Avery Dennison Reports Third-Quarter Earnings; Revenue Exceeds $1 Billion in the Quarter for the First Time as Company Achieves Double-Digit Earnings Growth.Business Editors PASADENA, Calif.--(BUSINESS WIRE)--Oct. 24, 2000 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:
Highlights for the third quarter 2000: -- Earnings per share, on a diluted basis, increased 12.3 percent to $.73 per share, from $.65 per share a year ago. Excluding the impact of currency exchange rates, earnings per share would have been $.02 higher. -- Net income grew to $73 million, an increase of 10.6 percent from $66 million in the third quarter of 1999. -- Reported sales reached $1 billion, an increase of 4.2 percent from $961 million in the third quarter a year ago. Excluding the impact of currency exchange rates, sales grew 7.7 percent. The acquisition of Italy-based Adespan earlier this year contributed 2 percent to sales growth in the third quarter. -- Unit volume grew 8.7 percent over the same period a year ago, including 2 percent from the acquisition of Adespan. -- Operating margin was 12.4 percent, an increase of 70 basis points over the same period last year. Highlights for the first nine months of 2000 include: (prior-year comparisons exclude a 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 first quarter of 1999) -- 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, increased 14.9 percent for the first nine months of 2000 to $2.16 per share from $1.88 per share for the same period in 1999. Excluding the impact of currency exchange rates, year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. earnings per share would have been $.05 higher. -- Net income grew 13.4 percent to $216 million from $190.5 million during the same period a year ago. -- Reported sales for the first nine months of 2000 reached nearly $3 billion, up 4.9 percent over the same period in 1999. Excluding the impact of currency exchange rates, sales grew 8.4 percent, including 3 percent from acquisitions. -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: expanded 100 basis points to 12.5 percent from 11.5 percent a year ago. -- Year-to-date return on average equity surpassed 35 percent and year-to-date return on total capital reached 20 percent. "We are very pleased with our results for the third quarter in a period of challenging global business conditions and currency fluctuations," 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 are especially pleased with the excellent sales growth in our worldwide office products business and our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. , 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 materials businesses. "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 high-quality products and services continue to drive our leadership position in fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive global markets. Looking ahead, we remain on track to report a record year of sales and profitability for Avery Dennison." The company projects that, based on current Euro/U.S. Dollar exchange rates, earnings per share will be negatively impacted in the fourth quarter by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.03. As a result of this currency impact, coupled with short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. 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. due to inventory tightening in the retail supply chain, the company now expects low-to-mid single-digit earnings-per-share growth in the fourth quarter. Looking forward to 2001, assuming continued weakness in the Euro, the company expects currency to negatively impact earnings per share by approximately $.12 to $.15, for the year. In the third quarter, the company's two sectors reported increased sales and volumes. International growth again exceeded domestic growth, as operations in Asia and 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. continued to expand at double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. rates. The Pressure-sensitive Adhesives and Materials sector posted strong volume growth overseas, offset by slower growth in North America. Asian and Latin American operations of the Fasson Roll materials business provided volume growth of more than 20 percent, along with European operations delivering strong growth in the quarter. In the Consumer and Converted Products sector, volumes increased both 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 internationally. The worldwide office products business reported solid top-line growth and excellent operating margin expansion. In North America, a robust "back-to-school" season resulted in double-digit sales growth for a variety of popular Avery-brand products, including binders, index dividers dividers Noun, pl compasses with two pointed arms, used for measuring or dividing lines dividers npl → compás msg de puntas dividers npl , sheet protectors For the 1970s television series made by Gerry Anderson, see The Protectors Protectors was a team of fictional superheroes that starred in the eponymous title published by Malibu Comics. , office labels and writing instruments. In addition, sales in the worldwide ticketing business grew at double-digit rates, as the operation's market position has continued to expand as a result of successful penetration The successful unauthorized breach of a security perimeter. See penetration test. of off-shore markets serving global apparel manufacturing and retailers. Operating margin grew significantly in the Consumer and Converted Products sector, reflecting benefits from the company's 1999 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). program. This sector will continue to benefit from the restructuring program, as well as from the Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. productivity improvement initiative in the company's office products business. "The core fundamentals of our business remain sound," said Neal. "As a global leader in the pressure-sensitive materials and office products businesses, we are well-positioned for continued 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. We continue to drive our aggressive global expansion efforts, innovative product introductions and superior technology and service." 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 1999 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 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 conditions, financial condition of customers, fluctuations in demand affecting sales to customers and other matters referred to in the company's Securities and Exchange Commission filings.
