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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report, (Date of earliest event reported): April 3, 1997
CHECKPOINT SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania
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(State or Other Jurisdiction of Incorporation)
1-11257 22-1895850
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(Commission File Number) (I.R.S. Employer
Identification Number)
101 Wolf Drive, Thorofare, New Jersey 08086
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(Address of Principal Executive Offices (Zip Code)
609-848-1800
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 3, 1997, the Registrant entered into a Termination Agreement
with Ultrak, Inc. pursuant to which the (i) Agreement and Plan of
Reorganization, (ii) Checkpoint Stock Option Agreement; and (iii) Ultrak Stock
Option Agreement, each dated March 11, 1997 between Checkpoint and Ultrak, and
the Shareholder's Agreement dated March 11, 1997 between Checkpoint and George
K. Broady, were each terminated. A press release announcing the termination
of the merger is attached hereto as Exhibit 99.1, which is incorporated herein
by reference. The merger agreement and related documents were previously
described in the Registrant's Form 10-K for the year ending December 29, 1996.
ITEM 5. OTHER EVENTS
On April 3, 1997, the Registrant issued a press release announcing
that the first quarter and 1997 revenues and earnings will not meet street
expectations. A copy of the press release is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
On April 8, 1997, the Registrant announced by way of a press release
that its board of directors authorized the purchase of up to 10 percent of its
outstanding common stock in transactions intended to satisfy the requirements
of SEC Rule 10b-18. A copy of the press release is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements - None
(b) Pro forma Financial Information - None
(c) Exhibits
99.1 -- Press Release issued April 3, 1997
99.2 -- Press Release issued April 8, 1997
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHECKPOINT SYSTEMS, INC. Dated: April 10, 1997
/s/Jeffrey A. Reinhold
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Jeffrey A. Reinhold
Vice President - Finance,
Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION OF EXHIBITS
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99.1 Press Release issued April 3, 1997
99.2 Press Release issued April 8, 1997
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FOR IMMEDIATE RELEASE CONTACT: Steven Gaynes
MALLORY FACTOR, INC.
212/350-0000
April 3, 1997
COMPANY Steven G. Selfridge
CONTACT CHECKPOINTSYSTEMS, INC.
609/384-2473
CHECKPOINT SYSTEMS, INC., ANNOUNCES TERMINATION OF
ULTRAK MERGER AND REALIGNMENT OF STREET EXPECTATIONS
TERMINATION OF MERGER
THOROFARE, NJ - Checkpoint Systems, Inc. (NYSE: CKP) today
announced that by mutual consent the agreement to merge with
Ultrak, Inc. (NASDAQ:ULTK) has been terminated.
The primary reason for the termination was perceived channel
conflict with Ultrak s larger distributor/dealer network. As
announced on March 11, 1997, the merged company was to sell,
install and service all Ultrak products through Ultrak s larger
distributor/dealer network. Subsequent to the announcement,
Checkpoint s retail customers expressed much concern over this
method of product distribution and service. Checkpoint s
customers wanted to continue a relationship where they would have
direct contact with Checkpoint during the sale, installation and
servicing of closed circuit television (CCTV) systems.
Ultimately, the two companies mutually came to the conclusion
that Checkpoint will need to continue to market CCTV systems to
retail customers through its direct sales force. Unfortunately,
the two companies also mutually agreed that selling CCTV systems
direct to retail customers would create significant channel
conflict with Ultrak s distributor/dealer network, which also
sells CCTV systems and other products to retail customers. Based
on each group s respective set of customers, Checkpoint and
Ultrak agreed that the expected synergies could not be
accomplished.
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Checkpoint/Ultrak
Street Expectations
Page 2
"As a result of the termination, we will not divest our CCTV
division," said Kevin P. Dowd, president and CEO of Checkpoint.
"In fact, we will continue to build on its capabilities. While
we are disappointed that the merger did not materialize, through
our due diligence process, we see an opportunity to become a
dealer of Ultrak products to retail customers."
