Checkpoint shares rise on revenue gain; earnings restated

Share of Checkpoint Systems Inc., of Thorofare, a maker of anti-theft equipment for retailers, were up about 13 percent in midday trading after the company said fourth-quarter revenue rose 12.4 percent from a year earlier.

Revenue for the quarter ending Dec. 31 was $216.3 million, compared to $192.5 million a year earlier. The company reported earnings from continuing operations of $18.6 million or 46 cents per share for the quarter, compared to $6.5 million or 16 cents per share for the year-ago quarter.

In a separate announcement Checkpoint said it had finished a restatement of results for the first nine months of 2006, and fiscal years 2004 and 2005.

The restatement was due to and overstatement of revenue because of "improper activities" of former employees of Checkpoint's Japanese sales subsidiary, errors in the timing of recognition of revenue for certain transactions in the company's CheckNet business, and income tax adjustments recorded in the fourth quarter of 2005 relating to prior years, the company said.

The activities of the Japanese subsidiary caused the company to over-report revenue by $2.9 million in the first nine months of 2006, $1.7 million in fiscal 2005, and $0.4 million in fiscal 2004. The Japanese sales subsidiary generated $35.7 million of revenue in 2006.

After an internal investigation, the company fired both the chairman and president of the subsidiary, Checkpoint said.

The restatement resulted in a reduction in net earnings for the first nine months of 2006 by $1.9 million, a reduction in net earnings for fiscal year 2005 by $2.9 million and an increase in net earnings for fiscal year 2004 by $1.6 million, approximately in line with the Company's previously announced expectations.