Avery Dennison Reports Third-Quarter 2001 Results.Business Editors PASADENA, Calif.--(BUSINESS WIRE)--Oct. 23, 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 $.63 compared with $.73 per share for the third quarter a year ago. Earnings were in line with the expectations that the company had set previously for the quarter and met analyst consensus estimates. Key results for the third quarter of 2001 include: -- Earnings per share, on a diluted basis, were $.63, compared with $.73 per share for the same quarter a year ago. The impact of changes in currency exchange rates reduced earnings per share by slightly more than $.01 for the quarter. -- Net income was $61.7 million, compared with $73 million in the third quarter of 2000. -- Reported sales declined 3.5 percent to $966.7 million, from $1,001.7 million in the third quarter a year ago. Excluding the impact of currency exchange rates, sales were 1.6 percent less than the third quarter a year ago. Acquisitions, net of divestitures, contributed 1 percent to sales growth in the third quarter. -- Core unit volumes were essentially unchanged, excluding the impact from acquisitions and divestitures, compared with the same period a year ago. "We are pleased to deliver earnings at levels consistent with our guidance announced in July July: see month. , despite the sustained weakness in global economic conditions and the immediate adverse impact on the economy of the tragic events of September September: see month. 11," 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. "We continue to take the disciplined steps necessary to adapt successfully to the current uncertain business climate through aggressive cost-management efforts and initiatives to improve productivity, while keeping our attention focused on key 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 strategies," Neal said. "Our recently announced agreement to acquire Jackstadt GmbH GmbH Gesellschaft mit Beschränkter Haftung (German: limited liability company; business entity) , a highly respected manufacturer of pressure-sensitive adhesive adhesive, substance capable of sticking to surfaces of other substances and bonding them to one another. The term adhesive cement is sometimes used in place of adhesive, especially when referring to a synthetic adhesive. materials based in 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). , reflects our continued commitment and capability to expand our core businesses," said Neal. Highlights for the first nine months of 2001 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 $1.88, compared with $2.16 per share for the same period last year. -- Net income was $185.1 million, down from $216 million during the same period a year ago. -- Reported sales were $2,890.7 million, compared with $2,960.4 million during the same period in 2000. Excluding the impact of currency, sales were essentially flat compared with the prior year. -- Unit volumes in the first nine months of 2001 were essentially unchanged, excluding the impact from acquisitions and divestitures, compared with the same period a year ago. In the third quarter of 2001, sales for the Pressure-sensitive Adhesives and Materials sector grew to $549.2 million, an increase of 5 percent over the third quarter a year ago, excluding the impact of currency exchange rates and including the contribution from the Dunsirn Industries acquisition completed earlier this year. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the sector was 8.6 percent in the third quarter of 2001, up 10 basis points compared with the second quarter of 2001, but down from 9.8 percent achieved in the third quarter a year ago. A number of operations in the Pressure-sensitive Adhesives and Materials sector achieved continued sales and unit volume improvement. Sales grew in the company's core Fasson materials business 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 Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , excluding the impact of currency exchange rates,
with particularly strong sales growth in Asia. However, sales declined
in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. compared with the same period a year ago.
