SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 30, 1995
Checkpoint Systems, Inc.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania
------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
1-11257 22-1895850
-------------------- --------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
101 Wolf Drive, PO Box 188 Thorofare, New Jersey 08086
----------------------------------------------------------------------
(Address of principal executive offices)
(609) 848-1800
- ------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -----------------------------------------------------------------------
(Former name or address, if changed since last report)
1
Item 7. Financial Statements and Exhibits
------ ----------------------------------
Filed herewith as Items 7(a) and (b) to this Form 8-K/A are the
required financial statements and proforma financial information relating
to the acquisition by Checkpoint Systems, Inc. (the "Registrant") of all of
the issued and outstanding capital stock of Actron Group Limited ("Actron").
Such transaction is more fully described in the Current Report on Form 8-K
filed by the Registrant on December 15, 1995.
2
Item 7(a) Financial Statements of Business Acquired
- --------- -----------------------------------------
INDEX TO FINANCIAL STATEMENTS
I. ACTRON GROUP LIMITED FINANCIAL STATEMENTS
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity
Notes to Consolidated Financial Statements
3
Item 7(b) Pro Forma Consolidated Financial Information
- --------- --------------------------------------------
I. Introduction to Historical and Pro Forma Consolidated
Financial Statements
II. Historical and Pro Forma Combined Statement of
Operations For the Year Ended December 31, 1995
III. Notes to Historical and Pro Forma Combined Statement
of Operations For the Year Ended December 31, 1995
IV. Combined Balance Sheet as of December 31, 1995
V.
4
ACTRON GROUP LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Pages
Consolidated Financial Statements
Report of Independent Accountants on the
consolidated financial statements for the year
ended December 31, 1994 4
Report of Independent Accountants on the
consolidated financial statements for the
eleven months ended November 30, 1995 5
Consolidated Statements of Income for the eleven
months ended November 30, 1995 and the year ended
December 31, 1994 6
Consolidated Balance Sheets at November 30, 1995 and
December 31, 1994 7
Consolidated Statements of Cash Flows for the
eleven months ended November 30, 1995 and the year
ended December 31, 1994 8
Consolidated Statements of Changes in Shareholders'
Equity for the eleven months ended November 30, 1995
and the year ended December 31, 1994 9
Notes to Consolidated Financial Statements 10
5
Consolidated Statements of Income
Eleven months Year
ended ended
November 30 December 31
1995 1994
Notes $m $m
Net sales 3 45.5 50.1
Cost of sales (40.8) (35.4)
Selling, general and
administrative expenses (19.3) (15.1)
------ ------
Operating loss 3 (14.6) (0.4)
Interest income 0.5 0.3
Interest expense - affiliates (2.2) (2.3)
Interest expense - non-affiliates (0.1) (0.1)
Other income less expenses 4 1.1 (0.2)
------ ------
Loss before income taxes (15.3) (2.7)
Income taxes 5 - (0.6)
------ ------
Net loss (15.3) (3.3)
====== ======
See accompanying notes to consolidated financial statements
6
Consolidated Balance Sheets
November 30 December 31
1995 1994
Notes $m $m
Assets
Cash and cash equivalents 0.5 3.2
Accounts receivable - net 6 10.9 9.4
Loans receivable - net - affiliates - 7.1
Inventories 7 9.8 7.2
Prepaid expenses and other current
assets 8 1.9 1.5
Net investments in direct financing 9
and sales type leases 1.7 1.6
------ ------
Total current assets 24.8 30.0
Property, plant and equipment - net 10 4.7 4.4
Investment in direct financing
and sales type leases 9 2.2 2.7
Other long-term assets 0.3 0.9
------ ------
Total assets 32.0 38.0
====== ======
Liabilities and shareholders' equity
Short-term debt 11 0.4 0.4
Accounts payable 5.4 2.5
Loans payable - affiliates 12 43.7 42.2
