- 2Q15 Reported EPS of $0.68
- Adjusted EPS (non-GAAP) of $0.91
- 2Q15 Net sales declined approximately 6
percent to $1.52 billion
- Net sales up approximately 4 percent on
organic basis
- Repurchased 1.1 million shares for $62
million and paid $66 million in dividends in the first half of
2015
- Updated FY15 Reported EPS guidance to
$2.82 to $3.02, reflecting loss on sale and exit costs associated
with a product line divestiture in 2Q
- No change to full year guidance for
adjusted EPS growth of 5 to 11 percent
Avery Dennison Corporation (NYSE:AVY) today announced
preliminary, unaudited results for its second quarter ended July 4,
2015. All non-GAAP financial measures referenced in this document
are reconciled to GAAP in the attached tables. Unless otherwise
indicated, the discussion of the company’s results is focused on
its continuing operations, and comparisons are to the same period
in the prior year.
“I’m pleased to report another solid quarter of progress against
our long-term strategic and financial objectives,” said Dean
Scarborough, Avery Dennison chairman and CEO. "Sales were up 4
percent on an organic basis, as exceptional performance in
Pressure-sensitive Materials offset a decline in Retail Branding
and Information Solutions. Despite the headwind from currency
translation, we delivered mid-teens growth in adjusted earnings per
share, continued to expand adjusted operating margin, and generated
significantly higher cash flow compared to last year.
“Pressure-sensitive Materials delivered great results through
the consistent execution of our strategy, leveraging our scale and
strengths in innovation, quality, and service across the entire
portfolio,” Scarborough added. “Results in Retail Branding and
Information Solutions were disappointing. Actions are underway
to build a better foundation for long-term profitable growth and
value creation in all segments of this business.”
“Overall, I remain confident that the consistent execution of
our strategies, including the turnaround in RBIS, will enable us to
meet our long-term goals."
For more details on the company’s results, see the summary table
accompanying this news release, as well as the supplemental
presentation materials, “Second Quarter 2015 Financial Review and
Analysis,” posted on the company’s website at
www.investors.averydennison.com, and furnished to the SEC on Form
8-K.
Second Quarter 2015 Results by
Segment
All references to sales reflect comparisons on an organic basis,
which exclude the estimated impact of currency translation, product
line exits, acquisitions and divestitures, and, where applicable,
the extra week in the prior fiscal year. Adjusted operating margin
refers to income before interest expense and taxes, excluding
restructuring costs and other items, as a percentage of sales.
Pressure-sensitive Materials (PSM)
- PSM sales increased approximately 6
percent. Within the segment, sales of both Label and Packaging
Materials and combined Graphics and Performance Tapes increased
mid-single digits.
- Operating margin improved 440 basis
points to 11.7 percent as the impact of lower restructuring costs,
productivity initiatives, higher volume, and the net benefit from
price and raw material input costs more than offset higher
employee-related costs. Adjusted operating margin improved 220
basis points.
Retail Branding and Information Solutions (RBIS)
- RBIS sales were down approximately 2
percent.
- Operating margin declined 420 basis
points to 2.6 percent as the impact of higher restructuring
charges, costs associated with a product line divestiture, lower
sales, and higher employee-related costs was partially offset by
the benefit of productivity initiatives. Adjusted operating margin
declined 40 basis points.
Other
Share Repurchases
The company repurchased 0.5 million shares in the second quarter
of 2015 at an aggregate cost of $28 million.
Income Taxes
The second quarter effective tax rate was 36 percent. The
adjusted tax rate for the second quarter was 34 percent, consistent
with the anticipated full year tax rate in the low to mid-thirty
percent range.
Cost Reduction Actions and Product Line Divestiture
In the second quarter, the company realized approximately $18
million in savings from restructuring, net of transition costs, and
incurred restructuring charges of approximately $20 million, most
of which represent cash costs.
