sc13d07234013_08102011.htm

0000921895-11-001589.txt : 20110811 0000921895-11-001589.hdr.sgml : 20110811 20110810202028 ACCESSION NUMBER: 0000921895-11-001589 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20110811 DATE AS OF CHANGE: 20110810 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHECKPOINT SYSTEMS INC CENTRAL INDEX KEY: 0000215419 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 221895850 STATE OF INCORPORATION: PA FISCAL YEAR END: 1225 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-17877 FILM NUMBER: 111025717 BUSINESS ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET, SUITE 2410 CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 856-848-1800 MAIL ADDRESS: STREET 1: ONE COMMERCE SQUARE STREET 2: 2005 MARKET STREET, SUITE 2410 CITY: PHILADELPHIA STATE: PA ZIP: 19103 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MMI INVESTMENTS, L.P. CENTRAL INDEX KEY: 0001089447 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 141810589 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1370 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-586-4333 MAIL ADDRESS: STREET 1: 1370 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: MMI INVESTMENTS LP DATE OF NAME CHANGE: 20020717 FORMER COMPANY: FORMER CONFORMED NAME: MMI INVESTMENTS II-A LP DATE OF NAME CHANGE: 19990623 SC 13D 1 sc13d07234013_08102011.htm SCHEDULE 13D sc13d07234013_08102011.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. )1

Checkpoint Systems, Inc.

(Name of Issuer)

Common Stock, par value $0.10

(Title of Class of Securities)

162825103

(CUSIP Number)

STEVEN WOLOSKY, ESQ.

OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

August 10, 2011

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 162825103

1	NAME OF REPORTING PERSON MMI Investments, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,055,800
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,055,800
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,055,800
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 162825103

1	NAME OF REPORTING PERSON MMI Plus, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,400
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,400
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,400
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14	TYPE OF REPORTING PERSON PN

CUSIP NO. 162825103

1	NAME OF REPORTING PERSON MCM Capital Management, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 2,058,200
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER 2,058,200
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,058,200
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 162825103

1	NAME OF REPORTING PERSON Clay B. Lifflander
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -1
	8	SHARED VOTING POWER - 0 -
	9	SOLE DISPOSITIVE POWER - 0 -1
	10	SHARED DISPOSITIVE POWER - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 0 -1
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%1
14	TYPE OF REPORTING PERSON IN

1 See Item 5.

CUSIP NO. 162825103

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1.

Security and Issuer.

This statement relates to the Common Stock, par value $0.10 per share (the “Shares”), of Checkpoint Systems, Inc., a Pennsylvania corporation (the “Issuer”). The address of the principal executive offices of the Issuer is One Commerce Square, 2005 Market Street, Suite 2410, Philadelphia, Pennsylvania 19103.

Item 2.

Identity and Background.

(a) This statement is being filed on behalf of (i) MMI Investments, L.P., a Delaware limited partnership (“MMI Investments”), (ii) MMI Plus, L.P., a Delaware limited partnership (“MMI Plus”), (iii) MCM Capital Management, LLC, a Delaware limited liability company that is the sole general partner of MMI Investments (“MCM”) and (iv) Clay B. Lifflander (“Mr. Lifflander”). Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Set forth on Schedule I, annexed to this statement and incorporated herein by reference, is the name, business address and present principal occupation or employment, and the name and address of any corporation or other organization in which such occupation or employment is conducted, of each voting member (each of whom is also an executive officer) of MCM as of the date hereof.

(b) The principal business address of MMI Investments, MMI Plus, MCM and Mr. Lifflander is 1370 Avenue of the Americas, New York, New York 10019.

(c) MMI Investments and MMI Plus are engaged primarily in the business of investing in publicly traded securities. MCM is the sole general partner of MMI Investments and MMI Plus and its principal business is investing in publicly traded securities. The principal occupation of Mr. Lifflander is serving as President of MCM.

(d) No Reporting Person nor, to each Reporting Person’s knowledge, any individual listed on Schedule I, is required to disclose legal proceedings pursuant to Item 2(d) of Schedule 13D.

(e) No Reporting Person nor, to each Reporting Person’s knowledge, any individual listed on Schedule I, is required to disclose legal proceedings pursuant to Item 2(e) of Schedule 13D.