Current instalments of obligations 13 0.7 0.8
under finance leases
Other current liabilities 14 12.1 8.3
------ ------
Total current liabilities 62.3 54.2
Deferred revenue 15 2.1 1.4
Obligations under finance leases-
excluding current installments 13 0.6 1.1
Other long-term liabilities 0.7 0.9
------ ------
Total liabilities 65.7 57.6
------ ------
Commitments and contingencies 17
Shareholders' equity:
Share capital 16 7.6 7.6
Accumulated deficit (41.5) (26.2)
Cumulative currency translation
adjustments 0.2 (1.0)
------ ------
Total shareholders' equity (33.7) (19.6)
------ ------
Total liabilities and shareholders'
equity 32.0 38.0
====== ======
See accompanying notes to consolidated financial statements
7
Consolidated Statements of Cash Flows
Eleven months Year
ended ended
November 30 December 31
1995 1994
$m $m
Cash flows from operating activities
Net loss (15.3) (3.3)
Adjustments to reconcile net loss to net
cash (utilized) provided by operating
activities:
Depreciation 1.9 1.6
Other (0.1) 0.2
Changes in assets and liabilities:
Accounts receivable (1.5) (2.3)
Inventories (2.6) (1.1)
Other assets 0.1 2.2
Accounts payable 2.9 0.6
Deferred revenue 1.0 1.3
Other liabilities 1.1 4.1
------ ------
Net cash (utilized) provided by
operating activities (12.5) 3.3
------ ------
Cash flows from investing activities
Purchase of property, plant and equipment (3.0) (3.6)
Disposal of property, plant and equipment 0.5 1.2
Capital element of finance lease receipts 1.9 1.2
Acquisition of businesses - (0.5)
------ ------
Net cash utilized by investing activities (0.6) (1.7)
------ ------
Cash flows from financing activities
Net receipts of short-term debt - affiliates 10.9 1.0
Net repayment of short-term debt - non-affiliates - (0.2)
Capital element of finance lease payments (0.7) (1.0)
------ ------
Net cash provided by financing activities 10.2 (0.2)
------ ------
Net (decrease) increase in cash and
cash equivalents (2.9) 1.4
Foreign exchange gain on opening cash balance 0.2 -
Cash and cash equivalents at beginning of period 3.2 1.8
------ ------
Cash and cash equivalents at end of period 0.5 3.2
====== ======
Cash payments during the period for
Interest - affiliates 2.2 2.3
Interest - non-affiliates 0.1 0.1
Income taxes 0.2 0.2
See accompanying notes to consolidated financial statements
8
Consolidated Statements of Changes in Shareholders' Equity
Cumulative
currency
Share Accumulated translation
capital deficit adjustments Total
$m $m $m $m
At January 1, 1994 7.6 (22.9) (0.2) (15.5)
Net loss - (3.3) - (3.3)
Currency translation
adjustments - - (0.8) (0.8)
----- ----- ----- -----
At December 31, 1994 7.6 (26.2) (1.0) (19.6)
Net loss - (15.3) - (15.3)
Currency translation
adjustments - - 1.2 1.2
----- ----- ----- -----
At November 30, 1995 7.6 (41.5) 0.2 (33.7)
===== ====== ===== ======
See accompanying notes to consolidated financial statements
9
ACTRON GROUP LIMITED
Note 1 - Basis of consolidated financial statements
- ---------------------------------------------------
Actron's primary business is the manufacture and distribution of electronic
article surveillance equipment. Actron and its subsidiaries are located in
Europe and customers are predominately in the retail trade.
The consolidated financial statements have been prepared in United States
dollars in accordance with generally accepted accounting principles in the
United States and as described in note 2. The preparation of consolidated
financial statements in accordance with generally accepted accounting
principles in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Liquidity
The Group's balance sheet reflects a net liabilities position at November 30,
1995. The Group also recorded a net loss and had significant net cash outflows
before financing from its parent company in the eleven month period ended
November 30, 1995. In order to meet its liabilities and continue trading the
Group is wholly dependent upon the continuing financial support of Checkpoint
Systems, Inc. Checkpoint Systems, Inc. has confirmed that it will provide
financial support to the Group.
