Avery Dennison Reports Second-Quarter 2001 Results.Business Editors PASADENA, Calif.--(BUSINESS WIRE)--July 24, 2001 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. Corp. (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 of $.61 compared with $.73 per share for the second quarter a year ago, consistent with the company's previously announced adjustment to second-quarter earnings expectations. Avery Dennison had revised its second-quarter projections as a result of inventory reductions at certain major office products customers, the continued economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , and expanded weakness in international markets. For the first half of 2001, diluted earnings per share were $1.25 compared with $1.42 for the same period last year. Key results for the second quarter of 2001 include: -- Net income was $59.8 million, compared with $72.8 million in the second quarter of 2000. The impact of currency exchange rates reduced net income by $900,000, or approximately $.01 per share, for the quarter. -- Reported sales declined 3.3 percent to $960.8 million, from $993.4 million in the second quarter a year ago. Excluding the impact of currency exchange rates, sales were 1.2 percent less than the second quarter a year ago. Acquisitions, net of divestitures, contributed 1.2 percent to sales in the second quarter. -- Unit volume was essentially flat, excluding the impact from acquisitions and divestitures, compared with the same period a year ago. "As we announced last month, continuing inventory reduction efforts at office products superstores This is a list of superstores by country. Multi-national
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. "The sluggish economic conditions impacting the industrial parts of our business earlier in the year are now affecting apparel retail markets. In addition, as widely reported, the weakness in the U.S. economy has extended to international markets. "However, in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of this challenging climate, we are maintaining or gaining share in our core markets," said Neal. "Furthermore, our aggressive cost-reduction efforts and productivity improvement programs have partially offset the earnings impact of weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. market conditions.
"Combined, these results drive an improved competitive position globally for the company, providing us with an opportunity to emerge better positioned when economic conditions improve and our markets return to their historical growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. ." Key results for the first six months of 2001 include: -- Net income was $123.4 million, down from $143 million during the same period a year ago. The impact of currency exchange rates reduced net income by $2.7 million, or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.03 per share, for the first six months of 2001. -- Reported sales were $1,924 million, compared with $1,958.7 million during the same period in 2000. Excluding the impact of currency, sales increased 0.9 percent. -- Unit volume in the first half of 2001 was essentially flat, excluding the impact from acquisitions and divestitures, from the same period a year ago. Although rates of growth have slowed, the Pressure-sensitive Adhesives and Materials sector reported increased unit volume over the year-ago second quarter. Compared with the first quarter of 2001, unit volume growth improved in North America while it slowed internationally. Excluding the impact of currency exchange rates, sector sales grew 3.4 percent to $544.9 million, including the contribution from the acquisition of Dunsirn Industries. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the sector was up 30 basis points compared with the first quarter of 2001; however, compared with the second quarter a year ago, operating margin declined 210 basis points. The company's core 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 reported sales improvement in the second quarter, continuing a trend that began late last quarter. In addition, Avery A·ver·y , Oswald 1877-1955. American bacteriologist noted for establishing (1944) that DNA is responsible for the transmission of heritable characteristics. Dennison's North American pressure-sensitive materials operation will benefit from the closure of a materials coating facility operated by Spinnaker Industries. Separately, the company announced a new 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. supply agreement to provide all pressure-sensitive materials requirements for Nashua Nashua (năsh`  ə), city (1990 pop. 79,662), seat of Hillsborough co., S N.H., on the Merrimack and Nashua rivers near the Mass. line; settled c.1655, inc. as a city 1853. Corp., a manufacturer and marketer of premium labels, thermal thermal /ther·mal/ (ther´m'l) pertaining to or characterized by heat. ther·mal adj. 1. Of, relating to, using, producing, or caused by heat. 2. 