(f) To each Reporting Person’s knowledge, each of the individuals listed on Schedule I is a citizen of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

The aggregate purchase price of the 2,055,800 Shares owned by MMI Investments is approximately $37,451,237; the source of funds is MMI Investments’ working capital. The aggregate purchase price of the 2,400 Shares owned by MMI Plus is approximately $46,952; the source of funds is MMI Plus’ working capital.

MMI Investments and MMI Plus effect purchases of securities primarily through margin accounts maintained for them with prime brokers, which may extend margin credit to them as and when required to open or carry positions in the margin accounts, subject to applicable federal margin regulations, stock exchange rules and the prime brokers’ credit policies. In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts.

CUSIP NO. 162825103

Item 4.

Purpose of Transaction.

MMI Investments and MMI Plus purchased the Shares as part of their investment activities based on their belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase of additional Shares desirable, the Reporting Persons may endeavor to increase their respective positions in the Issuer through, among other things, the purchase of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

On June 1, 2011, MMI Investments sent a letter (the “June 1 Letter”) to the Board of Directors of the Issuer (the “Board”) stating that it has grown increasingly frustrated with the Issuer’s poor valuation and share price performance and expressing its belief that the Issuer is trading at a valuation dramatically below its intrinsic worth and what it could command in a sale. In the June 1 Letter, MMI Investments also expressed its belief that the obstacles to the Issuer’s fair valuation, including its awkward positioning as a small cap company and weakness in capital spending by its retail customer base, are likely insurmountable as long as the Issuer remains an independent public company, irrespective of the efforts of the Board and management. MMI Investments therefore strongly urged the Board to retain an investment bank for the express purpose of exploring all strategic alternatives to maximize shareholder value, including a sale of the Issuer. A copy of the June 1 Letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On August 10, 2011, MMI Investments sent a letter to the Board (the “August 10 Letter”) reiterating its belief that the Issuer is significantly undervalued and that the Board should immediately hire an investment banker to assist the Board in seriously and comprehensively reviewing all strategic alternatives to maximize value for shareholders, including a sale of the Issuer. In the August 10 Letter, MMI Investments expressed its belief that the Issuer’s poor share price performance, capital allocation and operating results over the last decade are indicative of a Board that has been a very poor steward of shareholder capital over the short and long terms. MMI Investments questioned whether the Board is taking the Issuer’s undervaluation or shareholders seriously enough given that the Board, on three separate occasions, dismissed MMI Investments’ highly constructive recommendations to the Board, all with the goal of improving the Issuer’s dismal stock price performance. Specifically, the Issuer had previously dismissed MMI Investments’ (1) recommendation that the Issuer hire an investment banker to explore strategic alternatives, (2) attempt to connect the Issuer with those who are highly qualified and potentially interested in buying the Issuer, and (3) request that one MMI Investments representative be voluntarily appointed to the Board. MMI Investments also questioned the source of the Board’s confidence in and its commitment to the Issuer’s current strategic plan in light of the Issuer’s poor performance in stock price, operations and strategic planning. A copy of the August 10 Letter is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed above. The Reporting Persons intend to review their respective investments in the Issuer on a continuing basis and engage in discussions with management and the Board concerning the business, operations and future plans of the Issuer and ways to enhance stockholder value. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their respective investments in the Issuer as they deem appropriate including, without limitation, seeking Board representation, making proposals to the Issuer concerning changes to the capitalization, ownership structure or operations of the Issuer, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares or changing their intention with respect to any and all matters referred to in Item 4.

CUSIP NO. 162825103

Item 5.

Interest in Securities of the Issuer.

(a)-(b) The aggregate percentage of Shares reported owned by each Reporting Person is based upon 40,098,852 Shares outstanding as of July 27, 2011, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 3, 2011.