Note 2 - Summary of significant accounting policies
- ---------------------------------------------------
Principles of consolidation
The consolidated financial statements incorporate the financial statements of
Actron Group Limited, a company incorporated in the United Kingdom, and its
subsidiaries (the "Group" or "Actron"). In the consolidated financial
statements "affiliates" refers to a) as at December 31, 1994 and for the
periods ended November 30, 1995 - certain direct and indirect wholly owned
subsidiaries of ADT Limited which are not within the Actron Group of companies
and b) as at November 30, 1995 - certain direct and indirect wholly owned
subsidiaries of Checkpoint Systems, Inc. which are not within the Actron group
of companies. Actron consolidates companies in which it owns more than fifty
per cent of the voting shares. The results of subsidiary companies acquired
or disposed of during the financial year are included in the consolidated
financial statements from the effective date of acquisition or up to the date
of disposal. All significant intercompany balances and transactions have been
eliminated in consolidation.
Currency translation
Actron and its subsidiary companies are located in Europe and have various
functional currencies other than United States dollars. These consolidated
financial statements have been prepared in United States dollars as this is
the relevant reporting currency for the shareholders.
10
The results of companies which account in a functional currency other than
United States dollars are translated into United States dollars at the
average rate of exchange for the year. The assets and liabilities of
companies which account in a functional currency other than United States
dollars are translated into United States dollars at the rate ruling at the
balance sheet date. Currency translation adjustments arising from the use
of differing exchange rates from period to period are included in
shareholders' equity.
The gains and losses arising from currency transactions are included in the
consolidated statements of income.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits and highly
liquid instruments, with an original maturity of three months or less. As a
result of the short-term maturity of these financial instruments their
carrying value is approximately equal to their fair market value.
Inventories
Inventories are carried at the lower of cost or net realizable value. Cost
includes an addition for direct and indirect production overheads where
appropriate and is determined on a first-in first-out basis.
Property, plant and equipment
Property, plant and equipment are carried at cost less accumulated
depreciation. Depreciation is provided to write off the cost of the assets
over their estimated useful lives, using the straight line method, at the
following annual rates:
Leased property and related improvements term of lease
Plant and equipment 10% - 40%
Repairs and maintenance costs are expensed as incurred.
Gains and losses arising on the disposal of property, plant and equipment are
included in the consolidated statements of income.
Income taxes
Deferred tax liabilities and assets are recognized for the expected future tax
consequences of events that have been included in the consolidated financial
statements or tax returns. Deferred tax liabilities and assets are determined
based on the differences between the consolidated financial statements and tax
bases of assets and liabilities, using tax rates in effect for the years in
which the differences are expected to reverse.
Net sales
Net sales represent the invoiced value of goods and services to outside
customers net of sales-related taxes.
11
Revenue recognition
Revenue from services or products is recognized in the consolidated statements
of income as services are rendered or deliveries made. Service charges, which
consist of subscriber billings for services not yet rendered, are deferred and
taken into income as earned and the deferred element is included in long-term
liabilities. Revenue from the installation of subscriber systems is
recognized when instalations are completed.
Income from finance leases is credited to income based on a constant periodic
rate of return on the net investment in the lease.
Development costs
Product development costs are expensed as incurred.
Publicity and marketing expenses
Publicity and marketing expenses are charged against income as incurred.
Publicity and marketing expenses amounted to $0.8 million and $0.7 for
1995 and 1994 respectively.
Operating leases
Operating lease rental charges are charged against income as incurred.
Note 3 - Segment information
- ----------------------------
Net sales and operating loss all derive from the Group's electronic
article surveillance business in Europe.
