Avery Dennison Reports Second-Quarter 2002 Results; Company Posts Record Second-Quarter Sales With Double-Digit Increases in Core Materials Businesses.Business Editors PASADENA, Calif.--(BUSINESS WIRE)--July 23, 2002 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 of $.74 compared with $.61 for the second quarter a year ago, reflecting an increase of 21 percent over the prior-year quarter and exceeding the high end of the Company's original projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. for the quarter by $.03 per share. Excluding the impact of the Jackstadt acquisition that was completed on May 17, 2002, earnings grew nearly 25 percent to $.76 per share. "During the second quarter, many of our businesses achieved substantial sales growth improvement worldwide, enabling us to report significantly increased earnings," 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. "Our strong second-quarter performance reflects impressive top-line growth, aggressive productivity improvement efforts, a more stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. pricing environment and a workforce of highly committed Avery Dennison employees focused on implementing top-line growth strategies across the Company." Key results for the second quarter of 2002 include: -- Earnings per share, on a diluted basis, increased 12 percent to $1.40, compared with $1.25 for the first half of 2001. -- Net income grew 12.3 percent to $138.6 million, compared with $123.4 million in the first six months of 2001. -- Reported sales expanded 3.3 percent to $1.987 billion, compared with $1.924 billion in the first half of the prior year. Excluding the impact of currency exchange rates, acquisitions and divestitures, sales increased 3.6 percent over the first six months of 2001. -- Unit volume rose 6.1 percent, excluding the impact from acquisitions and divestitures, compared with the same period a year ago. Key results for the first six months of 2002 include: -- Earnings per share, on a diluted basis, increased 12 percent to $1.40, compared with $1.25 for the first half of 2001. -- Net income grew 12.3 percent to $138.6 million, compared with $123.4 million in the first six months of 2001. -- Reported sales expanded 3.3 percent to $1.987 billion, compared with $1.924 billion in the first half of the prior year. Excluding the impact of currency exchange rates, acquisitions and divestitures, sales increased 3.6 percent over the first six months of 2001. -- Unit volume rose 6.1 percent, excluding the impact from acquisitions and divestitures, compared with the same period a year ago. The Pressure-sensitive Adhesives and Materials sector reported strong improvement over the second quarter of 2001 with reported sales for the sector of $640.2 million. Sales for the sector grew 17.8 percent over the second quarter of 2001, excluding the impact of currency exchange rates and divestitures. Excluding the impact of the Jackstadt acquisition, currency exchange rates and divestitures, sales for the sector grew 9.4 percent. Double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales growth was achieved in the U.S. roll materials business and pressure-sensitive materials operations in Asian and Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of markets, excluding the impact of currency exchange rates. The 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. tape business reported high single-digit sales growth. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the sector grew to 9.5 percent, an improvement of 120 basis points over the prior-year second quarter. Excluding the impact of the Jackstadt acquisition and divestitures, operating margin for the sector grew to 10.7 percent, an improvement of 230 basis points over the second quarter of 2001. The Consumer and Converted Products sector also reported solid improvement compared to the same quarter a year ago. Reported sales for the sector were $460 million. Sales for the sector increased 3.8 percent from the second quarter of 2001, excluding the impact of currency exchange rates and divestitures. Stronger orders for the start of the "back-to-school" retail season in the U.S. market contributed to mid-single-digit sales growth for the Company's office products business. The worldwide ticketing business, which supplies tags and ticketing products to the apparel and retail industries, achieved double-digit sales growth. Operating margin for the sector was 14.3 percent, an increase of 20 basis points from the second quarter of 2001. Excluding the impact from divestitures, operating margin for the sector was 14.4 percent, unchanged from the prior-year second quarter and the first quarter of 2002. As previously announced, during the second quarter Avery Dennison completed its acquisition of Jackstadt GmbH GmbH Gesellschaft mit Beschränkter Haftung (German: limited liability company; business entity) , based in Wuppertal Wuppertal (v  p`ərtäl), city (1994 pop. 386,625), North Rhine–Westphalia, W Germany, on the Wupper River. ,
Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . The Company stated that after the integration plans for
Jackstadt operations are finalized See finalization. in the third quarter of 2002, a
