THOROFARE, N.J. - Checkpoint Systems, Inc. has reported financial results for the second quarter ended June 26, 2005.
Revenue for the second quarter of 2005 increased 11.2% to $210.4 million, compared to revenue of $189.3 million in the second quarter of last year. Foreign exchange had a positive impact on revenue of $6.4 million, or 3.4%, in the second quarter 2005, as compared to the second quarter 2004.
The GAAP reported net income for the second quarter of 2005 was $9.5 million, or $0.25 per diluted share, compared to a net loss of $6.4 million, or $0.17 per diluted share, in the second quarter of 2004. Excluding restructuring charges in the second quarter of 2005 and litigation charges in the second quarter of 2004, the Company's net income for the second quarter 2005 was $0.36 per diluted share as compared to $0.22 per diluted share in the second quarter 2004. The Company recorded an after-tax restructuring charge in the second quarter of 2005 of $4.4 million, or $0.11 per diluted share, related to its European cost reduction initiatives. Net income for the second quarter of 2004 includes a charge in the amount of $14.9 million, net of tax, related to the settlement agreement with ID Security Systems Canada Inc.
"Checkpoint had an excellent quarter as our earnings before restructuring reached an all time high," said George Off, Chairman and Chief Executive Officer of Checkpoint. "Our security business grew over 17% versus the second quarter of last year. In the US, our electronic article surveillance (EAS) business continued its strong performance driven by the ongoing roll-out of our RF-EAS technology with CVS/Pharmacy. We continue to see increased activity in apparel source marking using integrated security tagging solutions in both the U.S. and Europe and expect this increased activity to lead to the installation of RF-EAS systems in more than 2,500 apparel stores this year. Our European operations also reported revenue growth in the quarter led by their CheckNet service bureau business which grew by 44% in the quarter on a constant currency basis.
Large account rollout activity is a part of our business that can make year over year comparisons difficult. The large account rollout activities for CVS and 2,500 apparel stores will present difficult sales comparables in 2006, but they will increase associated recurring EAS label volumes by more than 10%. In the current year, we are facing difficult sales comparables in our CCTV and Australian businesses because they enjoyed large account rollout activity in 2004."