As of the date hereof, MMI Investments directly owned 2,055,800 Shares, constituting approximately 5.1% of the Shares outstanding. MMI Investments has the sole power to direct the vote and disposition of such Shares on the date of this statement. As of the date hereof, MMI Plus directly owned 2,400 Shares, constituting less than 1% of the Shares outstanding. MMI Plus has the sole power to direct the vote and disposition of such Shares on the date of this statement. MCM does not directly own any Shares. However, by virtue of being the general partner of MMI Investments and MMI Plus, MCM may be deemed to be the beneficial owner of the Shares owned by MMI Investments and MMI Plus and to have sole power over the voting and disposition of such Shares as a result of its having the sole power to make voting and disposition decisions on behalf of MMI Investments and MMI Plus with respect to such Shares. MCM disclaims beneficial ownership of such Shares. Mr. Lifflander does not directly own any Shares. However, as a member of a “group” for the purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, Mr. Lifflander may be deemed to beneficially own the Shares owned by MMI Investments and MMI Plus. Mr. Lifflander disclaims beneficial ownership of such Shares.

Except as described above, as of the date hereof, to each Reporting Person’s knowledge, none of the persons listed on Schedule I owns any Shares or has any right to acquire, directly or indirectly, any beneficial ownership of Shares.

(c) Except for the open market transactions in the Shares by MMI Investments and MMI Plus set forth in Schedule II attached hereto and incorporated herein by reference, there have been no transactions with respect to the Shares during the past 60 days by MMI Investments, MMI Plus, MCM or Mr. Lifflander, or, to each Reporting Person’s knowledge, any of the persons listed on Schedule I.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such Shares.

(e) Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On August 10, 2011, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to securities of the Issuer, to the extent required by applicable law. A copy of this agreement is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

CUSIP NO. 162825103

Item 7.

Material to be Filed as Exhibits.

99.1

Letter to the Board of Directors of Checkpoint Systems, Inc. from MMI Investments, L.P., dated June 1, 2011.

99.2

Letter to the Board of Directors of Checkpoint Systems, Inc. from MMI Investments, L.P., dated August 10, 2011.

99.3

Joint Filing Agreement by and among MMI Investments, L.P., MMI Plus, L.P., MCM Capital Management, LLC and Clay B. Lifflander, dated August 10, 2011.

CUSIP NO. 162825103

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: August 10, 2011

	MMI INVESTMENTS, L.P.

	By:	MCM Capital Management, LLC General Partner

	By:	/s/ Jerome J. Lande
		Jerome J. Lande
		Executive Vice President

	MMI PLUS, L.P.

	By:	MCM Capital Management, LLC General Partner

	By:	/s/ Jerome J. Lande
		Jerome J. Lande
		Executive Vice President

	MCM CAPITAL MANAGEMENT, LLC

	By:	/s/ Jerome J. Lande
		Jerome J. Lande
		Executive Vice President

	/s/ Clay B. Lifflander
	Clay B. Lifflander

CUSIP NO. 162825103

SCHEDULE I

MCM Capital Management, LLC (“MCM”)

Voting Members and Executive Officers

Name and Business Address		Position and Principal Occupation

John S. Dyson 1370 Avenue of the Americas New York, New York 10019		Voting Member and Chairman of MCM; Voting Member and Chairman of Millcap Advisors, LLC (“Millcap”), a Delaware limited liability company 1370 Avenue of the Americas, New York, New York 10019

Clay B. Lifflander 1370 Avenue of the Americas New York, New York 10019		Voting Member and President of MCM; Voting Member and President of Millcap

CUSIP NO. 162825103

SCHEDULE II

Transactions in the Shares During the Past 60 Days

Shares of Common Stock Purchased	Price Per Share($)	Date of Purchase
MMI Investments, L.P.
06/13/11	16.47	10,000
08/10/11	14.47	95,000

EX-99.1 2 ex991to13d07234013_08102011.htm LETTER TO CHECKPOINT BOARD, DATED JUNE 1, 2011 ex991to13d07234013_08102011.htm

Exhibit 99.1

June 1, 2011

The Board of Directors

Checkpoint Systems, Inc.

C/O Mr. Robert van der Merwe

Chairman & Chief Executive Officer

2005 Market Street

One Commerce Square, Suite 2410

Philadelphia, Pennsylvania 19103

Dear Members of the Board:

As some of you know, MMI Investments, L.P. (“MMI”) has been a substantial investor in Checkpoint Systems, Inc. (“Checkpoint”) for nearly a decade. MMI today owns 1,820,800 shares, or roughly 4.5% of the outstanding stock. We have long admired Checkpoint’s market positions, technologies and strong cash flows, even as we have grown increasingly frustrated with its poor valuation and stock price performance.