previously announced pre-tax pre-tax adj → anterior al impuestopre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in the range of $30 million to $40 million will be expensed. Avery Dennison announced that it expects earnings, excluding any impact from a restructuring charge related to the integration of Jackstadt operations, to be in the range of $.68 to $.73 per share for the third quarter of 2002, and annual earnings to be in the range of $2.74 to $2.85 per share. The Company said that these expectations are based on current economic conditions and include an anticipated dilutive impact on earnings resulting from the Jackstadt acquisition of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.05 per share in the third quarter and $.03 per share in the fourth quarter. "While order patterns across many of our businesses continue to be generally strong, we are somewhat cautious about our outlook for the second half of 2002 given the economic uncertainties created by the recent significant decline in the stock market," said Neal. "We know that some portion of our extremely strong second-quarter sales growth was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to inventory replenishment replenishment the addition of an appropriate quantity of properly prepared solution containing the correct concentration of chemicals to the developer solutions used in radiography. on the part of final 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. customers. A continuation continuation - continuation passing style of strong results in the second half of the year will ultimately depend upon consumers continuing to spend. Therefore, we are taking a cautious approach to forecasting our second-half results. "For the long term, our focus on top-line growth strategies remains a key priority, with continued investment in new business ventures that are designed to open high-growth potential markets for us to introduce a variety of new products and applications. Our longstanding Adj. 1. longstanding - having existed for a long time; "a longstanding friendship"; "the longstanding conflict" long - primarily temporal sense; being or indicating a relatively great or greater than average duration or passage of time or a duration as specified; commitment to cost-reduction efforts and productivity improvement programs continues to be rock-solid, and we are looking forward to the benefits we will obtain when Jackstadt operations are fully integrated into our pressure-sensitive materials and graphics businesses," said Neal. 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 2001 sales of $3.8 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, successful integration of new acquisitions, 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 2nd 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 Six Months Ended
Jun. 29, Jun. 30, Jun. 29, Jun. 30,
2002 2001 2002 2001
Net sales $ 1,056.3 $ 960.8 $ 1,987.1 $ 1,924.0
Cost of products sold 709.8 649.0 1,331.7 1,293.2
Gross profit 346.5 311.8 655.4 630.8
Marketing, general &
administrative expense 231.4 208.4 437.1 417.6
Interest expense 9.6 13.5 18.9 27.3
Income before taxes 105.5 89.9 199.4 185.9
Taxes on income 31.7 30.1 60.8 62.3
Income before
accounting change 73.8 59.8 138.6 123.6
Cumulative effect of
accounting change,
net of tax (1) -- -- -- (0.2)
Net income $ 73.8 $ 59.8 $ 138.6 $ 123.4
Diluted earnings per share:
Before accounting change $ 0.74 $ 0.61 $ 1.40 $ 1.25
Cumulative effect of
accounting change -- -- -- --
Net income per
common share,
assuming dilution $ 0.74 $ 0.61 $ 1.40 $ 1.25
Average common
shares outstanding,
assuming dilution 99.4 98.7 99.2 98.6
Common shares outstanding
at period end 98.5 98.0 98.5 98.0
(1) 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
SUPPLEMENTARY INFORMATION
(In millions)
(Unaudited)
Second Quarter Ended
OPERATING OPERATING
NET SALES (1) INCOME (2) MARGINS
2002 2001 2002 2001 2002 2001
Pressure-sensitive
Adhesives & Materials $ 640.2 $558.2 $ 60.9 $ 46.4 9.5% 8.3%
Consumer & Converted
Products 460.0 448.1 66.0 63.1 14.3% 14.1%
Intersegment Sales (43.9) (45.5) N/A N/A N/A N/A
Corporate Expense N/A N/A (11.8) (6.1) N/A N/A
Interest Expense N/A N/A (9.6) (13.5) N/A N/A
TOTAL $1,056.3 $960.8 $105.5 $ 89.9 10.0% 9.4%
Change
in Sales
Before
Acqui-
sitions,
CHANGE Impact to Sales Growth From: Divest-
IN SALES Acqui- Divest- itures &
REPORTED sitions itures Currency Currency
Pressure-sensitive
Adhesives & Materials 14.7% 8.4% (2.4%) (0.7%) 9.4%
Consumer & Converted
Products 2.7% -- (1.2%) 0.1% 3.8%
TOTAL 9.9% 4.8% (2.1%) (0.4%) 7.6%
Note (1): Net sales for the second quarter of 2002 include
$1.1 million of sales from operations divested during the quarter in
the Pressure-sensitive Adhesives & Materials segment. Net sales for
the second quarter of 2001 include sales from divested operations of
$19.1 million, of which the Pressure-sensitive Adhesives & Materials
segment recorded $12.6 million and the Consumer & Converted Products
segment recorded $6.5 million.
Note (2): Operating income for the second quarter of 2002 includes
$(0.1) million from divested operations included within the Consumer
& Converted Products segment. Operating income for the second quarter
of 2001 includes $0.1 million from divested operations, of which the
Pressure-sensitive Adhesives & Materials segment recorded $0.8 million
and the Consumer & Converted Products segment recorded $(0.7) million.