The company completed the sale of its Europe-based industrial
printer product line that resulted in a pre-tax loss which, when
combined with related exit costs, totaled approximately $8 million
in the second quarter. Full year sales for the business in 2014
were approximately $70 million, with a negligible contribution to
operating income.
Outlook
In its supplemental presentation materials, “Second Quarter 2015
Financial Review and Analysis,” the company provides a list of
factors that it believes will contribute to its 2015 financial
results. Based on the factors listed and other assumptions, the
company has reduced its previous guidance for 2015 earnings per
share by $0.03 to $2.82 to $3.02, reflecting the loss on sale of a
product line and related exit costs in the second quarter.
Excluding an estimated $0.43 per share for restructuring costs and
other items, the company continues to expect adjusted (non-GAAP)
earnings per share of $3.25 to $3.45.
Note: Throughout this release and the supplemental presentation
materials, amounts on a per share basis reflect fully diluted
shares outstanding.
About Avery Dennison
Avery Dennison (NYSE:AVY) is a global leader in labeling and
packaging materials and solutions. The company’s applications and
technologies are an integral part of products used in every major
market and industry. With operations in more than 50 countries and
over 25,000 employees worldwide, Avery Dennison serves customers
with insights and innovations that help make brands more inspiring
and the world more intelligent. Headquartered in Glendale,
California, the company reported sales from continuing operations
of $6.3 billion in 2014. Learn more at www.averydennison.com.
“Safe Harbor” Statement under the Private
Securities Litigation Reform Act of 1995
Certain statements contained in this document are
"forward-looking statements" intended to qualify for the safe
harbor from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements,
and financial or other business targets, are subject to certain
risks and uncertainties. Actual results and trends may differ
materially from historical or anticipated results depending on a
variety of factors, including but not limited to risks and
uncertainties relating to the following: fluctuations in demand
affecting sales to customers; worldwide and local economic
conditions; fluctuations in currency exchange rates and other risks
associated with foreign operations, including in emerging markets;
the financial condition and inventory strategies of customers;
changes in customer preferences; fluctuations in cost and
availability of raw materials; our ability to generate sustained
productivity improvement; our ability to achieve and sustain
targeted cost reductions; the impact of competitive products and
pricing; loss of significant contracts or customers; collection of
receivables from customers; selling prices; business mix shift;
timely development and market acceptance of new products, including
sustainable or sustainably-sourced products; investment in
development activities and new production facilities; integration
of acquisitions and completion of potential dispositions; amounts
of future dividends and share repurchases; customer and supplier
concentrations; successful implementation of new manufacturing
technologies and installation of manufacturing equipment;
disruptions in information technology systems, including
cyber-attacks or other intrusions to network security; successful
installation of new or upgraded information technology systems;
data security breaches; volatility of financial markets; impairment
of capitalized assets, including goodwill and other intangibles;
credit risks; our ability to obtain adequate financing arrangements
and maintain access to capital; fluctuations in interest and tax
rates; changes in tax laws and regulations, and uncertainties
associated with interpretations of such laws and regulations;
outcome of tax audits; fluctuations in pension, insurance, and
employee benefit costs; the impact of legal and regulatory
proceedings, including with respect to environmental, health and
safety; changes in governmental laws and regulations; protection
and infringement of intellectual property; changes in political
conditions; the impact of epidemiological events on the economy and
our customers and suppliers; acts of war, terrorism, and natural
disasters; and other factors.
We believe that the most significant risk factors that could
affect our financial performance in the near-term include: (1) the
impacts of economic conditions on underlying demand for our
products and foreign currency fluctuations; (2) competitors'
actions, including pricing, expansion in key markets, and product
offerings; and (3) the degree to which higher costs can be offset
with productivity measures and/or passed on to customers through
selling price increases, without a significant loss of volume.