In our time as investors there have been periods of good operational and stock performance, but not on a sustainable basis. Checkpoint stock is today roughly unchanged, or below, its levels of one, three, five and seven years ago. As it has for so long, Checkpoint trades today at a valuation we believe to be dramatically below its intrinsic worth and what it could command in a sale of the company. There are many reasons for this, ranging from Checkpoint’s awkward positioning as a small cap company with limited natural comparables and institutional coverage, to the seemingly perpetual weakness in capital spending by its retail customer base. While these factors may fluctuate, we have concluded that the obstacles to Checkpoint’s fair valuation are, in total, likely insurmountable as an independent public company, irrespective of the efforts of the Board and management. Therefore we strongly urge the Board to retain an investment bank for the express purpose of exploring all strategic alternatives to maximize Checkpoint shareholder value, including a sale of the company.

We believe that Checkpoint’s strong market positions and technologies make it a highly attractive acquisition candidate for several well-capitalized potential strategic acquirers in competing and adjacent positions. Moreover Checkpoint’s high levels of recurring cash flow make it a strong candidate for a leveraged buyout. Either outcome is likely in our view to generate a substantial premium over the present stock price, and far more likely to do so than staying-the-course as an independent public company.

We have always endeavored to be constructive contributors to Checkpoint’s prospects for success, from encouraging greater focus on RFID in 2003 to our view today that shareholder value can best be maximized through a strategic alternatives review. We recognize that the Board has likely considered this issue in the past, but we note that rarely has the M&A market been this robust due to historically low interest rates, liquid credit markets, tepid economic growth and the tremendous capital reserves of corporations and financial sponsors. However, these attractive conditions will not last forever and the presently robust M&A window will eventually shut, as it did for several years during the recent credit crisis. We strongly urge you to grasp this opportunity now to maximize value for Checkpoint shareholders. We would be happy to discuss these matters in greater detail. Please feel free to contact me at (212) 586-4333 or jlande@millcap.com

Sincerely,

/s/ Jerome J. Lande

Jerome J. Lande

EX-99.2 3 ex992to13d07234013_08102011.htm LETTER TO CHECKPOINT BOARD, DATED AUGUST 10, 2011 ex992to13d07234013_08102011.htm

Exhibit 99.2

August 10, 2011

The Board of Directors

Checkpoint Systems, Inc.

C/O Mr. Robert van der Merwe

Chairman & Chief Executive Officer

One Commerce Square

2005 Market Street, Suite 2410

Philadelphia, Pennsylvania 19103

Dear Members of the Board:

MMI Investments, L.P. (“MMI”) owns 1,960,800 shares of Checkpoint Systems, Inc. (“Checkpoint” or the “Company”), or roughly 4.9% of the outstanding stock, making us one of Checkpoint’s largest shareholders. As you know, we have been a Checkpoint shareholder for roughly a decade. Very shortly we will own more of Checkpoint and will file with the SEC a Schedule 13D disclosing additional information about our position as well as details regarding the communications we have had with the Board and Chairman & CEO Rob van der Merwe over the last few months. We feel that Checkpoint is significantly undervalued given its strong products, technology, market positions and customer relationships. The Board appears not to recognize that correcting that undervaluation will take more than the status quo. We believe that view does a disservice to Checkpoint shareholders, and we hope therefore that this public disclosure will be illuminating and constructive.

Three separate times since June 2011 MMI has, on a private basis, proffered highly constructive recommendations to the Board, all with the goal of improving Checkpoint’s dismal stock price performance. We have recommended that Checkpoint hire an investment banker to explore strategic alternatives, which the Board summarily dismissed. We have attempted to connect Checkpoint with those who are highly qualified and potentially interested in buying the Company, to no avail. Most recently we have requested that one MMI representative be voluntarily appointed to Checkpoint’s nine-member Board so that we could discuss these issues with full information, on an equal footing with the rest of the Board, so as to best represent the interests of our fellow shareholders. The Board responded that it was uninterested in shareholder representation on the Board. Instead, it repeated an offer of only entering into a confidentiality agreement that we had already declined due to our belief that it would effectively tie our hands without any compensating influence. All of this, as well as Checkpoint’s long-term poor performance, lead us to question whether the Checkpoint Board is taking Checkpoint’s undervaluation or shareholders seriously enough. Apparently we are not the only ones who feel this way, as is evident from the 2nd quarter earnings call during which Checkpoint’s largest shareholder questioned whether Mr. van der Merwe should resign and whether Checkpoint should sell itself.

