Avery Dennison Reports First Quarter 2003 Results; Net Income Grows 9.3 Percent; Sales Reach Record High.Business Editors PASADENA, Calif.--(BUSINESS WIRE)--April 22, 2003 Avery Dennison Avery Dennison Corporation (NYSE: AVY) produces pressure-sensitive materials (such as self-adhesive labels), office products, and various paper products. R. Stanton Avery founded Avery in 1935. Avery Dennison Corporation was created in 1990 by merger of Avery and Dennison. Corporation (NYSE NYSE See: New York Stock Exchange :AVY AVY may refer to:
An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of increased 7.6 percent to $0.71, compared with $0.66 per share for the first quarter a year ago. "We are pleased to report a very solid first quarter of 2003, given the challenging economic and geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. climate, including achieving sales growth of nearly 24 percent and earnings-per-share growth of nearly 8 percent," said Philip Philip, tetrarch of Ituraea Philip, d. A.D. 34, tetrarch of Ituraea, son of Herod the Great. He was perhaps the ablest of the Herod dynasty. He is mentioned in the Gospel of St. Luke. M. Neal, chairman and chief executive officer of Avery Dennison. "In addition to achieving our sales and earnings growth goals, our newly launched top-line growth acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. program is providing some exciting initial results, with more than 100 individual new product development projects underway throughout the Company that are expected to provide approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $50 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. sales by the end of the year." Key results for the first quarter of 2003 include: -- Earnings per share, on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, were $0.71 per share, compared with $0.66 per share in the same quarter a year ago. The impact of currency exchange rates added $0.04 to earnings per share in the quarter, which was approximately $0.01 above the previously announced expectation for the quarter. -- Net income increased 9.3 percent to $70.8 million, compared with $64.8 million in the first quarter of 2002. -- Reported sales grew 23.6 percent from prior-year levels, reaching $1.151 billion for the first quarter of 2003, compared with $930.8 million in the first quarter of 2002. Approximately 60 percent of the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales are attributed to acquisitions net of divestitures, and approximately 20 percent of the incremental sales are due to the impact of currency exchange rates. Consequently, core sales growth is estimated to be approximately 4 percent for the first quarter of 2003. -- Core unit volume grew approximately 4 percent over the prior-year first quarter. -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: declined 110 basis points from the first quarter of 2002, due to lower margins associated with the integration of acquired Jackstadt operations. Operating margin increased 170 basis points from the fourth quarter of 2002, with 150 basis points of the improvement attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the negative impact of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges in the fourth quarter. -- Returns remained high, with return on shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of 26 percent, compared with 27.6 percent in the year-ago first quarter, and return on total capital of 15.7 percent, compared with 17.1 percent in the first quarter of 2002. The Company's Pressure-sensitive Adhesives and Materials sector reported sales of $724 million, reflecting growth of 32 percent over the first quarter of 2002. Approximately 55 percent to 60 percent of the incremental sales are attributed to acquisitions net of divestitures and approximately 15 percent of the incremental sales are due to the impact of currency exchange rates. Core sales growth for the sector is estimated to be 7 percent to 8 percent. Sales in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. pressure-sensitive roll materials business remained solid, achieving mid-single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. growth driven by strong results in the premium packaging segment of the market. Excluding the Jackstadt acquisition, sales in the roll materials business in Asia grew at double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. rates, while sales growth in European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets grew at low-single digit levels due to the continued weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. economic