For a more detailed discussion of these and other factors, see
“Risk Factors” and “Management’s Discussion and Analysis of Results
of Operations and Financial Condition” in our 2014 Form 10-K, filed
on February 25, 2015 with the Securities and Exchange Commission,
and subsequent quarterly reports on Form 10-Q. The forward-looking
statements included in this document are made only as of the date
of this document, and we undertake no obligation to update these
statements to reflect subsequent events or circumstances, other
than as may be required by law.
For more information and to listen to a live broadcast or an
audio replay of the quarterly conference call with analysts, visit
the Avery Dennison website at
www.investors.averydennison.com.
Second
Quarter Financial Summary - Preliminary, unaudited (in
millions, except % and per share amounts)
2Q 2Q % Change vs. P/Y
2015 2014
Reported Organic (a)
Net sales, by segment: Pressure-sensitive Materials $1,114.1
$1,180.9 (6%) 6% Retail Branding and Information Solutions 383.8
414.4 (7%) (2%) Vancive Medical Technologies 18.1 20.5 (12%)
(1%) Total net sales $1,516.0 $1,615.8 (6%) 4%
As Reported (GAAP)
Adjusted Non-GAAP (b) 2Q 2Q % of
Sales 2Q 2Q % of Sales
2015 2014 %
Change 2015 2014
2015 2014 %
Change 2015 2014
Operating income (loss) before interest
and taxes, by segment:
Pressure-sensitive Materials $129.8 $86.5 11.7% 7.3% $136.9 $119.4
12.3% 10.1% Retail Branding and Information Solutions 10.0 28.3
2.6% 6.8% 30.0 33.9 7.8% 8.2% Vancive Medical Technologies (1.4)
(1.7) (7.7%) (8.3%) (0.8) (1.7) (4.4%) (8.3%) Corporate expense
(22.3) (20.4) (22.3) (20.4)
Total operating income before interest and
taxes / operating margin
$116.1 $92.7 25% 7.7% 5.7% $143.8 $131.2 10% 9.5% 8.1%
Interest expense $15.3 $15.6 $15.3 $15.6 Income from
continuing operations before taxes $100.8 $77.1 31% 6.6% 4.8%
$128.5 $115.6 11% 8.5% 7.2% Provision for income taxes $36.5
$32.7 $43.7 $38.1 Income from continuing operations $64.3
$44.4 45% 4.2% 2.7% $84.8 $77.5 9% 5.6% 4.8%
Loss from discontinued operations, net of
tax (d)
($1.0) ($1.9) n/m Net income $63.3 $42.5 49% 4.2% 2.6%
Net income (loss) per common share, assuming dilution:
Continuing operations $0.69 $0.46 50% $0.91 $0.80 14%
Discontinued operations (0.01) (0.02) n/m Total Company
$0.68 $0.44 55%
2015
2014 2Q Free Cash Flow from Continuing
Operations (c) $ 130.0 $ 84.6 YTD Free Cash Flow from Continuing
Operations (c)
$ 114.0 $ (70.8)
(a) Percentage change in sales
excluding the estimated impact of currency translation, product
line exits, acquisitions and divestitures, and, where applicable,
the extra week in the prior fiscal year. (b) Excludes restructuring
costs and other items (see accompanying schedules A-2 to A-4 for
reconciliation to GAAP financial measures). (c)
Free cash flow refers to cash flow from
operations, less payments for property, plant and equipment,
software and other deferred charges, plus proceeds from sales of
property, plant and equipment, plus (minus) net proceeds from sales
(purchases) of investments. Free cash flow excludes uses of cash
that do not directly or immediately support the underlying
business, such as discretionary debt reductions, dividends, share
repurchases, and certain effects of acquisitions and divestitures
(e.g., cash flow from discontinued operations, taxes, and
transaction costs).
(d) "Loss from discontinued operations, net of tax" related to the
2013 sale of the Office and Consumer Products business.
