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Datum nieuwsfeit: 25-10-2005
( BW)(CA-AVERY-DENNISON)(AVY) Avery Dennison Reports Third Quarter
2005 Results; Company Raises Earnings Guidance for the Year on
Improved Profitability; Announces $60 Million to $70 Million of
Targeted Annual Savings from New Productivity Improvement Initiatives
Business Editors
PASADENA, Calif.--(BUSINESS WIRE)--Oct. 25, 2005--Avery Dennison
Corporation (NYSE:AVY) today reported third quarter diluted earnings
per share of $0.86 compared with $0.75 a year ago, a 15 percent
increase. Profits increased due to improved pricing and product mix,
as well as a reduction in operating expenses and the tax rate. The
Company also announced actions to increase operating efficiencies and
improve its profitability, targeting $60 million to $70 million of
annual savings when fully implemented in 2007.
"We are very pleased with the profit improvement we have achieved
over the past six months," said Dean A. Scarborough, president and
chief executive officer of Avery Dennison. "The actions we announced
today will further improve our global operating efficiencies, driving
margin expansion and helping to fund our investments for top-line
growth."
Planned cost reduction actions could result in cumulative pre-tax,
cash charges of approximately $20 million to $30 million, to be
incurred primarily during the fourth quarter of 2005. These charges
relate to estimated severance costs for a potential reduction in
headcount of over 500 positions, with actions expected to impact most
businesses and geographic regions.
Annual pre-tax savings associated with these and other cost
reduction actions could total $40 million to $50 million in 2006,
increasing to a total of $60 million to $70 million by 2007.
Approximately half of the targeted savings is expected to be generated
by actions taken to streamline corporate general and administrative
activities, including the Company's shared services units.
In addition, the Company is considering a number of divestitures
of non-strategic, low-margin businesses, which would reduce annual
sales by approximately $70 million, with minimal impact to earnings
from operations. Such divestitures, if completed, could result in
pre-tax, non-cash charges in excess of $100 million, representing
goodwill and other asset write-downs. These charges could be incurred
as early as the fourth quarter of 2005.
Planned savings and cash generated from divestitures will be used
in part to fund investments in ongoing Horizons initiatives and future
growth opportunities, as well as actions to drive additional
productivity gains.
Financial highlights for the third quarter of 2005:
-- Earnings per share, on a diluted basis, were $0.86, compared
with $0.75 a year ago. Results for the third quarter of 2005
include an incremental tax expense of approximately $0.14 per
share associated with the repatriation of $350 million of
earnings of certain foreign subsidiaries, to be completed
during the fourth quarter.
-- Net income increased 15 percent to $86.2 million, compared
with $75 million last year.
-- Sales for the third quarter increased 2 percent over the prior
year to $1.4 billion, at the low end of the Company's
expectations, reflecting relatively weak results in the first
two months of the quarter, partially offset by higher sales
growth in September. The improvement in the sales trend has
continued into the early part of the fourth quarter.
The impact of currency translation contributed approximately
40 percent of the sales growth during the quarter. The net
effect of pricing and product mix changes was positive, more
than offsetting a modest decline in unit volume, which
reflected generally weak industry conditions, market share
loss resulting from price increases in several businesses, and
a shift in the timing of sales related to the back-to-school
season.
-- Gross profit margin was comparable to the third quarter of
2004, reflecting improved pricing and productivity, offset by
unfavorable segment mix and higher spending associated with
the development of the Company's radio frequency
identification (RFID) business. Higher raw material costs were
fully offset with selling price increases.
-- Marketing, general and administrative expenses as a percent of
sales improved by 80 basis points compared to the same quarter
a year ago, reflecting spending controls implemented during
the past six months.
-- Excluding restructuring, asset impairment and plant transition
costs in the third quarter of 2005, operating margin improved
by 80 basis points over the third quarter of 2004, due to the
reduction in marketing, general and administrative expenses as
a percentage of sales. (See Attachment A-3: "Preliminary
Reconciliation of GAAP to Non-GAAP Measures".)