Note 4 - Other income less expenses
- -----------------------------------
Eleven months Year
ended ended
November 30 December 31
1995 1994
$m $m
Gain on sale of investments - 0.1
Gains and(losses) on currency transactions 1.1 (0.3)
----- -----
1.1 (0.2)
===== =====
12
Note 5 - Income taxes
- ---------------------
The provision for income taxes in the consolidated statements of income
is as follows:
Eleven months Year
ended ended
November 30 December 31
1995 1994
$m $m
UK-current - (0.4)
Overseas-current - (0.2)
----- -----
- (0.6)
===== =====
Income tax expense differed from the amounts computed by applying the
United Kingdom corporation tax rate of 33 percent to pretax loss as a
result of the following:
Eleven months Year
ended ended
November 30 December 31
1995 1994
$m $m
Loss before taxes on income
United Kingdom 7.1 1.2
Overseas 8.2 1.5
---- -----
15.3 2.7
Computed "expected" tax 5.0 0.9
(Increase)reduction in income taxes
resulting from:
Unutilized tax losses (4.8) (1.9)
Tax rate differentials (0.4) (0.5)
Utilization of losses brought forward 0.2 0.9
----- -----
Actual tax charge - (0.6)
===== =====
13
Deferred tax balances
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at November 30,1995 and
December 31, 1994 are presented below:
November 30 December 31
1995 1994
$m $m
Deferred tax assets
Net tax losses carried forward 11.3 6.7
Other 1.1 1.5
------ ------
Total gross deferred tax assets 12.4 8.2
Less valuation allowance (12.4) (8.2)
------ ------
Net deferred tax assets - -
------ ------
Deferred tax liabilities - -
------ ------
Net deferred tax liability - -
------ ------
Of which:
Current United Kingdom - -
Overseas - -
------ ------
The Group is carrying forward operating losses and the related tax credits
as of November 30, 1995. The expiry dates of these operating losses and tax
credits are analysed below:
Date of expiry (December 31) Operating loss Tax credit
$m $m
1997 5.2 1.2
1998 15.6 2.0
1999 25.3 2.5
2000 5.2 1.7
2001 5.8 0.7
2002 3.7 0.4
Without expiry 5.9 2.8
---- ----
66.7 11.3
==== ====
Note 6 - Accounts receivable - net
- ----------------------------------
November 30 December 31
1995 1994
$m $m
Trade accounts receivable 12.2 10.6
Less: allowance for doubtful receivables (1.3) (1.2)
----- -----
10.9 9.4
===== =====
14
Note 7 - Inventories
- --------------------
November 30 December 31
1995 1994
$m $m
Raw materials and consumables 1.6 1.7
Work in process 0.4 0.2
Finished goods 7.8 5.3
----- -----
9.8 7.2
===== =====
Note 8 - Prepaid expenses and other current assets
- --------------------------------------------------
November 30 December 31
1995 1994
$m $m
Prepaid expenses 0.4 0.7
Other current assets 1.5 0.8
----- -----
1.9 1.5
===== =====
Note 9 - Sales-type and direct financing leases
- -----------------------------------------------
The Group's leasing operations comprise leasing its electronic article
surveillance equipment under direct financing and sales-type leases expiring
in various years through 2000. The following is a summary of the components
of the Group's net investment in direct financing and sales-type leases:
November 30 December 31
1995 1994
$m $m
Future minimum lease payments 5.1 6.0
Unearned income (0.7) (1.2)
Less provision for doubtful receivables (0.5) (0.5)
----- -----
3.9 4.3
===== =====
Minimum lease payments to be received as of November 30, 1995 for
each of the next five years are:
$m
1996 2.0
1997 1.4
1998 1.0
1999 0.6
2000 0.1
----
5.1
====
15
The Group has transferred finance lease receivables with recourse in the
eleven month period to November 30, 1995 and year ended December 31,1994
amounting $6.2 million and $8.6 million respectively. The Group has
guaranteed the performance of the underlying leases. The contingent
liability in respect of the sale of finance lease receivables at
November 30, 1995 is $2.5 million.