A-1
AVERY DENNISON PRELIMINARY CONSOLIDATED STATEMENTS
OF INCOME (In millions, except per share amounts)
(UNAUDITED) Three Months Ended Six Months
Ended Jul. 04, 2015 Jun. 28, 2014 Jul.
04, 2015 Jun. 28, 2014
Net sales $ 1,516.0 $
1,615.8 $ 3,044.0 $ 3,165.9 Cost of products sold 1,098.4
1,187.6 2,196.4 2,330.5
Gross profit 417.6 428.2
847.6 835.4 Marketing, general & administrative expense
273.8 297.0 574.7 593.7 Interest expense 15.3 15.6 30.6 31.0
Other expense, net (1) 27.7 38.5 42.0 45.8
Income from continuing operations before taxes 100.8 77.1
200.3 164.9 Provision for income taxes 36.5 32.7 64.4 48.9
Income from continuing operations 64.3 44.4
135.9 116.0 Loss from discontinued operations, net of tax
(1.0 ) (1.9 ) (1.0 ) (2.3 )
Net income
$ 63.3 $ 42.5 $ 134.9 $ 113.7
Per share
amounts: Net income (loss) per common share, assuming
dilution Continuing operations $ 0.69 $ 0.46 $ 1.46 $ 1.19
Discontinued operations (0.01 ) (0.02 ) (0.01 ) (0.02 )
Net income per common share, assuming dilution
$ 0.68 $ 0.44 $ 1.45 $ 1.17
Weighted-average
common shares outstanding, assuming dilution
93.0 96.7 92.8
97.3
(1)
"Other expense, net" for the second
quarter of 2015 includes severance and related costs of $16.8,
asset impairment and lease cancellation charges of $3.2, and loss
on sale of product line and related exit costs of $7.7.
"Other expense, net" for the second
quarter of 2014 includes severance and related costs of $35.9,
asset impairment charges of $2.6, and loss from curtailment of
pension obligation of $.6, partially offset by gain on sale of
asset of $.6.
"Other expense, net" 2015 YTD includes
severance and related costs of $30.3, asset impairment and lease
cancellation charges of $3.6, and loss on sale of product line and
related exit costs of $10.3, partially offset by gain on sale of
asset of $1.7 and legal settlement of $.5.
"Other expense, net" 2014 YTD includes
severance and related costs of $42.9, asset impairment charges of
$2.9, and loss from curtailment of pension obligation of $.6,
partially offset by gain on sale of asset of $.6.
A-2
Reconciliation of Non-GAAP Financial Measures in
Accordance with SEC Regulations G and S-K We report
financial results in conformity with accounting principles
generally accepted in the United States of America, or GAAP, and
also communicate with investors using certain non-GAAP financial
measures. These non-GAAP financial measures are not in accordance
with, nor are they a substitute for or superior to, the comparable
GAAP financial measures. These non-GAAP financial measures are
intended to supplement presentation of our financial results that
are prepared in accordance with GAAP. Based upon feedback from
investors and financial analysts, we believe that supplemental
non-GAAP financial measures provide information that is useful to
the assessment of our performance and operating trends, as well as
liquidity. Our non-GAAP financial measures exclude the
impact of certain events, activities, or strategic decisions. The
accounting effects of these events, activities or decisions, which
are included in the GAAP financial measures, may make it difficult
to assess our underlying performance in a single period. By
excluding the accounting effects, both positive and negative, of
certain items (e.g., restructuring costs, asset impairments, legal
settlements, certain effects of strategic transactions and related
costs, losses from debt extinguishments, losses from curtailment
and settlement of pension obligations, gains or losses on sale of
certain assets, and other items), we believe that we are providing
meaningful supplemental information to facilitate an understanding
of our core operating results and liquidity measures. These
non-GAAP financial measures are used internally to evaluate trends
in our underlying performance, as well as to facilitate comparison
to the results of competitors for a single period. While some of
the items we exclude from GAAP financial measures recur, they tend
to be disparate in amount, frequency, or timing. We use the
following non-GAAP financial measures in the accompanying news
release and presentation: Organic sales change refers to the
increase or decrease in sales excluding the estimated impact of
currency translation, product line exits, acquisitions and
divestitures, and, where applicable, the extra week in the prior
fiscal year. Adjusted operating margin refers to income from
continuing operations before interest expense and taxes, excluding
restructuring costs and other items, as a percentage of sales.