-- The one-time incremental tax expense associated with the
repatriation of earnings impacted the quarter by $0.14 per
share. The Company also had a $.09 per share benefit related
to several favorable tax audit settlements in multiple
jurisdictions. Geographic income mix and other factors also
contributed favorably to the tax rate. As a result, the
effective tax rate for the third quarter was 23.8 percent,
compared to 26.8 percent for the same period last year.
Adjusting for the unusual items, the company's effective tax
rate for the quarter was approximately 22.5 percent, which is
expected to be sustained through year end.
Segment results
The Company's Pressure-sensitive Materials segment reported sales
of approximately $775 million, up approximately 4 percent over the
third quarter of 2004. Approximately three-quarters of the increase in
segment revenue reflects unit volume growth and a positive
contribution from price and mix. The balance of the growth is
attributable to the impact of currency translation.
Before the effects of currency translation, sales in the North
American pressure-sensitive roll materials business declined by
approximately 3 percent, with the benefit of price increases more than
offset by a decline in volume. The volume decline affected most
business segments within the North American pressure-sensitive roll
materials business with the exception of films, which continued to
benefit from growth in the beverage label market.
Sales in the European pressure-sensitive roll materials business
grew approximately 9 percent in local currency, driven by solid unit
volume growth and a positive contribution from changes in price and
mix. Strong growth in the Eastern European region contributed to this
result. The roll materials business in Asia continued to report
double-digit growth in local currency sales, while sales for this
business in Latin America declined slightly. Sales in the graphics and
reflective materials business increased modestly before the effect of
currency.
Excluding asset impairment costs, operating margin for the segment
declined to 9.0 percent compared with 9.2 percent a year ago, due to
higher bad debt expense in Eastern Europe, partially offset by
productivity improvement initiatives and spending controls. The
benefit of price increases covered higher raw material costs. (See
Attachment A-4: "Preliminary Supplementary Information, Reconciliation
of GAAP to Non-GAAP Supplementary Information".)
The Office and Consumer Products segment reported sales of
approximately $284 million, a decline of approximately 6 percent from
the third quarter of 2004. The benefit of price increases was more
than offset by a decline in volume, partially reflecting an
approximately $10 million shift in back-to-school related sales into
the second quarter of 2005.
Excluding transition costs associated with a previously announced
plant closure, operating margin for the segment increased to 15.1
percent compared with 14.6 percent a year ago, reflecting the benefit
of pricing, productivity improvement efforts and spending controls.
Price increases, effective January 1 of this year, have covered
cumulative raw material cost inflation for the segment. (See
Attachment A-4: "Preliminary Supplementary Information, Reconciliation
of GAAP to Non-GAAP Supplementary Information".)
The Retail Information Services segment reported sales of
approximately $166 million, an increase of approximately 5 percent
over the third quarter of 2004. Approximately 70 percent of the growth
is due to the combined effect of the Rinke acquisition and currency
translation, with the balance due to core unit volume growth.
Operating margin for the segment increased to 7.2 percent in the third
quarter, compared with 6.4 percent a year ago, reflecting productivity
improvement efforts, including movement of production from Hong Kong
to lower cost operations in mainland China, as well as spending
controls.
Businesses in the other specialty converting group reported sales
of approximately $138 million, an increase of approximately 7 percent
over the third quarter of 2004. Operating margin for these businesses
declined to 5.1 percent from 6.6 percent a year ago, due to higher
spending related to the Company's radio frequency identification
(RFID) division, partially offset by the benefit of productivity
initiatives and spending controls.
Legal developments
The Company announced that it had been notified by the Australian
Competition and Consumer Commission that it was seeking information in
connection with an investigation of the Company's label stock
business. The Company is cooperating with the investigation.
Separately, the Company announced that it had contacted relevant
authorities in the U.S. with respect to the preliminary results of an
internal investigation of potential violations of the Foreign Corrupt
Practices Act, and that it intends to make a full report to these
authorities shortly. The issues relate to transactions carried out by
a small number of employees of the Company's reflectives business in
China, which had sales of approximately $5 million in 2004. The
transactions giving rise to these issues appear to have been
relatively minor in amount and of limited duration. Based on findings
to date, no changes to the Company's previously filed financial
statements are warranted as a result of these matters. However, the
Company expects that fines or other penalties could be incurred.