"We are disappointed the merger did not work out, but we are
totally committed to not violating the trust we have built with
our distributors, installing dealers and systems integrators -
that is to fully support them, and not compete with them," said
George Broady, president and CEO of Ultrak. "During the due
diligence process, we developed great respect and admiration for
Kevin Dowd and the people at Checkpoint as well as enthusiasm for
their future business prospects. We think our products,
including DAVE, can help propel their growth as they become a
successful dealer of Ultrak products worldwide," added Broady.
The stock options granted by Checkpoint and Ultrak to each other
to acquire 19.9 percent of the common stock of the other company
under certain conditions have also been terminated.
STREET EXPECTATIONS
Checkpoint Systems also announced that first quarter and 1997
revenues and earnings will not meet street expectations.
The company estimates that the combination of foreign currency
fluctuations, the timing of some significant orders, and a one-
time charge relating to the Ultrak merger expenses will result in
first quarter revenues of approximately $68 million and earnings
per share of approximately 7 cents in comparison to first quarter
estimates of 16 cents.
more . . .
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Checkpoint/Ultrak
Street Expectations
Page 3
For the 1997 year, two primary factors contribute to the
realignment. First, due to the Ultrak merger, certain
acquisitions which were expected to make a significant
contribution to 1997 revenues were not pursued because of channel
conflict with Ultrak s distributor/dealer network.
Second, and more important, Checkpoint s "comprehensive tag
program" (where hardware is installed in major retail
establishments at a small cost to the retailer in return for
long-term label commitments) has the potential of becoming much
more successful in Europe than the company anticipated. This
will result in lower than anticipated hardware revenues in 1997,
as the hardware revenues under the comprehensive tag program are
deferred and recognized over the term of the particular customer
contract (usually five years).
The company estimates that these two factors will result in 1997
revenues of approximately $325 million and earnings per share of
approximately 67 cents compared to estimates of 90 cents.
Mr. Dowd stated that, "Although it is never easy to realign
estimates, we are excited about our unit and market share
increases which are driven by our comprehensive tag programs.
The company s strategy continues to emphasize market share
increases which we believe will drive our source tagging
success."
Checkpoint Systems, Inc. is a leading provider of integrated
security solutions for retailers worldwide and is the leading
provider of radio frequency (RF) source tagging, which allows its
paper-thin RF tags to be embedded into product packaging.
more . . .
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Checkpoint/Ultrak
Street Expectations
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This press release contains forward-looking statements. Any such
statements are subject to risks and uncertainties that could
cause actual results to vary materially from those anticipated;
among these are the company s dependence on conditions in the
security systems industry, the size and resources of many of the
company s competitors, and the need for the company to
manufacture and deliver technologically advanced products
successfully and efficiently. Additional information with
respect to these and other factors which could materially affect
the company is included in the company s filings with the
Securities and Exchange Commission, including its 1996 annual
report on Form 10-K and its 1997 definitive proxy statement.
# # #
Visit Checkpoint Systems, Inc. s Website at:
www.checkpointsystems.com
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FOR IMMEDIATE RELEASE CONTACT: Steven Gaynes
MALLORY FACTOR, INC.
212/350-0000
April 3, 1997
COMPANY: Jeffrey A. Reinhold
CONTACT: CHECKPOINT SYSTEMS, INC.
609/384-2457
CHECKPOINT SYSTEMS ANNOUNCES UP TO
10 PERCENT STOCK REPURCHASE AUTHORIZATION
THOROFARE, NJ -- Checkpoint Systems, Inc. (NYSE:CKP) today
announced that its board of directors has authorized the
purchase of up to 10 percent of its outstanding common stock.
The stock will be repurchased in the open market or in other
transactions pursuant to SEC Rule 10b-18. The timing of
repurchase and number of shares actually repurchased will
depend on a variety of factors, including price and other
market considerations.
Checkpoint Systems, Inc. is a leading provider of integrated
security solutions for retailers worldwide and is the leading
provider of radio frequency (RF) source tagging, which allows
its paper-thin RF tags to be embedded into product packaging.
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Visit Checkpoint Systems, Inc. s Website at:
www.checkpointsystems.com