Adjusted tax rate refers to the anticipated full-year GAAP
tax rate adjusted for certain events. Adjusted income from
continuing operations refers to reported income from continuing
operations adjusted for tax-effected restructuring costs and other
items. Adjusted EPS refers to reported income from
continuing operations per common share, assuming dilution, adjusted
for tax-effected restructuring costs and other items. Free
cash flow refers to cash flow from operations, less payments for
property, plant and equipment, software and other deferred charges,
plus proceeds from sales of property, plant and equipment, plus
(minus) net proceeds from sales (purchases) of investments. Free
cash flow excludes uses of cash that do not directly or immediately
support the underlying business, such as discretionary debt
reductions, dividends, share repurchases, and certain effects of
acquisitions and divestitures (e.g., cash flow from discontinued
operations, taxes, and transaction costs). The
reconciliations set forth below and in the accompanying
presentation are provided in accordance with Regulations G and S-K
and reconcile our non-GAAP financial measures with the most
directly comparable GAAP financial measures.
A-3
AVERY DENNISON PRELIMINARY RECONCILIATION OF GAAP
TO NON-GAAP FINANCIAL MEASURES (In millions, except % and
per share amounts) (UNAUDITED)
Three Months Ended
Six Months Ended
Jul. 04, 2015 Jun. 28, 2014 Jul. 04,
2015 Jun. 28, 2014
Reconciliation
of Operating Margins: Net sales $ 1,516.0 $ 1,615.8 $
3,044.0 $ 3,165.9
Income from continuing operations before taxes $
100.8 $ 77.1 $ 200.3 $ 164.9
Income from
continuing operations before taxes as a percentage of sales
6.6 % 4.8 % 6.6 %
5.2 %
Adjustment: Interest
expense $ 15.3 $ 15.6 $ 30.6 $ 31.0
Operating income from continuing
operations before interest expense and taxes $ 116.1 $ 92.7 $ 230.9
$ 195.9
Operating Margins 7.7
% 5.7 % 7.6 % 6.2
%
Income from continuing operations
before taxes $ 100.8 $ 77.1 $ 200.3 $ 164.9 Adjustments:
Restructuring costs: Severance and related costs 16.8 35.9 30.3
42.9 Asset impairment and lease cancellation charges 3.2 2.6 3.6
2.9 Other items(1) 7.7 --- 8.1 --- Interest expense 15.3 15.6 30.6
31.0
Adjusted operating income from continuing operations before
interest expense and taxes (non-GAAP) $ 143.8 $ 131.2 $ 272.9 $
241.7
Adjusted Operating Margins
(non-GAAP) 9.5 % 8.1 % 9.0
% 7.6 %
Reconciliation
of GAAP to Non-GAAP Income from Continuing Operations: As
reported income from continuing operations $ 64.3 $ 44.4 $ 135.9 $
116.0 Non-GAAP adjustments, net of tax: Restructuring costs and
other items(2) 20.5 33.1 24.0 25.2
Adjusted
Non-GAAP Income from Continuing Operations $ 84.8 $ 77.5 $
159.9 $ 141.2
A-3
(continued)
AVERY DENNISON PRELIMINARY RECONCILIATION OF GAAP
TO NON-GAAP FINANCIAL MEASURES (In millions, except % and
per share amounts) (UNAUDITED) Three
Months Ended Six Months Ended Jul. 04,
2015 Jun. 28, 2014 Jul. 04, 2015 Jun. 28,
2014
Reconciliation of GAAP to Non-GAAP
Income per Common Share from Continuing Operations: As reported
income per common share from continuing operations, assuming
dilution $ 0.69 $ 0.46 $ 1.46 $ 1.19 Non-GAAP adjustments per
common share, net of tax: Restructuring costs and other items(2)
0.22 0.34 0.26 0.26
Adjusted Non-GAAP Income per Common
Share from Continuing Operations, assuming dilution
$ 0.91 $ 0.80 $ 1.72 $ 1.45
Weighted-average
common shares outstanding, assuming dilution 93.0 96.7 92.8 97.3
(1)Includes loss on sale of product line and
related exit costs, loss from curtailment of pension obligation,
gain on sale of asset, and legal settlement. (2)Reflects
restructuring costs and other items, tax-effected at the adjusted
tax rate.