General economic weakness affecting North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. office products markets and converting businesses negatively affected the Consumer and Converted Products sector, which reported a decline in sales in the third quarter of 2001 compared with the same period a year ago. Sales for the sector, excluding the impact of currency exchange rates, decreased 4.2 percent to $460.5 million. Operating margin for the sector decreased to 13.6 percent in the third quarter of 2001, compared with 16.4 percent for the same period a year ago. The company said that the sales decline in the sector was primarily driven by a downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. at its North American office products business. In contrast to previous quarters, point-of-purchase data from superstores This is a list of superstores by country. Multi-national
This decline in consumer purchasing is consistent with public announcements by the company's superstore su·per·store n. A very large retail store that stocks highly diversified merchandise, such as groceries, toys, and camera equipment, or a wide variety of mechandise in a specific product line, such as computers or sporting goods. customers of significant drops in their in-store traffic following the September 11 terrorist attacks. Consistent with softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. sales levels at superstores, results from the back-to-school retail season were mixed, with strong sales reported for newly introduced Avery-brand products but relatively weak performance overall. "The uncertain economic climate has made it unusually difficult to provide guidance over the past few quarters, and this quarter is perhaps the most challenging," said Neal. "Just a few weeks into the fourth quarter, orders for our Fasson-brand pressure-sensitive materials in North America are keeping pace with our improved third-quarter trends in that business. "However, 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. in Europe have slowed, and orders in our North American office products business are tracking below prior-year levels. Therefore, we remain cautious about the outlook for the fourth quarter." Avery Dennison said that it expects earnings in the fourth quarter of 2001 to be in the range of $.57 to $.63 per fully diluted share, consistent with current First Call consensus projections. "We continue to benefit from ongoing cost-reduction efforts, which will provide approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $30 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. savings in our operations," said Neal. "In addition, we have identified a number of new programs to cut expenses that, once implemented, will result in approximately $15 million of additional annualized savings." The company said that it had originally planned to eliminate approximately 350 positions worldwide in 2001, but as a result of the continued slowing in economic conditions, it has become more aggressive in its employee reductions by cutting permanent headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. by more than 550 positions as of the end of the third quarter. "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 extremely challenging time for all global companies, our core fundamentals remain solid, our products continue to enjoy market-leading positions in the pressure-sensitive materials and office products industries, and we continue to invest in the long-term growth of our businesses," said Neal. "We look forward to the substantially expanded scale of our international pressure-sensitive materials operation once the Jackstadt acquisition is finalized See finalization. . Completion of this deal is subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals, which we hope to obtain late in the fourth quarter or early next year. "We are confident that we have all the pieces in place to return to our historic levels of earnings and sales growth when global economic conditions improve," 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, 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 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 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 and political 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 Third 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 Nine Months Ended
Sept. 29, Sept. 30, Sept. 29, Sept. 30,
2001 2000 2001 2000
Net sales $ 966.7 $1,001.7 $2,890.7 $2,960.4
Cost of products sold 653.9 661.4 1,947.1 1,942.3
Gross profit 312.8 340.3 943.6 1,018.1
Marketing, general &
administrative expense 209.6 215.8 627.2 648.7
Interest expense 12.4 14.2 39.7 41.1
Income before taxes 90.8 110.3 276.7 328.3
Taxes on income 29.1 37.3 91.4 112.3
Income before
accounting change 61.7 73.0 185.3 216.0
Cumulative effect of accounting
change, net of tax (a) -- -- (0.2) --
Net income $ 61.7 $ 73.0 $ 185.1 $ 216.0
Diluted earnings per share:
Before accounting change $ 0.63 $ 0.73 $ 1.88 $ 2.16
Cumulative effect of
accounting change -- -- -- --
Net income per common
share, assuming dilution $ 0.63 $ 0.73 $ 1.88 $ 2.16
Average common shares
outstanding, assuming dilution 98.6 99.4 98.6 100.2
Common shares outstanding
at period end 97.8 97.5 97.8 97.5
(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)
Third Quarter Ended
OPERATING OPERATING
NET SALES INCOME MARGINS
2001 2000 2001 2000 2001 2000
Pressure-sensitive
Adhesives & Materials $ 549.2 $ 536.3 $ 47.4 $ 52.8 8.6% 9.8%
Consumer & Converted
Products 460.5 486.8 62.6 79.7 13.6% 16.4%
Intersegment Sales (47.4) (34.5) N/A N/A N/A N/A
Divested Operations 4.4 13.1 0.1 (0.7) N/A N/A
Corporate Expense N/A N/A (6.9) (7.3) N/A N/A
Interest Expense N/A N/A (12.4) (14.2) N/A N/A
TOTAL $ 966.7 $1,001.7 $ 90.8 $110.3 9.4% 11.0%
SALES GROWTH
CURRENCY
REPORTED ADJUSTED
Pressure-sensitive
Adhesives & Materials 2.4% 5.0%
Consumer & Converted
Products (5.4%) (4.2%)
TOTAL (3.5%) (1.6%)
AVERY DENNISON CORP.