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. papers and imaging products. Avery Dennison expects to gain approximately $50 million to $60 million in annual sales as a result of the plant closing and the long-term supply agreement. The Consumer and Converted Products sector reported a decline in unit volume over the second quarter of 2000. Sales for the sector, excluding the impact of currency exchange rates, decreased 4.5 percent to $449.5 million. Operating margin for the sector decreased by 130 basis points over the second quarter a year ago. The company attributed the declines to several factors, including previously announced inventory reduction efforts at office products superstores and reduced back-to-school orders, as well as general economic weakness affecting Avery Dennison converting businesses serving both retail and industrial markets in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and overseas. "Consistent with our announcement last month, our outlook for the second half of the year remains cautious," said Neal. "Our current projections assume continued global economic weakness and unfavorable currency exchange rates, with some improvement in our North American pressure-sensitive business." Avery Dennison said that it is maintaining previously announced guidance for the second half of 2001. Earnings expectations for the third quarter are in the range of $.62 to $.68 per fully 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. share, including a projected negative impact from currency exchange rates of approximately $.02 per share. Currency exchange rates are expected to reduce fourth-quarter earnings by approximately $.01 per share. "Our core business fundamentals business fundamentals The general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point remain strong, and we are seeing a number of positive developments in our operations, despite the current weakness in economic conditions around the world," said Neal. "We have an excellent record of sustaining and even increasing our market share position in businesses that continue to have excellent long-term growth potential. "We continue to invest in the long-term expansion of our businesses, including research and development efforts to produce a constant flow of innovative new products and applications for our proprietary technologies, as well as a variety of new venture activities." 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, the company had 2000 sales of $3.9 billion. Avery Dennison develops, manufactures and markets a wide range of products for consumer and industrial markets, including Avery-brand office products, 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 and labeling systems, and specialty tapes and chemicals. 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, financial condition of customers, 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 second-quarter conference call with analysts, visit the Avery Dennison Web site at www.investors.averydennison.com.
AVERY DENNISON CORP.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
Jun. 30, Jul. 1, Jun. 30, Jul. 1,
2001 2000 2001 2000
Net sales $ 960.8 $ 993.4 $1,924.0 $1,958.7
Cost of products sold 649.0 649.7 1,293.2 1,280.9
Gross profit 311.8 343.7 630.8 677.8
Marketing, general &
administrative expense 208.4 218.7 417.6 432.9
Interest expense 13.5 14.6 27.3 26.9
Income before taxes 89.9 110.4 185.9 218.0
Taxes on income 30.1 37.6 62.3 75.0
Income before
accounting change 59.8 72.8 123.6 143.0
Cumulative effect of accounting
change, net of tax (a) -- -- 0.2 --
Net income $ 59.8 $ 72.8 $ 123.4 $ 143.0
Diluted earnings per share:
Before accounting change $ 0.61 $ 0.73 $ 1.25 $ 1.42
Cumulative effect of
accounting change -- -- -- --
Net income per common share,
assuming dilution $ 0.61 $ 0.73 $ 1.25 $ 1.42
Average common shares
outstanding, assuming dilution 98.7 100.4 98.6 100.6
Common shares outstanding
at period end 98.0 98.7 98.0 98.7
(a) As required, the company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and related
amendments in the first quarter of 2001.
AVERY DENNISON CORP.
SUPPLEMENTARY SEGMENT INFORMATION
(In millions)
(Unaudited)
Second Quarter Ended
OPERATING OPERATING
NET SALES INCOME MARGINS
2001 2000 2001 2000 2001 2000
Pressure-sensitive
Adhesives & Materials $544.9 $541.6 $46.5 $57.4 8.5% 10.6%
Consumer & Converted
Products 449.5 478.2 64.2 74.8 14.3% 15.6%
Intersegment Sales (37.0) (35.8) N/A N/A N/A N/A
Divested Operations 3.4 9.4 (1.2) (0.5) N/A N/A
Corporate Expense N/A N/A (6.1) (6.7) N/A N/A
Interest Expense N/A N/A (13.5) (14.6) N/A N/A
TOTAL $960.8 $993.4 $89.9 $110.4 9.4% 11.1%
SALES GROWTH
CURRENCY
REPORTED ADJUSTED
Pressure-sensitive
Adhesives & Materials 0.6% 3.4%
Consumer & Converted
Products (6.0%) (4.5%)
TOTAL (3.3%) (1.2%)
AVERY DENNISON CORP.