For the Board’s benefit, allow me to explain why the situation is so serious. As of August 5th, 2011, the total return of Checkpoint stock is negative over each of the one-, two-, three-, four-, five-, six-, seven- and eight-year timeframes. The average decline over these timeframes is -24%. Checkpoint has also underperformed the S&P 500, as well as both small cap indices of which it is a member: the S&P 600 and the Russell 2000, over every timeframe from one-year to ten-years. The underperformance relative to these indices over these timeframes has annually averaged -35%, -60% and -52%, respectively. This stock performance is abhorrent, and largely reflective of operating performance, both short- and long-term. Checkpoint’s LTM adjusted EBITDA is lower than annual EBITDA has been in every fiscal year of the last decade other than 2006, and is roughly -25% below 2001. Free cash flow for the LTM period is roughly 1/9th the level of 2001, and the lowest in the last decade, barring 2010 when free cash flow was actually negative. Management has spoken extensively about the sizeable capital expenditures for ERP consolidation in 2010 and 2011, but even adding these back would still leave 2010 and LTM free cash flow at anemic levels compared to most fiscal years of the last decade. These results were produced despite investments in growth during this decade of roughly $600mm, (defined as capital expenditures, research & development expense and acquisitions, not even including 2011’s acquisition of Shore to Shore, Inc.) or more than Checkpoint’s current market capitalization. We believe these results are indicative of a Board that has been a very poor steward of shareholder capital over the short and long terms.

As the Board stated in refusing MMI’s recommendation to hire a banker and explore strategic alternatives, the Board is committed to the strategic plan Checkpoint is pursuing. We wonder whether the Board was equally confident in the strategic plan presented by Checkpoint’s management in late November of 2008 (two months after Lehman failed and the credit crisis began), which projected 10% annual revenue growth and at least 10% operating margin by 2011. We note that 2011 operating margin year-to-date is 1.8%, recently-lowered 2011 guidance calls for only 7.4% to 7.8% operating margin, and LTM and 2010 revenues are below 2008 and roughly the same as 2007. What level of confidence did the Board have in the strategic plan management unveiled in 2005 that called for 15% operating margins by 2007? Operating margins since 2005 have averaged less than half that goal.

With such poor performance in stock price, operations and strategic planning, how does the Board derive its confidence in the present strategic plan’s ability to reverse this decade-long trend, let alone the view that the strategic plan is a better alternative than engaging with bona fide potential acquirors, financial and strategic, certain of whom we believe have attempted in vain to discuss a transaction with Checkpoint? Our analysis suggests that such a transaction could yield a stock price in the low-to-mid $20’s, assuming acquisition by a financial sponsor at 7.5x to 8.5x the midpoint of the Company’s 2011 EBITDA guidance, and potentially well above that with a strategic acquirer. These are sincere questions, and we welcome any credible attempt to answer them.

We reiterate our view that Checkpoint should immediately hire an investment banker to assist the Board in seriously and comprehensively reviewing all strategic alternatives to maximize value for Checkpoint shareholders, including the sale of the Company. I continue to be available to discuss these matters with the Board and can be reached at (212) 586-4333.

Sincerely,

/s/ Jerome Lande

Jerome Lande

EX-99.3 4 ex993to13d07234013_08102011.htm JOINT FILING AGREEMENT ex993to13d07234013_08102011.htm

Exhibit 99.3

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including amendments thereto) with respect to the Common Stock, par value $0.10 per share, of Checkpoint Systems, Inc. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Dated: August 10, 2011

	MMI INVESTMENTS, L.P.

	By:	MCM Capital Management, LLC General Partner

	By:	/s/ Jerome J. Lande
		Jerome J. Lande
		Executive Vice President

	MMI PLUS, L.P.

	By:	MCM Capital Management, LLC General Partner

	By:	/s/ Jerome J. Lande
		Jerome J. Lande
		Executive Vice President

	MCM CAPITAL MANAGEMENT, LLC

	By:	/s/ Jerome J. Lande
		Jerome J. Lande
		Executive Vice President

	/s/ Clay B. Lifflander
	Clay B. Lifflander

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