Outlook
Reflecting improved profitability and the reduction in its tax
rate, Avery Dennison is raising its 2005 earnings-per-share guidance
to a range of $3.28 to $3.43, before the impact of plant transition
costs, restructuring, asset impairment charges, and the one-time tax
expense associated with the repatriation of earnings. While fourth
quarter actions are still being developed, in the aggregate, these
items could reduce full year earnings by $0.35 to $0.45 per share,
including year-to-date costs already reported. Additionally, non-cash
charges associated with potential divestitures could further reduce
reported earnings. The Company's previously announced earnings
expectation excluding these factors was $2.95 to $3.20 per share.
The Company's outlook for the fourth quarter anticipates continued
weakness in core volume growth, recognizing unusually high sales
during the prior year related to an extra week of sales, as well as
the effect of customers buying in advance of 2005 price increases. The
Company indicated that it expects additional raw material cost
inflation in the fourth quarter, which it anticipates passing on to
customers, as needed.
"While we anticipate top-line growth to remain soft in the
near-term, we expect sales growth to accelerate, as we return to more
typical volume gains resulting from the underlying drivers in our
markets, as well as new products and services from our pipeline of
Horizon growth initiatives," said Scarborough.
"We remain focused on margin expansion during this period of
rising costs, by maintaining our pricing discipline and executing our
aggressive operational improvement strategy," added Scarborough. "We
will reinvest a portion of the gains from our productivity improvement
efforts into targeted growth initiatives, including expansion in the
rapidly growing emerging markets, as well as new product and service
innovations such as RFID."
Avery Dennison is a global leader in pressure-sensitive labeling
materials, office products and retail tag, ticketing and branding
systems. Based in Pasadena, Calif., Avery Dennison is a FORTUNE 500
company with 2004 sales of $5.3 billion. Avery Dennison employs more
than 21,000 individuals in 47 countries worldwide who apply the
Company's technologies to develop, manufacture and market a wide range
of products for both consumer and industrial markets.
Products offered by Avery Dennison include Avery-brand office
products and graphics imaging media, Fasson-brand self-adhesive
materials, peel-and-stick postage stamps, reflective highway safety
products, labels for a wide variety of automotive, industrial and
durable goods applications, brand identification and supply chain
management products for the retail and apparel industries, and
specialty tapes and polymers.
Forward-Looking Statements
Certain information presented in this news release may constitute
"forward-looking" 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 fluctuations in cost and
availability of raw materials; ability of the Company to achieve and
sustain targeted cost reductions; foreign exchange rates; worldwide
and local economic conditions; selling prices; impact of legal
proceedings, including the U.S. Department of Justice ("DOJ") criminal
investigation, as well as the European Commission ("EC"), Canadian
Department of Justice, and Australian Competition and Consumer
Commission investigations, into industry competitive practices and any
related proceedings or lawsuits pertaining to these investigations or
to the subject matter thereof (including purported class actions
seeking treble damages for alleged unlawful competitive practices, and
purported class actions related to alleged disclosure violations
pertaining to alleged unlawful competitive practices, which were filed
after the announcement of the DOJ investigation, as well as a likely
fine by the EC in respect of certain employee misconduct in Europe);
impact of potential violations of the U.S. Foreign Corrupt Practices
Act based on issues in China; impact of epidemiological events on the
economy and the Company's customers and suppliers; successful
integration of acquired companies; financial condition and inventory
strategies of customers; development, introduction and acceptance of
new products; fluctuations in demand affecting sales to customers; and
other matters referred to in the Company's SEC filings.
The financial information presented in this news release
represents preliminary financial results.
The Company believes that the most significant risk factors that
could affect its ability to achieve its stated financial expectations
in the near-term include (1) potential adverse developments in legal
proceedings and/or investigations regarding competitive activities;
(2) the degree to which higher raw material costs can be passed on to
customers through selling price increases (and previously implemented
selling price increases can be sustained), without a significant loss
of volume; (3) the impact of economic conditions on underlying demand
for the Company's products; and (4) ability of the Company to achieve
and sustain targeted cost reductions.