AVERY DENNISON
SUPPLEMENTARY INFORMATION
(In millions)
(Unaudited)
Six Months Year-to-Date
OPERATING OPERATING
NET SALES (1) INCOME (2) MARGINS
2002 2001 2002 2001 2002 2001
Pressure-sensitive
Adhesives & Materials $1,190.6 $1,094.6 $111.9 $ 91.3 9.4% 8.3%
Consumer & Converted
Products 880.1 900.7 126.0 133.7 14.3% 14.8%
Intersegment Sales (83.6) (71.3) N/A N/A N/A N/A
Corporate Expense N/A N/A (19.6) (11.8) N/A N/A
Interest Expense N/A N/A (18.9) (27.3) N/A N/A
TOTAL $1,987.1 $1,924.0 $199.4 $185.9 10.0% 9.7%
Change
in Sales
Before
Acqui-
sitions,
CHANGE Impact to Sales Growth From: Divest-
IN SALES Acqui- Divest- itures &
REPORTED sitions itures Currency Currency
Pressure-sensitive
Adhesives & Materials 8.8% 4.8% (2.4%) (1.7%) 8.1%
Consumer & Converted
Products (2.3%) 0.3% (1.4%) (0.4%) (0.8%)
TOTAL 3.3% 2.8% (2.1%) (1.0%) 3.6%
Note (1): Net sales for 2002 include $3.3 million of sales from
operations divested during the year, of which the Pressure-sensitive
Adhesives & Materials segment recorded $2.6 million and the Consumer
& Converted Products segment recorded $0.7 million. Net sales for 2001
include sales from divested operations of $41.2 million, of which the
Pressure-sensitive Adhesives & Materials segment recorded
$26.5 million and the Consumer & Converted Products segment recorded
$14.7 million.
Note (2): Operating income for 2002 includes $(0.6) million from
operations during the year, of which the Pressure-sensitive Adhesives
& Materials segment recorded $0.1 million and the Consumer & Converted
Products segment recorded $(0.7) million. Operating income for 2001
includes $0.9 million from divested operations, of which the
Pressure-sensitive Adhesives & Materials segment recorded $1.5 million
and the Consumer & Converted Products segment recorded $(0.6) million.
AVERY DENNISON
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
ASSETS Jun. 29, Jun. 30,
2002 2001
Current assets:
Cash and cash equivalents $ 25.9 $ 10.3
Trade accounts receivable, net 753.6 626.8
Inventories, net 355.6 309.5
Other current assets 125.0 123.5
Total current assets 1,260.1 1,070.1
Property, plant and equipment, net 1,150.8 1,074.4
Goodwill, net 464.7 294.6
Intangibles resulting from business
acquisitions, net 130.9 122.3
Other assets 356.8 281.0
$ 3,363.3 $ 2,842.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion
of long-term debt $ 441.7 $ 228.3
Accounts payable 409.5 357.3
Other current liabilities 490.7 378.9
Total current liabilities 1,341.9 964.5
Long-term debt 668.3 702.5
Other long-term liabilities 313.2 288.8
Shareholders' equity:
Common stock 124.1 124.1
Capital in excess of par value 777.9 641.4
Retained earnings 1,622.2 1,505.6
Accumulated other comprehensive loss (122.6) (125.7)
Cost of unallocated ESOP shares (13.7) (15.3)
Employee stock benefit trusts (711.6) (619.8)
Treasury stock at cost (636.4) (623.7)
Total shareholders' equity 1,039.9 886.6
$ 3,363.3 $ 2,842.4
AVERY DENNISON
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended
Jun. 29, Jun. 30,
2002 2001
Operating Activities:
Net income $ 138.6 $ 123.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 62.8 62.2
Amortization 9.5 16.1
Deferred taxes 3.1 (1.3)
Cash provided by operations 214.0 200.4
Changes in assets and liabilities (46.2) (97.6)
Net cash provided by operating activities 167.8 102.8
Investing Activities:
Purchase of property, plant and equipment (38.4) (64.7)
Acquisitions, net of proceeds
from sale of assets (218.1) (50.6)
Other (11.6) (37.9)
Net cash used in investing activities (268.1) (153.2)
Financing Activities:
Additional borrowings 386.0 434.3
Payments of debt (223.4) (330.9)
Dividends paid (72.5) (66.1)
Purchase of treasury stock (3.3) (8.2)
Proceeds from exercise of stock options 20.5 13.7
Other (0.5) 6.8
Net cash provided by financing activities 106.8 49.6
Effect of foreign currency translation
on cash balances 0.3 (0.3)
Increase / (decrease) in cash
and cash equivalents 6.8 (1.1)
Cash and cash equivalents, beginning of period 19.1 11.4
Cash and cash equivalents, end of period $ 25.9 $ 10.3
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