777 32,193
Weighted average common stock and
dilutive stock outstanding 40,178 39,216 39,770 39,300
- -------------------------
(1) Includes a $1,545 restucturing charge reversal related to fourth quarter
2001 restructuring program offset by a restructuring charge of $705 and an
asset impairment of $466.
(2) Includes a $904 restructuring charge reversal related to fourth quarter 2001
restructuring program.
Checkpoint Systems, Inc.
Summary Consolidated Balance Sheet
(Thousands)
September 28, December 29,
2003 2002
---- ----
(unaudited)
preliminary
Cash and Cash Equivalents $ 47,157 $ 54,670
Working Capital $126,815 $111,187
Current Assets $318,403 $297,866
Total Debt $184,796 $209,325
Shareholders' Equity $270,499 $225,246
Total Assets $713,132 $678,382
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