For more information and to listen to a live broadcast or an audio
replay of the 3rd Quarter conference call with analysts, visit the
Avery Dennison Web site at www.investors.averydennison.com
AVERY DENNISON A-1
PRELIMINARY CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
(UNAUDITED)
Three Months Ended Nine Months Ended
--------------------- -------------------
Oct. 01, Sep. 25, Oct. 01, Sep. 25,
2005 2004 2005 2004
-------------------------------------------------- -------------------
Net sales $ 1,362.5 $1,336.2 $4,127.4 $3,906.9
Cost of products sold 966.5 946.8 2,917.6 2,760.4
--------------------------- ---------------------- -------------------
Gross profit 396.0 389.4 1,209.8 1,146.5
Marketing, general &
administrative expense 266.9 272.8 851.4 804.5
Interest expense 14.7 14.1 45.0 43.1
Other expense, net(1) 1.3 --- 6.7 35.2
--------------------------- ---------------------- -------------------
Income before taxes 113.1 102.5 306.7 263.7
Taxes on income 26.9 27.5 73.4 67.6
--------------------------- ---------------------- -------------------
Net Income $ 86.2 $ 75.0 $ 233.3 $ 196.1
--------------------------- ---------------------- -------------------
Per share amounts:
Income per common share,
assuming dilution $ 0.86 $ 0.75 $ 2.32 $ 1.95
--------------------------- ---------------------- -------------------
Average common shares
outstanding, assuming
dilution 100.6 100.6 100.6 100.5
--------------------------- ---------------------- -------------------
Common shares outstanding
at period end 100.2 99.9 100.2 99.9
--------------------------- ---------------------- -------------------
Certain prior year amounts have been reclassified to conform with the
2005 financial statement presentation.
(1) Other expense for the third quarter of 2005 includes $1.3 of asset
impairment charges.
Other expense, net, for 2005 YTD includes $10.1 of restructuring
costs and asset impairment charges, partially offset by gain on
sale of assets of $(3.4).
Other expense for 2004 YTD includes $35.2 of restructuring costs,
asset impairment and lease cancellation charges.
A-2
Reconciliation of Non-GAAP Financial Measures in Accordance with SEC
Regulation G
Avery Dennison reports financial results in accordance with U.S. GAAP,
and herein provides some non-GAAP measures. These non-GAAP measures
are not in accordance with, nor are they a substitute for, GAAP
measures. These non-GAAP measures are intended to supplement the
Company's presentation of its financial results that are prepared in
accordance with GAAP.
Avery Dennison uses the non-GAAP measures presented to evaluate and
manage the Company's operations internally. Avery Dennison is also
providing this information to assist investors in performing
additional financial analysis that is consistent with financial models
developed by research analysts who follow the Company.
The reconciliation set forth below is provided in accordance with
Regulations G and S-K and reconciles the non-GAAP financial measures
with the most directly comparable GAAP financial measures.