Note 10 - Property, plant and equipment - net
- ---------------------------------------------
November 30 December 31
1995 1994
$m $m
Cost:
Leased property and related improvements 1.8 1.7
Plant and equipment 11.5 10.1
----- -----
Total cost 13.3 11.8
----- -----
Accumulated depreciation:
Leased property and related improvements 1.0 0.8
Plant and equipment 7.6 6.6
----- -----
Total accumulated depreciation 8.6 7.4
----- -----
Net book values 4.7 4.4
===== =====
Note 11 - Short-term debt
- -------------------------
November 30 December 31
1995 1994
$m $m
Bank and acceptance facilities 0.4 0.4
===== =====
The weighted average interest rate at November 30, 1995 was 8%.
As at November 30, 1995 the Group had unutilized lines of credit amounting to
$0.5 million. These lines of credit are not committed and can be withdrawn
without a notice period.
Note 12 - Loans payable - affiliates
- ------------------------------------
Loans payable - affiliates at December 31, 1994 represented interest bearing
non-collateralized loans due to ADT affiliated companies. These loans were
interest bearing at base rate plus one per cent and were repayable on demand.
Loans payable - affiliates at November 30, 1995 represents loans due to
Checkpoint affiliated companies.
16
Note 13 - Obligations under finance leases
- ------------------------------------------
The Group has financed certain of its leasing contracts with customers using
back to back leases with financial institutions.
The minimum future lease payments under these leases as of November 30, 1995
for each of the next five years and in aggregate are:
$m
1996 0.8
1997 0.5
1998 0.2
-----
Total minimum lease payments 1.5
Less amount representing interest (0.2)
-----
Present value of minimum lease payments 1.3
=====
Note 14 - Other current liabilities
- -----------------------------------
November 30 December 31
1995 1994
$m $m
Accruals 5.7 4.9
Payroll and employee benefits 0.2 0.8
Income taxes 0.1 0.1
Other current liabilities 6.1 2.5
----- -----
12.1 8.3
===== =====
Note 15 - Deferred revenue
- --------------------------
Deferred revenue is comprised of subscriber billings for
maintenance services not yet rendered.
Note 16 - Share capital
- -----------------------
November 30 December 31
1995 1994
$m $m
Authorized:
10 million ordinary shares of
one pound sterling each 15.2 15.2
===== =====
Issued and outstanding:
5 million ordinary shares of
one pound sterling each 7.6 7.6
===== =====
17
The ownership of the Group changed in 100-. While the acquisition may
have involved consideration in amounts greater than the carrying amounts
of net assets at the time, no new basis of accounting was recorded as a
result of the acquisition. The Group believes that no such push down
amounts would have been material with the possible exception of goodwill
and that such goodwill would have been fully amortized or written off
before January 1, 1994.
Note 17 - Commitments and contingencies
- ---------------------------------------
(i) The Group is a defendant in a number of pending legal proceedings
incidental to present and former operations. The Group does not expect the
outcome of these proceedings either individually or in the aggregate to have
a material adverse effect on the operations or financial position of the
Group.
(ii) Financial instruments which potentially subject the Group to
concentrations of credit risk principally consist of cash and cash equivalents
and trade receivables. The Group places its cash and cash equivalents with
high credit quality financial institutions and, by policy, limits the amount
of credit exposure to any one financial institution. The Group's trade
receivables primarily result from its electronic article surveillance business
and reflects a broad international customer base. Credit limits, ongoing
credit evaluation and account monitoring procedures are utilized to minimize
the risk of loss. As a consequence, concentrations of credit risk are
limited.
(iii) Actron Group Limited and certain of its subsidiaries have given
guarantees and indemnities in the ordinary course of business in respect of
certain Actron group companies and have confirmed their current intentions to
provide, for the foreseeable future, such financial support as is required for
certain Actron group companies to continue to fulfil all their obligations and
other commitments as they fall due.
