Business News
Avery Dennison Announces Second Quarter 2009 Results and Reduces Quarterly Dividend
Friday 31. July 2009 - Dividend Action Taken to Focus on Reducing Debt and Managing Cost of Credit in Light of Continued Economic Uncertainty
Avery Dennison Corporation (NYSE:AVY) today announced preliminary second quarter 2009 results. The Company also announced that it reduced its quarterly dividend from $0.41 to $0.20 per share.
All non-GAAP terms are reconciled to GAAP in the attached tables.
Second Quarter Financial Summary – Preliminary
($ millions, except per share amounts)
Q2 Q2 % Change vs. P/Y
2009 2008 Reported Organic (a)
Net sales, by segment:
Pressure-sensitive Materials $ 793.6 $ 979.9 -19 % -10 %
Retail Information Services 331.5 438.2 -24 % -20 %
Office and Consumer Products 216.9 255.4 -15 % -11 %
Other specialty converting businesses 113.4 155.4 -27 % -22 %
Total net sales $ 1,455.4 $ 1,828.9 -20 % -14 %
As Reported (GAAP) Adjusted Non-GAAP (b)
% of Sales % of Sales
2009 2008 % Change 2009 2008 2009 2008 % Change 2009 2008
Operating income (loss) before
interest and taxes, by segment:
Pressure-sensitive Materials $ 50.6 $ 82.4 -39 % 6.4 % 8.4 % $ 64.4 $ 82.9 -22 % 8.1 % 8.5 %
Retail Information Services (5.9 ) 20.3 -129 % -1.8 % 4.6 % (0.8 ) 31.6 -103 % -0.2 % 7.2 %
Office and Consumer Products 34.5 40.7 -15 % 15.9 % 15.9 % 37.5 44.9 -16 % 17.3 % 17.6 %
Other specialty converting businesses (10.4 ) 5.8 -279 % -9.2 % 3.7 % (2.7 ) 5.8 -147 % -2.4 % 3.7 %
Corporate expense (8.2 ) (5.7 ) (8.2 ) (10.2 )
Total operating income before
interest and taxes
$ 60.6 $ 143.5 -58 % 4.2 % 7.8 % $ 90.2 $ 155.0 -42 % 6.2 % 8.5 %
Interest expense 20.4 29.3 20.4 29.3
Income from operations
before taxes $ 40.2 $ 114.2 -65 % 2.8 % 6.2 % $ 69.8 $ 125.7 -44 % 4.8 % 6.9 %
Provision for income taxes $ 0.4 $ 21.8 $ 10.5 $ 23.6
Net income $ 39.8 $ 92.4 -57 % 2.7 % 5.1 % $ 59.3 $ 102.1 -42 % 4.1 % 5.6 %
Net income per common share,
assuming dilution $ 0.38 $ 0.93 -59 % $ 0.56 $ 1.03 -46 %
2009 2008
YTD Free Cash Flow (c) $ 87.5 $ 99.6
a) Percentage change in sales before the impact of acquisitions and foreign currency translation
b)
Excludes restructuring and asset impairment charges, transition costs associated with acquisition integrations, and other items (see accompanying schedules A-3 and A-4 for reconciliation to GAAP measures).
c)
Free Cash Flow (a non-GAAP measure) as used herein is defined as net cash provided by operating activities (as reported), less purchase of property, plant, equipment, software, and other deferred charges, plus proceeds from sale of investments, net (see accompanying schedule A-3 for reconciliation to GAAP measure).
“The Board is committed to paying a dividend, and its decision to reduce the dividend was not taken lightly,” said Dean A. Scarborough, president and chief executive officer of Avery Dennison. “However, the possibility of continued poor market conditions beyond 2009, along with increased pension funding requirements, compels us to take precautionary action. Our greatest responsibility during economic uncertainty is to ensure that the Company remains healthy, vibrant and strong for the future.”
“The size of the dividend reduction reflects a combination of the Companys near-term debt reduction target, as well as our target to pay a cash dividend of 40 to 50 percent of normalized earnings over time,” Scarborough said. “When our outlook improves, we expect to raise the dividend in line with this target.
“The decline in sales and profits in the second quarter reflects the continuation of a very challenging macroeconomic environment, particularly in the retail sector,” Scarborough said. “Im pleased that we maintained our gross margin in light of a substantial decline in volume. This is the result of fixed-cost reductions and pricing discipline. These actions, plus continued investment in growth initiatives, position the Company for strong profit growth when volumes improve.”