AVERY DENNISON A-3
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In millions, except per share amounts)
(UNAUDITED)
Three Months Ended Nine Months Ended
-------------------- -----------------
Oct. 01, Sep. 25, Oct. 01, Sep. 25,
2005 2004 2005 2004
--------------------------------------------------- -----------------
Reconciliation of GAAP to Non-
GAAP Operating Margin:
Net sales $ 1,362.5 $1,336.2 $4,127.4 $3,906.9
-------------------- -----------------
Income before taxes $ 113.1 $ 102.5 $ 306.7 $ 263.7
------------------------------ -------------------- -----------------
GAAP Operating Margin 8.3% 7.7% 7.4% 6.7%
--------------------------------------------------- -----------------
Income before taxes $ 113.1 $ 102.5 $ 306.7 $ 263.7
Non-GAAP adjustments:
Restructuring and
transition costs(1) 0.4 --- 6.9 23.6
Asset impairment and lease
cancellation charges 1.3 --- 5.5 11.6
Gain on sale of assets --- --- (3.4) ---
Interest expense 14.7 14.1 45.0 43.1
-------------------- -----------------
Adjusted non-GAAP operating
income before taxes and
interest expense $ 129.5 $ 116.6 $ 360.7 $ 342.0
------------------------------ -------------------- -----------------
Adjusted Non-GAAP Operating
Margin 9.5% 8.7% 8.7% 8.8%
--------------------------------------------------- -----------------
Reconciliation of GAAP to Non-
GAAP Net Income:
As reported net income $ 86.2 $ 75.0 $ 233.3 $ 196.1
Non-GAAP adjustments, net
of taxes:
Restructuring and
transition costs 0.4 --- 5.3 17.1
Asset impairment and lease
cancellation charges 1.1 --- 4.3 8.4
Tax expense on repatriated
earnings 13.6 --- 13.6 ---
Gain on sale of assets --- --- (2.6) ---
------------------------------ -------------------- -----------------
Adjusted Non-GAAP Net Income $ 101.3 $ 75.0 $ 253.9 $ 221.6
--------------------------------------------------- -----------------
Reconciliation of GAAP to Non-
GAAP Earnings Per Share:
As reported income per common
share, assuming dilution $ 0.86 $ 0.75 $ 2.32 $ 1.95
Non-GAAP adjustments per
share, net of taxes:
Restructuring and
transition costs --- --- 0.05 0.17
Asset impairment and lease
cancellation charges 0.01 --- 0.04 0.08
Tax expense on repatriated
earnings 0.14 --- 0.14 ---
Gain on sale of assets --- --- (0.03) ---
------------------------------ -------------------- -----------------
Adjusted Non-GAAP income per
common share, assuming
dilution $ 1.01 $ 0.75 $ 2.52 $ 2.20
--------------------------------------------------- -----------------
Average common shares
outstanding, assuming
dilution 100.6 100.6 100.6 100.5
--------------------------------------------------- -----------------
Certain prior year amounts have been reclassified to conform with the
2005 financial statement presentation.
(1) 2005 QTD includes transition costs of $.4 related to a plant
closure.
2005 YTD includes restructuring and transition costs of $4.6 and
$2.3, respectively, primarily related to plant closures.
AVERY DENNISON A-4
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions)
(UNAUDITED)
Third Quarter Ended
---------------------------------------------
NET SALES OPERATING OPERATING
INCOME MARGINS
------------------ --------------- ----------
2005 2004 2005(1) 2004 2005 2004
------------------ --------------- ----------
Pressure-sensitive
Materials $774.6 $746.0 $68.8 $68.4 8.9% 9.2%
Office and Consumer
Products 284.3 303.7 42.6 44.4 15.0%14.6%
Retail Information
Services 165.6 157.8 12.0 10.1 7.2% 6.4%
Other specialty
converting businesses 138.0 128.7 7.0 8.5 5.1% 6.6%
Corporate Expense N/A N/A (2.6) (14.8) N/A N/A
Interest Expense N/A N/A (14.7) (14.1) N/A N/A
------------------ --------------- ----------
TOTAL $1,362.5 $1,336.2 $113.1 $102.5 8.3% 7.7%
================== =============== ==========
(1) Operating income for the third quarter of 2005 includes $1.7 of
asset impairment charges and transition costs, of which the
Pressure- sensitive Materials segment recorded $1.2, the Office
and Consumer Products segment recorded $.4 and other specialty
converting businesses recorded $.1.
Certain prior year amounts have been reclassified to conform with the
2005 financial statement presentation.
RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY INFORMATION
Third Quarter Ended
-----------------------
OPERATING OPERATING
INCOME MARGINS
------------ ----------
2005 2004 2005 2004
------------ ----------
Pressure-sensitive Materials
----------------------------
Operating income, as reported $68.8 $68.4 8.9% 9.2%
Non-GAAP adjustments:
Asset impairment charges 1.2 --- 0.1% ---
------------ ----------
Adjusted non-GAAP operating income $70.0 $68.4 9.0% 9.2%
============ ==========
Office and Consumer Products
----------------------------
Operating income, as reported $42.6 $44.4 15.0%14.6%
Non-GAAP adjustments:
Transition costs(1) 0.4 --- 0.1% ---
------------ ----------
Adjusted non-GAAP operating income $43.0 $44.4 15.1%14.6%
============ ==========
Other specialty converting businesses
-------------------------------------
Operating income, as reported $7.0 $8.5 5.1% 6.6%
Non-GAAP adjustments:
Asset impairment charges 0.1 --- --- ---
------------ ----------
Adjusted non-GAAP operating income $7.1 $8.5 5.1% 6.6%
============ ==========
(1) For 2005, amount includes transition costs of $.4 related to a
plant closure.
AVERY DENNISON A-5
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions)
(UNAUDITED)
Nine Months Year-to-Date
----------------------------------------------
NET SALES OPERATING INCOME OPERATING
MARGINS
------------------ ---------------- ----------
2005 2004 2005(1) 2004(2) 2005 2004
------------------ ---------------- ----------
Pressure-sensitive
Materials $2,369.2 $2,214.0 $213.3 $156.8 9.0% 7.1%
Office and Consumer
Products 843.2 844.7 119.8 121.8 14.2%14.4%
Retail Information
Services 504.5 460.9 36.6 35.5 7.3% 7.7%
Other specialty
converting businesses 410.5 387.3 12.5 32.6 3.0% 8.4%
Corporate Expense N/A N/A (30.5) (39.9) N/A N/A
Interest Expense N/A N/A (45.0) (43.1) N/A N/A
------------------ ---------------- ----------
TOTAL $4,127.4 $3,906.9 $306.7 $263.7 7.4% 6.7%
================== ================ ==========
(1) Operating income for 2005 includes $12.4 of restructuring costs,
asset impairment charges and transition costs, partially offset by
gain on sale of assets of $(3.4), of which the Pressure-sensitive
Materials segment recorded $1.6, the Office and Consumer Products
segment recorded $6.6 and other specialty converting businesses
recorded $.8.
(2) Operating income for 2004 includes $35.2 of restructuring costs,
asset impairment and lease cancellation charges, of which the
Pressure-sensitive Materials segment recorded $34.4, the Office
and Consumer Products segment recorded $.5 and the Retail
Information Services segment recorded $.3.
Certain prior year amounts have been reclassified to conform with the
2005 financial statement presentation.
RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY INFORMATION
Nine Months Year-to-Date
--------------------------
OPERATING OPERATING
INCOME MARGINS
--------------------------
2005 2004 2005 2004
-------------- -----------
Pressure-sensitive Materials
----------------------------
Operating income, as reported $213.3 $156.8 9.0% 7.1%
Non-GAAP adjustments:
Restructuring costs 0.4 22.8 --- 1.0%
Asset impairment and lease cancellation
charges 4.6 11.6 0.2% 0.5%
Gain on sale of assets (3.4) --- (0.1%) ---
-------------- -----------
Adjusted non-GAAP operating income $214.9 $191.2 9.1% 8.6%
============== ===========
Office and Consumer Products
----------------------------
Operating income, as reported $119.8 $121.8 14.2%14.4%
Non-GAAP adjustments:
Restructuring and transition costs(1) 6.6 0.5 0.8% 0.1%
-------------- -----------
Adjusted non-GAAP operating income $126.4 $122.3 15.0%14.5%
============== ===========
Retail Information Services
---------------------------
Operating income, as reported $36.6 $35.5 7.3% 7.7%
Non-GAAP adjustments:
Restructuring costs --- 0.3 --- 0.1%
-------------- -----------
Adjusted non-GAAP operating income $36.6 $35.8 7.3% 7.8%
============== ===========
Other specialty converting businesses
-------------------------------------
Operating income, as reported $12.5 $32.6 3.0% 8.4%
Non-GAAP adjustments:
Asset impairment charges 0.8 --- 0.2% ---
-------------- -----------
Adjusted non-GAAP operating income $13.3 $32.6 3.2% 8.4%
============== ===========
(1) For 2005, amount includes restructuring and transition costs of
$4.3 and $2.3, respectively, primarily related to plant closures.