(iv) The Group leases land, buildings, motor vehicles and other equipment
under various contracts. The future total minimum rental payments required
under operating leases that have remaining noncancellable lease terms in
excess of one year at November 30, 1995 are as follows:
operating
leases
$m
Year ending December 31
1996 0.5
1997 0.4
1998 0.3
1999 0.3
2000 0.3
Thereafter 2.0
---
3.8
===
The operating lease rental charge for the eleven months ended
November 30, 1995 included in the consolidated statements of income
amounted to $0.5 million (year ended December 31, 1994 -
$0.6 million).
18
Note 18 - Pensions and other plans
- -----------------------------------
The Group operates various pension plans designed in accordance with
conditions and practices in the countries concerned, which are principally
defined contribution in nature.
United Kingdom employees participate in defined benefit pension schemes
operated by ADT Group PLC for some of its subsidiaries.
In France and Germany the State provides pensions for employees of the Group.
Contributions to these state schemes are made through indirect taxation.
The Group also sponsors defined contribution schemes in Switzerland, Belgium,
and Holland. Contributions to these plans are based on employees' salaries
The aggregate net pension expense for the eleven months ended November 30,
1995 included in the consolidated statements of income amounted to
$0.3 million (year ended December 31, 1994 - $0.4 million).
Note 19 - Valuation and qualifying accounts
- -------------------------------------------
Allowance for doubtful receivables
Eleven
Year months
ended ended
December November
31, 1995 30, 1995
$m $m
Balance at beginning of period 1.1 1.2
Subsidiaries acquired(disposed of) --- ---
Additions charged to income 0.1 0.2
Deductions-primarily write-offs - (0.1)
----- -----
Balance at end of period 1.2 1.3
===== =====
Note 20 - Related party transaction
- -----------------------------------
The Group purchases disposable security tags from Tokai Electronics Co.
Limited (Tokai), a company incorporated in Japan in which the Group owns
33.3% of the equity stock. Purchases from Tokai in the eleven month
period ended November 30, 1995 amounted to $7.8 million and as of
November 30, 1995 the Group owed Tokai $1.5 million.
The Group's investment in Tokai Electronics Co. Limited has been provided
against in full based on the Directors' valuation of the company.
Note 21 - Subsequent Events
- ---------------------------
Following its acquisition of Actron, Checkpoint Systems, Inc. has begun
rationalizing Actron's operations and integrating them with its own
operations in Europe. To date the known costs of this rationalization
program are $1 million in respect of additional inventory provisions.
19
HISTORICAL AND PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS OF CHECKPOINT SYSTEMS, INC.
AND ACTRON GROUP LIMITED
The following pro forma consolidated financial statements of Checkpoint
Systems, Inc. have been prepared to reflect the following transaction:
1. The acquisition of 100% of the outstanding share capital of Actron
Group Limited.
The pro forma statements of operations are prepared as if the transaction
occurred as of the beginning of the periods presented. A consolidated
historical balance sheet as of December 31, 1995 is presented which reflects
the acquisition of Actron Group Limited.
The pro forma consolidated financial statement of operations does not purport
to represent what Checkpoint's results of operations for the period would
actually have been had the consummated transaction in fact occurred on the
aforementioned dates, or to project Checkpoint's results of operations for
any future periods. The pro forma adjustments are based upon available
information and upon certain assumptions that management believes are
reasonable under the circumstances. These adjustments are directly
attributable to the consummated transaction and are expected to have a
continuing impact on the financial position and results of operations of
Checkpoint Systems, Inc.
The pro forma consolidated financial statements of operations should be read
in conjunction with Checkpoint's Financial Statements, including notes
thereto.