conditions in that region. The worldwide specialty A contract under seal.A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. tapes businesses reported strong results, especially in operations serving the medical market, while sales in the graphics and reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. materials businesses declined modestly, excluding the Jackstadt acquisition. The Consumer and Converted Products sector reported sales of $473 million, reflecting growth of 13 percent over the prior-year first quarter. Approximately 60 percent of the incremental sales are attributed to acquisitions net of divestitures and approximately 35 percent of the incremental sales are due to the impact of currency exchange rates. Core sales growth for the sector is estimated to be approximately 1 percent. Global sales of office products declined by approximately 3 percent, due to continued weakened end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. demand and modest inventory reductions by office products superstores This is a list of superstores by country. Multi-national
The Company stated that the integration of operations resulting from the acquisition of Jackstadt is proceeding ahead of plan in terms of customer retention and working capital reductions, with cost savings expectations remaining on schedule. Avery Dennison also said that the integration of RVL RVL Revolution (Nintendo) RVL Regio Verkehrsverbund Lörrach GmbH (German) RVL Rolling Vertical Landing and L&E operations is well underway as the Company's retail information services business broadens its capabilities to provide a full range of products and services to the retail and apparel industries. Avery Dennison announced that for the second quarter of 2003, it expects earnings to be in the range of $0.77 to $0.82 per share, based on current assumptions. Avery Dennison stated that it was slightly reducing the high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. of its previously announced 2003 annual earnings-per-share expectation, by $0.05, based on generally weaker economic conditions around the world, which are expected to be partially offset by an anticipated positive impact from currency exchange rates. The adjustment results in an annual earnings expectation in the range of $3.00 to $3.20 per share in 2003. "The fundamentals of our business remain outstanding, as demonstrated by the strong results achieved during the first quarter and our expectation of high-single digit annual earnings-per-share growth in 2003," said Neal. "We remain focused on our aggressive initiatives to accelerate growth, and we look forward to continued expansion as we introduce new products and services in markets that are enjoying solid, long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth." Avery Dennison is a global leader in pressure-sensitive technology and innovative self-adhesive self-ad·he·sive adj. Having a surface coated with an adhesive and not needing any substance, such as glue or paste, applied to form a bond: self-adhesive wallpaper; self-adhesive labels. solutions for consumer products and label materials. Based in Pasadena, Calif., the Company had 2002 sales of $4.2 billion. Avery Dennison develops, manufactures and markets a wide range of products for consumer and industrial markets, including Avery-brand office products and graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick postage stamps This is a list of postage stamps that are especially notable in some way. The best-known stamps:
v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. retail tag, labeling and branding systems, and specialty tapes and polymers. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain information presented in this news release may constitute "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements. These statements are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or expected results depending on a variety of factors, including but not limited to price and availability of raw materials; foreign exchange rates; worldwide and local economic conditions; impact of legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , including the U.S. Department of Justice criminal investigation into competitive practices in the label stock industry and any related proceedings pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the subject matter; impact of Severe Acute Respiratory Syndrome Severe Acute Respiratory Syndrome (SARS) Definition Severe acute respiratory syndrome (SARS) is the first emergent and highly transmissible viral disease to appear during the twenty-first century. (SARS) on the economy, the Company's customers and business; financial condition and inventory strategies of customers; acceptance of new products; fluctuations in demand affecting sales to customers; and other matters referred to in the Company's SEC filings. For more information and to listen to a live broadcast or an audio replay of the 1st Quarter conference call with analysts, visit the Avery Dennison Web site at www.investors.averydennison.com.
