The Company's second quarter 2002 net income was $6.0 million, or $0.18 per diluted share, compared to $6.2 million, or $0.19 per diluted share, in the second quarter 2001. Second quarter 2002 net income included operating expenses of $2.8 million pre-tax, or $0.04 per diluted share after-tax, related to compensation costs associated with executive management changes and legal fees for the ID Security Systems Canada Inc. litigation.

For the second quarter 2002, the Company reported revenue of $160.9 million versus $162.2 million in the prior year period. Gross profit in the second quarter of 2002 was $66.1 million, or 41.1% of revenue, compared to $66.3 million, or 40.9% of revenue, in the second quarter of 2001.

"Our performance in the second quarter is evidence that our business remains robust, despite a challenging economic environment," commented George Off, Interim Chief Executive Officer. "Notwithstanding the softness in the global retail market, we benefited from successful sales and marketing efforts and continued to see our gross margins improve as a result of our cost reduction initiatives."

Mr. Off added, "Our Labeling Services business in the U.S. continued to demonstrate positive trends and source tagging revenue increased worldwide. Our Electronic Article Surveillance (EAS) sales volume in Europe, however, remained soft, reflecting a mixed economic environment in the region."

Selling, general, and administrative expenses (SG&A) were $54.0 million compared to $50.8 million in the same period last year. SG&A as a percent of revenue increased to 33.5% in the second quarter of 2002 from 31.3% in the second quarter of 2001. Excluding expenses associated with executive management changes and legal fees, SG&A as a percent of revenue was 31.8%. Excluding the amortization of goodwill, SG&A for the second quarter of 2001 was 29.8% of revenue.

Operating income in the second quarter of 2002 decreased to $12.1 million, or 7.5% of revenue, compared to $15.6 million, or 9.6% of revenue, in the prior year period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $20.0 million in the second quarter 2002 compared to $26.0 million in the comparable 2001 period. Capital expenditures in the second quarter were $1.7 million, compared to $2.7 million a year ago.

As of June 30, 2002, cash and short-term investments were $51.8 million, working capital was $133.0 million and total debt was $271.6 million.

Craig Burns, Executive Vice President, Chief Financial Officer and Treasurer, commented "We continue reporting solid gross margins, generating strong cash flow and paying down debt, in spite of revenue pressure resulting from the slowing economy. We generated $32.2 million in cash flow from operations and repaid $20.6 million in debt during the second quarter of 2002."

Mr. Off added, "In June, we filed a Motion for Post-Trial Relief in the lawsuit brought by ID Security Systems Canada, Inc. The post-trial and appeal process will take place during the next eighteen to twenty-four months. We will vigorously pursue all available appeal rights and believe that the company will be vindicated as a consequence of this process."

Mr. Off concluded, "Going forward, we will remain focused on improving top-line results and delivering on our stated goals to maximize cash flow and reduce debt levels. Based on the current market conditions, we expect third quarter 2002 revenue of between $160 million and $165 million, and diluted EPS between $0.20 and $0.24 per share. Also, we are confident that we will exceed our original debt reduction goal of $55 million for the year 2002."

For the six months ended June 30, 2002, the Company reported revenue of $304.4 million, compared to $325.9 million in the same period of 2001. Operating income was $21.7 million for the first six months of 2002, compared to $26.4 million for the same period of 2001. Net income was $10.1 million, or $0.31 per diluted share for the first half of fiscal 2002, versus $9.7 million, or $0.31 per diluted share, for the first six months of 2001.

Checkpoint Systems will host a conference call today, July 23, 2002, at 10:00 a.m. Eastern Time, to discuss its 2002 second 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

                       Checkpoint Systems, Inc.
                 Consolidated Statements of Operations
            (Amounts in thousands except per share amounts)
                              (unaudited)
                        Quarter Ended              Six Months Ended
                          (13 Weeks)                  (26 Weeks)
                    June 30,        July 1,     June 30,       July 1,
                      2002           2001        2002           2001
                   ---------------------------------------------------
Net revenues        $160,924       $162,182     $304,378     $325,910
Cost of revenues      94,842         95,858      178,864      192,440
                   ---------------------------------------------------
Gross profit          66,082         66,324      125,514      133,470
Selling, general,
 and administrative
 expenses             53,967         50,771      103,799      105,484
Other operating
  expenses              -              -             -          1,607
                   ---------------------------------------------------
Operating income      12,115         15,553       21,715       26,379
Interest income         454             685          869        1,510
Interest expense      3,902           5,723        7,627       11,829
Other income/
 (loss), net            131            (317)       (100)         (22)
                   ---------------------------------------------------
Earnings before
 income taxes         8,798          10,198       14,857       16,038
Income taxes          2,815           3,977        4,754        6,255
Minority interest        16              42           22           52
                   ---------------------------------------------------
Net earnings        $ 5,967        $ 6,179       $10,081      $ 9,731
                   ===================================================
Earnings per share
 before other
 operating expenses:
Basic                $ 0.19         $ 0.20        $ 0.32       $ 0.35
Diluted              $ 0.18         $ 0.19        $ 0.31       $ 0.33
Net earnings per share:
Basic                $ 0.19         $ 0.20        $ 0.32       $ 0.32
Diluted              $ 0.18         $ 0.19        $ 0.31       $ 0.31
                       Checkpoint Systems, Inc.
                         Summary Balance Sheet
                        (Amounts in thousands)
                            June 30,               December 30,
                              2002                     2001
                              ----                     ----
                           (unaudited)
                           preliminary
Cash and Short-term
  Investments              $  51,783                $  43,698
Working Capital             $132,955                 $126,615
Current Assets              $315,714                 $313,573
Total Debt                  $271,611                 $293,511
Shareholders' Equity        $276,416                 $240,263
Total Assets                $774,420                 $752,653

CONTACT:          Checkpoint Systems, Inc.
                  Craig Burns, 856/848-1800
                  or
                  FD Morgen-Walke             
                  Investor Relations: Christine Mohrmann, Marco Lima,
                  Lindsay Hatton
                  Press Contact: Scott Hoffman
                  212/850-5600

URL:              http://www.businesswire.com
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.

Copyright (C) 2002 Business Wire.  All rights reserved.