20
Pro Forma Combined Statement of Operations Data
Fiscal Year 1995
(All amounts in thousands)
Twelve Eleven
Months Months Proforma
12/31/95 11/30/95 Adjustments Pro Forma for
Checkpoint Actron for the Actron the Actron
Actual Actual Acquisition Acquisition
---------- ------ -------------- -------------
Net revenues $204,741 $45,500 $250,241
Cost of revenues 114,044 40,800 (2,000) (1) 152,844
-------- ------- ------- --------
Gross profit 90,697 4,700 2,000 97,397
Selling, general
and administrative
expenses 71,642 19,300 (3,100) (2) 87,842
Operating Income/(loss) 19,055 (14,600) 5,100 9,555
Interest expense, net 2,259 1,800 399 (3) 4,458
Other income/(expense) (198) 1,100 0 902
-------- ------- ------- --------
Income before income tax 16,598 (15,300) 4,701 5,999
Income taxes 5,189 0 (3,024) (4) 2,165
-------- -------- ------- --------
Net earnings/(loss) $11,409 ($15,300) $7,725 $3,834
======== ======== ======= ========
Net earnings/(loss)
per share $0.83 $0.28
======== ======== ======= ========
Weighted average number
of common and common
equivalent shares 13,687 13,687
======== ======== ======= ========
(1) Reflects the adjustment to inventory to reflect a profit on the selling
effort of related inventory and reduction and elimination of redundancies
created by the acquisition. No adjustment has been made to reflect what
cost of revenues would have been had manufacturing operations been
transferred as of January 1, 1995 to the Company's lower cost Caribbean
based manufacturing facilities.
(2) Reflects (i) the annual amortization of goodwill of approximately
$2.2 million, and (ii) a $4.0 million reduction to Selling, General
and Administrative expense as a result of an elimination of redundancies
created by the acquisition of approximately 50 employees and facilities,
and (iii) to eliminate $1.3 million of one time severance charges
directly associated with the acquisition which are reflected in
Checkpoint's operating results for the twelve months ending December 31,
1995.
(3) Reflects the interest expense associated with the Convertible
Subordinated debentures less the $2.2 million of intercompany
interest charges calculated as follows:
Twelve months interest at 5-1/4% on $54 million $2,835
Less:
Interest expense booked 236
Intercompany interest charges 2,200
------
Total pro forma interest adjustment $ 399
======
21
(4) Reflects the change in the provision for income taxes as a result
of the pro forma adjustments. Such adjustments were based on the
combined effective tax rate of 36%, however no deduction was taken for
the amortization of the goodwill acquired as this amount is not
deductible.
22
Combined Balance Sheet data
December 31, 1995
(Includes the impact of the Actron purchase completed on November 30, 1995)
(All Amounts In Thousands)
Checkpoint
Actual
----------
Current Assets:
Cash and Short Term Investments $77,456
Accounts Receivable, net 73,065
Inventories 54,941
Other Current Assets 7,479
Deferred Income Taxes 1,117
-------
Total Current Assets $214,058
Property, Plant, and Equipment, net of
accumulated depreciation 56,025
Excess of Purchase Price Over Fair Value
of Net Assets Acquired 64,826
Intangibles 6,760
Other Assets 14,881
-------
Total Assets $356,550
========
Current Liabilities:
Accounts Payable $16,643
Accrued Compensation 5,762
Income Taxes 5,816
Unearned Revenues 8,155
Other Current Liabilities 21,566
Current Portion Long-term Debt 4,002
-------
Total Current Liabilities $61,944
Long-Term Debt, Less Current Maturities 35,674
5- 1/4% Subordinated Debentures 120,000
Deferred Income Taxes 1,274
Shareholders' Equity
Preferred Stock, no par value
Common Stock, par value
$.10 per share 1,501
Additional Capital 84,627
Retained Earnings 58,198
Common Stock in Treasury (5,664)
Foreign Currency Adjustment (1,004)
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Total Shareholders' Equity $137,658
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Total Liabilities and
Shareholders'Equity $356,550
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Signature
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 13, 1996
Checkpoint Systems, Inc.
BY:
/s/Mitchell T. Codkind
Vice President, Corporate Controller and
Chief Accounting Officer
24