SUPPLEMENTARY SEGMENT INFORMATION
(In millions)
(Unaudited)
Six Months Year-to-Date
OPERATING OPERATING
NET SALES INCOME MARGINS
2001 2000 2001 2000 2001 2000
Pressure-sensitive
Adhesives & Materials $1,091.6 $1,075.7 $ 92.3 $119.9 8.5% 11.1%
Consumer & Converted
Products 900.3 936.0 135.1 140.5 15.0% 15.0%
Intersegment Sales (75.7) (67.8) N/A N/A N/A N/A
Divested Operations 7.8 14.8 (2.4) (2.1) N/A N/A
Corporate Expense N/A N/A (11.8) (13.4) N/A N/A
Interest Expense N/A N/A (27.3) (26.9) N/A N/A
TOTAL $1,924.0 $1,958.7 $185.9 $218.0 9.7% 11.1%
SALES GROWTH
CURRENCY
REPORTED ADJUSTED
Pressure-sensitive
Adhesives & Materials 1.5% 4.8%
Consumer & Converted
Products (3.8%) (1.8%)
TOTAL (1.8%) 0.9%
AVERY DENNISON CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
ASSETS Jun. 30, 2001 Jul. 1, 2000
Current assets:
Cash and cash equivalents $ 10.3 $ 6.4
Trade accounts receivable, net 626.8 610.8
Inventories, net 309.5 308.0
Other current assets 123.5 129.0
Total current assets 1,070.1 1,054.2
Property, plant and equipment, net 1,074.4 1,056.9
Intangibles resulting from business
acquisitions, net 416.9 415.4
Other assets 281.0 205.6
$ 2,842.4 $ 2,732.1
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion
of long-term debt $ 228.3 $ 43.9
Accounts payable 357.3 363.0
Other current liabilities 378.9 429.4
Total current liabilities 964.5 836.3
Long-term debt 702.5 739.1
Other long-term liabilities 288.8 318.4
Shareholders' equity:
Common stock 124.1 124.1
Capital in excess of par value 641.4 857.8
Retained earnings 1,505.6 1,370.9
Accumulated other comprehensive loss (125.7) (80.9)
Cost of unallocated ESOP shares (15.3) (16.8)
Employee stock benefit trusts (619.8) (882.8)
Treasury stock at cost (623.7) (534.0)
Total shareholders' equity 886.6 838.3
$ 2,842.4 $ 2,732.1
AVERY DENNISON CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
Jun. 30, 2001 Jul. 1, 2000
Operating Activities:
Net income $ 123.4 $ 143.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 62.2 63.5
Amortization 16.1 15.1
Deferred taxes (1.3) 3.7
Cash provided by operations 200.4 225.3
Changes in assets and liabilities,
net of the effect of foreign
currency translation, business
divestitures and acquisitions (97.6) (54.9)
Net cash provided by operating activities 102.8 170.4
Investing Activities:
Purchase of property, plant and equipment (64.7) (77.3)
Acquisitions, net of miscellaneous
proceeds from sale of assets (50.6) (76.9)
Other (37.9) (13.6)
Net cash used in investing activities (153.2) (167.8)
Financing Activities:
Net decrease in long-term debt (0.3) (1.5)
Net increase in short-term debt 103.7 100.6
Dividends paid (66.1) (60.6)
Purchase of treasury stock (8.2) (52.7)
Proceeds from exercise of stock options 13.7 13.0
Other 6.8 (1.6)
Net cash provided by (used in)
financing activities 49.6 (2.8)
Effect of foreign currency translation
on cash balances (0.3) (0.3)
Decrease in cash and cash equivalents (1.1) (0.5)
Cash and cash equivalents,
beginning of period 11.4 6.9
Cash and cash equivalents, end of period $ 10.3 $ 6.4
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