AVERY DENNISON
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended
----------------------------
Mar. 29, 2003 Mar. 30, 2002
----------------------------------------------------------------------
Net sales $ 1,150.6 $ 930.8
Cost of products sold 786.5 621.9
----------------------------------------------------------------------
Gross profit 364.1 308.9
Marketing, general & administrative expense 249.5 205.7
Interest expense 14.9 9.3
----------------------------------------------------------------------
Income before taxes 99.7 93.9
Taxes on income 28.9 29.1
----------------------------------------------------------------------
Net income $ 70.8 $ 64.8
----------------------------------------------------------------------
Net income per common share, assuming
dilution $ 0.71 $ 0.66
----------------------------------------------------------------------
Average common shares outstanding,
assuming dilution 100.0 98.9
----------------------------------------------------------------------
Common shares outstanding at period end 99.4 98.2
----------------------------------------------------------------------
AVERY DENNISON
SUPPLEMENTARY INFORMATION
(In millions)
(Unaudited)
First Quarter Ended
-----------------------------------------
NET SALES OPERATING OPERATING
INCOME MARGINS
---------------- ------------- ----------
2003 2002 2003 2002 2003 2002
---------------- ------------- ----------
Pressure-sensitive Adhesives
and Materials $724.3 $550.4 $60.6 $50.3 8.4% 9.1%
Consumer and Converted
Products 473.4 420.1 68.7 60.0 14.5%14.3%
Intersegment Sales (47.1) (39.7) N/A N/A N/A N/A
Corporate Expense N/A N/A (14.7) (7.1) N/A N/A
Interest Expense N/A N/A (14.9) (9.3) N/A N/A
---------------- ------------- ----------
TOTAL $1,150.6 $930.8 $99.7 $93.9 8.7%10.1%
================ ============= ==========
AVERY DENNISON
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
ASSETS Mar. 29, 2003 Mar. 30, 2002
------------------------------------------------------- -------------
Current assets:
Cash and cash equivalents $ 33.2 $ 16.0
Trade accounts receivable, net 759.5 592.0
Inventories, net 365.8 289.7
Other current assets 121.0 116.1
------------------------------------------------------- -------------
Total current assets 1,279.5 1,013.8
Property, plant and equipment, net 1,216.3 1,048.6
Goodwill, net 637.2 295.6
Intangibles resulting from business
acquisitions, net 148.8 116.7
Other assets 472.4 442.0
------------------------------------------------------- -------------
$3,754.2 $2,916.7
------------------------------------------------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------------- -------------
Current liabilities:
Short-term and current portion of long-term
debt $ 313.1 $ 218.8
Accounts payable 451.9 317.8
Other current liabilities 551.5 381.8
------------------------------------------------------- -------------
Total current liabilities 1,316.5 918.4
Long-term debt 936.4 657.8
Other long-term liabilities 378.9 389.6
Shareholders' equity:
Common stock 124.1 124.1
Capital in excess of par value 747.8 760.8
Retained earnings 1,695.8 1,584.6
Minimum pension liability (68.2) (14.3)
Accumulated other comprehensive loss (108.3) (141.9)
Cost of unallocated ESOP shares (12.2) (13.7)
Employee stock benefit trusts (659.6) (713.3)
Treasury stock at cost (597.0) (635.4)
------------------------------------------------------- -------------
Total shareholders' equity 1,122.4 950.9
------------------------------------------------------- -------------
$3,754.2 $2,916.7
------------------------------------------------------- -------------
Certain prior year amounts have been reclassified to conform with the
2003 financial statement presentation.
AVERY DENNISON
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
---------------------------
Mar. 29, 2003 Mar. 30, 2002
-------------------------------------------------------- -------------
Operating Activities:
Net income $ 70.8 $ 64.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 35.4 31.0
Amortization 8.8 5.3
Deferred taxes (8.3) 0.4
------- -------
106.7 101.5
Changes in assets and liabilities (68.4) (71.9)
------- -------
Net cash provided by operating activities 38.3 29.6
------- -------
Investing Activities:
Purchase of property, plant and equipment (40.9) (17.5)
Proceeds from sale of assets 4.4 0.6
Payments for acquisitions (6.6) (7.0)
Purchase of software (7.4) (4.1)
Other 0.2 (5.0)
------- -------
Net cash used by investing activities (50.3) (33.0)
------- -------
Financing Activities:
Additional borrowings 428.4 233.2
Payments of debt (372.8) (204.5)
Dividends paid (39.8) (36.3)
Purchase of treasury stock (0.1) (2.0)
Proceeds from exercise of stock options, net 1.7 8.4
Other 4.2 2.0
------- -------
Net cash provided by financing activities 21.6 0.8
------- -------
Effect of foreign currency translation on
cash balances 0.8 (0.5)
------- -------
Increase / (decrease) in cash and cash
equivalents 10.4 (3.1)
------- -------
Cash and cash equivalents, beginning of period 22.8 19.1
------- -------
Cash and cash equivalents, end of period $ 33.2 $ 16.0
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