SUPPLEMENTARY SEGMENT INFORMATION
(In millions)
(Unaudited)
Nine Months Year-to-Date
OPERATING OPERATING
NET SALES INCOME MARGINS
2001 2000 2001 2000 2001 2000
Pressure-sensitive
Adhesives & Materials $1,647.9 $1,612.0 $139.7 $172.7 8.5% 10.7%
Consumer & Converted
Products 1,352.1 1,412.7 197.0 219.4 14.6% 15.5%
Intersegment Sales (129.8) (102.2) N/A N/A N/A N/A
Divested Operations 20.5 37.9 (1.5) (2.0) N/A N/A
Corporate Expense N/A N/A (18.8) (20.7) N/A N/A
Interest Expense N/A N/A (39.7) (41.1) N/A N/A
TOTAL $2,890.7 $2,960.4 $276.7 $328.3 9.6% 11.1%
SALES GROWTH
CURRENCY
REPORTED ADJUSTED
Pressure-sensitive
Adhesives & Materials 2.2% 5.3%
Consumer & Converted
Products (4.3%) (2.6%)
TOTAL (2.4%) 0.0%
AVERY DENNISON CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
ASSETS Sept. 29, Sept. 30,
2001 2000
Current assets:
Cash and cash equivalents $ 17.5 $ 7.7
Trade accounts receivable, net 616.4 616.4
Inventories, net 292.4 291.9
Other current assets 129.3 122.5
Total current assets 1,055.6 1,038.5
Property, plant and equipment, net 1,077.4 1,050.1
Intangibles resulting from business
acquisitions, net 426.1 401.0
Other assets 296.0 224.9
$2,855.1 $2,714.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion of
long-term debt $ 187.9 $ 60.4
Accounts payable 350.0 359.1
Other current liabilities 394.5 433.9
Total current liabilities 932.4 853.4
Long-term debt 701.7 754.5
Other long-term liabilities 290.7 313.0
Shareholders' equity:
Common stock 124.1 124.1
Capital in excess of par value 601.0 586.3
Retained earnings 1,534.3 1,413.9
Accumulated other comprehensive loss (107.8) (107.5)
Cost of unallocated ESOP shares (15.3) (16.8)
Employee stock benefit trusts (572.6) (604.3)
Treasury stock at cost (633.4) (602.1)
Total shareholders' equity 930.3 793.6
$2,855.1 $2,714.5
AVERY DENNISON CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
Sept. 29, Sept. 30,
2001 2000
Operating Activities:
Net income $ 185.1 $ 216.0
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 93.1 94.6
Amortization 23.9 23.0
Deferred taxes 1.9 7.4
Cash provided by operations 304.0 341.0
Changes in assets and liabilities,
net of the effect of foreign currency
translation, business divestitures
and acquisitions (59.6) (48.4)
Net cash provided by operating activities 244.4 292.6
Investing Activities:
Purchase of property, plant and equipment (96.6) (120.2)
Acquisitions, net of miscellaneous proceeds
from sale of assets (52.9) (75.2)
Other (56.2) (36.0)
Net cash used in investing activities (205.7) (231.4)
Financing Activities:
Net (decrease)/increase in long-term debt (1.2) 38.2
Net increase in short-term debt 61.0 96.6
Dividends paid (99.1) (90.6)
Purchase of treasury stock (17.8) (120.8)
Proceeds from exercise of stock options 14.6 15.6
Other 9.9 1.3
Net cash used in financing activities (32.6) (59.7)
Effect of foreign currency translation
on cash balances 0.0 (0.7)
Increase in cash and cash equivalents 6.1 0.8
Cash and cash equivalents, beginning of period 11.4 6.9
Cash and cash equivalents, end of period $ 17.5 $ 7.7
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