For more information and to listen to a live broadcast or an audio
replay of the 3rd Quarter conference call with analysts and investors,
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 Nine Months Ended
Sep. 30, Oct. 2, Sep. 30, Oct. 2, Oct. 2,
2000 1999 2000 1999 1999
Without With
Restruc- Restruc-
turing turing
Net sales $1,001.7 $ 961.0 $2,960.4 $2,823.4 $2,823.4
Cost of products sold 661.4 633.5 1,942.3 1,869.8 1,869.8
Gross profit 340.3 327.5 1,018.1 953.6 953.6
Marketing, general &
administrative expense 215.8 214.7 648.7 630.3 630.3
Restructuring charge -- -- -- -- 65.0
Interest expense 14.2 11.6 41.1 31.2 31.2
Income before taxes 110.3 101.2 328.3 292.1 227.1
Taxes on income 37.3 35.2 112.3 101.6 79.0
Net income $ 73.0 $ 66.0 $ 216.0 $ 190.5 $ 148.1
Net income per
common share,
assuming dilution $ 0.73 $ 0.65 $ 2.16 $ 1.88 $ 1.46
Average common shares
outstanding,
assuming dilution 99.4 101.3 100.2 101.5 101.5
Common shares
outstanding
at period end 97.5 98.9 97.5 98.9 98.9
AVERY DENNISON
SUPPLEMENTARY SEGMENT INFORMATION
(In millions)
(Unaudited)
Third Quarter Ended
OPERATING OPERATING
NET SALES INCOME MARGINS
2000 1999 2000 1999 2000 1999
Pressure-sensitive Adhesives
& Materials $544.6 $523.4 $52.1 $53.5 9.6% 10.2%
Consumer & Converted Products 492.3 474.4 79.4 65.9 16.1% 13.9%
Intersegment Sales (35.2) (37.6) N/A N/A N/A N/A
Divested Operations N/A 0.8 N/A (0.3) N/A N/A
Corporate Expense N/A N/A (7.0) (6.3) N/A N/A
Interest Expense N/A N/A (14.2) (11.6) N/A N/A
TOTAL $1,001.7 $961.0 $110.3 $101.2 11.0% 10.5%
SALES GROWTH
CURRENCY
REPORTED ADJUSTED
Pressure-sensitive
Adhesives & Materials 4.1% 8.3%
Consumer & Converted
Products 3.8% 6.5%
TOTAL 4.2% 7.7%
AVERY DENNISON
SUPPLEMENTARY SEGMENT INFORMATION
(In millions)
(Unaudited)
Nine Months Year-to-Date
With Restructuring
OPERATING OPERATING
NET SALES INCOME MARGINS
2000 1999 2000 1999 2000 1999
Pressure-sensitive
Adhesives & Materials $1,631.8 $1,516.4 $170.1 $131.4 10.4% 8.7%
Consumer & Converted
Products 1,433.0 1,410.7 219.6 153.2 15.3% 10.9%
Intersegment Sales (104.4) (108.0) N/A N/A N/A N/A
Divested Operations N/A 4.3 N/A (1.4) N/A N/A
Corporate Expense N/A N/A (20.3) (24.9) N/A N/A
Interest Expense N/A N/A (41.1) (31.2) N/A N/A
TOTAL $2,960.4 $2,823.4 $328.3 $227.1 11.1% 8.0%
Without Restructuring
OPERATING OPERATING
NET SALES INCOME MARGINS
2000 1999 2000 1999 2000 1999
Pressure-sensitive
Adhesives & Materials $1,631.8 $1,516.4 $170.1 $156.5 10.4% 10.3%
Consumer & Converted
Products 1,433.0 1,410.7 219.6 190.8 15.3% 13.5%
Intersegment Sales (104.4) (108.0) N/A N/A N/A N/A
Divested Operations N/A 4.3 N/A (1.4) N/A N/A
Corporate Expense N/A N/A (20.3) (22.6) N/A N/A