AVERY DENNISON A-6
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEET
(In millions)
(UNAUDITED)
ASSETS Oct. 01, 2005 Sep. 25, 2004
----------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 75.5 $ 69.9
Trade accounts receivable, net 878.8 860.6
Inventories, net 439.9 430.1
Other current assets 120.6 132.7
----------------------------------------------------------------------
Total current assets 1,514.8 1,493.3
Property, plant and equipment, net 1,297.2 1,277.4
Goodwill 724.5 722.8
Intangibles resulting from business
acquisitions, net 130.9 140.3
Other assets 567.6 513.0
----------------------------------------------------------------------
$4,235.0 $4,146.8
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------
Current liabilities:
Short-term and current portion of long-
term debt $ 124.7 $ 197.1
Accounts payable 567.6 539.8
Other current liabilities 511.1 546.0
----------------------------------------------------------------------
Total current liabilities 1,203.4 1,282.9
Long-term debt 973.8 1,054.3
Other long-term liabilities 453.5 391.0
Shareholders'
equity:
Common stock 124.1 124.1
Capital in excess of par value 696.9 802.9
Retained earnings 1,995.0 1,846.0
Accumulated other comprehensive loss (71.7) (81.5)
Cost of unallocated ESOP shares (9.7) (11.6)
Employee stock benefit trusts (533.0) (663.9)
Treasury stock at cost (597.3) (597.4)
----------------------------------------------------------------------
Total shareholders' equity 1,604.3 1,418.6
----------------------------------------------------------------------
$4,235.0 $4,146.8
----------------------------------------------------------------------
Certain prior year amounts have been reclassified to conform with the
2005 financial statement presentation.
AVERY DENNISON A-7
PRELIMINARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(UNAUDITED)
Nine Months Ended
------------------------
Oct. 01, Sep. 25,
2005 2004
----------------------------------------------------------------------
Operating Activities:
Net income $ 233.3 $ 196.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 115.4 109.3
Amortization 34.1 29.8
Deferred taxes 19.7 8.8
Asset impairment and net loss (gain) on
sale of assets 9.5 9.7
Other non-cash items, net (7.9) (2.4)
------- -------
404.1 351.3
Changes in assets and liabilities (115.6) (18.6)
------- -------
Net cash provided by operating
activities 288.5 332.7
------- -------
Investing Activities:
Purchase of property, plant and
equipment (117.1) (115.6)
Purchase of software and other deferred
charges (15.6) (17.4)
Payments for acquisitions (2.7) (14.3)
Proceeds from sale of assets 20.3 8.2
Other 3.3 (6.9)
------- -------
Net cash used in investing activities (111.8) (146.0)
------- -------
Financing Activities:
Net (decrease)/increase in borrowings
(maturities of 90 days or less) (16.1) 32.0
Additional borrowings (maturities longer
than 90 days) 76.2 302.6
Payments of debt (maturities longer than
90 days) (137.5) (385.0)
Dividends paid (125.9) (122.6)
Purchase of treasury stock --- (0.5)
Proceeds from exercise of stock options,
net 4.8 14.9
Other 12.4 12.0
------- -------
Net cash used in financing activities (186.1) (146.6)
------- -------
Effect of foreign currency translation on
cash balances 0.1 0.3
------- -------
(Decrease) Increase in cash and cash
equivalents (9.3) 40.4
------- -------
Cash and cash equivalents, beginning of
period 84.8 29.5
------- -------
Cash and cash equivalents, end of period $ 75.5 $ 69.9
======= =======
Certain prior year amounts have been reclassified to conform with the
2005 financial statement presentation.
--30--JC/la*
CONTACT: Avery Dennison Corporation
Charles E. Coleman (Media Relations), 626-304-2014
communications@averydennison.com
or
Cynthia S. Guenther (Investor Relations), 626-304-2204
investorcom@averydennison.com