COMPANY CONTACT:
Checkpoint Systems, Inc.
Craig Burns
Executive Vice President,
Chief Financial Officer and Treasurer
(856) 848-1800
INVESTOR RELATIONS CONTACTS:
Christine Mohrmann, Jim Olecki
Financial Dynamics
(212) 850-5600
FOR IMMEDIATE RELEASE
CHECKPOINT SYSTEMS, INC. REACHES SETTLEMENT IN
ID SECURITY SYSTEMS CANADA INC. LAWSUIT
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Revises Second Quarter 2004 Financial Results
Thorofare, New Jersey, August 5, 2004 - Checkpoint Systems, Inc. (NYSE: CKP)
today announced that it has reached a settlement agreement in the antitrust,
tortious interference and unfair competition lawsuit brought by ID Security
Systems Canada Inc. (ID Systems).
Under the terms of the settlement agreement, Checkpoint paid $19.95 million
today to ID Systems. Accordingly, Checkpoint has recorded a charge for the
quarter ending June 27, 2004 in the amount of $14.87 million, net of tax, to
reflect the settlement. After the effect of the charge, the Company recorded a
net loss for the second quarter 2004 of $6.44 million, or $0.17 per diluted
share. On July 27, 2004, Checkpoint reported net earnings of $8.43 million, or
$0.22 per diluted share for the second quarter 2004. The revised second quarter
financial results have been reported in the Company's second quarter Form 10-Q
which is being filed with the Securities and Exchange Commission today.
"We believe that the settlement is in the best interest of the company to put
this matter behind us and to avoid the risks, burden, and expenses of continued
litigation. Previous financial guidance should be adjusted for this one-time
charge," said George Off, Chairman and Chief Executive Officer of Checkpoint
Systems.
Background
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In February 1999, ID Systems filed suit against Checkpoint citing federal
antitrust and state law tort claims.
On May 24, 2002, judgment was entered on the jury verdict in favor of ID
Systems, after trebling, in the amount of $79.17 million plus attorneys' fees
and costs, which were to be determined by the Court. On March 28, 2003, the
Court issued an order, which vacated the jury verdict on the antitrust claims
and reduced the damages award related to tortious interference and unfair
competition from $19.00 million to $13.00 million. On May 20, 2003, the Court
further reduced the judgment from $13.00 million to $10.89 million.
Prior to settlement, both ID Systems and Checkpoint were appealing the decision
to the Federal Third Circuit Court of Appeals.
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 website 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 Securities and Exchange Commission filings.