Interest Expense N/A N/A (41.1) (31.2) N/A N/A
TOTAL $2,960.4 $2,823.4 $328.3 $292.1 11.1% 10.3%
SALES GROWTH
CURRENCY
REPORTED ADJUSTED
Pressure-sensitive
Adhesives & Materials 7.6% 12.3%
Consumer & Converted
Products 1.6% 4.3%
TOTAL 4.9% 8.4%
AVERY DENNISON
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(Unaudited)
ASSETS Sep. 30, 2000 Oct. 2, 1999
Current assets:
Cash and cash equivalents $ 7.7 $ 5.8
Trade accounts receivable, net 616.4 573.2
Inventories, net 291.9 260.2
Other current assets 122.5 123.4
Total current assets 1,038.5 962.6
Property, plant and equipment, net 1,050.1 1,018.6
Intangibles resulting from business
acquisitions, net 401.0 368.1
Other assets 224.9 169.5
$2,714.5 $2,518.8
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion of
long-term debt $ 60.4 $ 27.5
Accounts payable 359.1 294.2
Other current liabilities 433.9 464.6
Total current liabilities 853.4 786.3
Long-term debt 754.5 652.5
Other long-term liabilities 313.0 288.5
Shareholders' equity:
Common stock 124.1 124.1
Capital in excess of par value 586.3 673.5
Retained earnings 1,413.9 1,251.2
Accumulated other comprehensive loss (107.5) (40.8)
Cost of unallocated ESOP shares (16.8) (18.3)
Employee stock benefit trusts (604.3) (733.4)
Treasury stock at cost (602.1) (464.8)
Total shareholders' equity 793.6 791.5
$2,714.5 $2,518.8
AVERY DENNISON
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(In millions)
(Unaudited)
Nine Months Ended
Sep. 30, 2000 Oct. 2, 1999
Operating Activities:
Net income $ 216.0 $ 148.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Restructuring charge -- 65.0
Depreciation 94.6 94.3
Amortization 23.0 16.0
Deferred taxes 7.4 (9.4)
Cash provided by operations 341.0 314.0
Changes in assets and liabilities, net
of the effect of foreign currency
translation, business divestitures,
acquisitions and restructuring charge (48.4) (37.5)
Net cash provided by operating activities 292.6 276.5
Investing Activities:
Purchase of property, plant and equipment (120.2) (99.4)
Payments for acquisitions (75.2) (167.8)
Other (36.0) 7.7
Net cash used in investing activities (231.4) (259.5)
Financing Activities:
Net increase/(decrease) in long-term debt 38.2 (0.9)
Net increase in short-term debt 96.6 144.3
Dividends paid (90.6) (82.0)
Purchase of treasury stock (120.8) (105.4)
Proceeds from exercise of stock options 15.6 14.2
Other 1.3 0.4
Net cash used in financing activities (59.7) (29.4)
Effect of foreign currency translation
on cash balances (0.7) (0.3)
Increase/(decrease) in cash and
cash equivalents 0.8 (12.7)
Cash and cash equivalents, beginning of period 6.9 18.5
Cash and cash equivalents, end of period $ 7.7 $ 5.8
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