(UNAUDITED) Three Months
Ended Six Months Ended Jul. 04, 2015
Jun. 28, 2014 Jul. 04, 2015 Jun. 28, 2014
Reconciliation of GAAP to Non-GAAP Free
Cash Flow: Net cash provided by operating activities $
162.6 $ 117.8 $ 170.9 $ 9.8 Purchases of property, plant and
equipment (31.1 ) (28.8 ) (56.4 ) (67.5 ) Purchases of software and
other deferred charges (2.6 ) (5.5 ) (4.0 ) (14.4 ) Proceeds from
sales of property, plant and equipment --- 0.5 2.8 0.6 (Purchases)
sales of investments, net 0.1 --- (0.3 ) 0.1
Plus: divestiture-related payments and
free cash outflow from discontinued operations
1.0 0.6 1.0 0.6
Free Cash Flow - Continuing
Operations $ 130.0 $ 84.6
$ 114.0 $ (70.8 )
A-4
AVERY DENNISON PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
Second Quarter Ended NET SALES OPERATING INCOME
OPERATING MARGINS 2015 2014
2015 (1)
2014 (2)
2015 2014 Pressure-sensitive Materials $ 1,114.1 $ 1,180.9 $
129.8 $ 86.5 11.7 % 7.3 % Retail Branding and Information Solutions
383.8 414.4 10.0 28.3 2.6 % 6.8 % Vancive Medical Technologies 18.1
20.5 (1.4 ) (1.7 ) (7.7 %) (8.3 %) Corporate Expense N/A
N/A (22.3 ) (20.4 ) N/A
N/A TOTAL FROM CONTINUING OPERATIONS $ 1,516.0
$ 1,615.8 $ 116.1 $ 92.7 7.7 % 5.7 %
(1) Operating income for the second
quarter of 2015 includes severance and related costs of $16.8,
asset impairment and lease cancellation charges of $3.2, and loss
on sale of product line and related exit costs of $7.7. Of the
total $27.7, the Pressure-sensitive Materials segment recorded
$7.1, the Retail Branding and Information Solutions segment
recorded $20, and the Vancive Medical Technologies segment recorded
$.6.
(2) Operating income for the second
quarter of 2014 includes severance and related costs of $35.9,
asset impairment charges of $2.6, and loss from curtailment of
pension obligation of $.6, partially offset by gain on sale of
asset of $.6. Of the total $38.5, the Pressure-sensitive Materials
segment recorded $32.9 and the Retail Branding and Information
Solutions segment recorded $5.6.
RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY
INFORMATION Second Quarter Ended
OPERATING INCOME
OPERATING MARGINS
2015 2014 2015 2014
Pressure-sensitive
Materials Operating income and margins, as
reported $ 129.8 $ 86.5 11.7
% 7.3 % Adjustments: Restructuring costs:
Severance and related costs 4.4 31.5 0.4 % 2.7 % Asset impairment
charges 2.7 0.8 0.2 % 0.1 % Loss from curtailment of pension
obligation --- 0.6 ---
---
Adjusted operating income and margins
(non-GAAP) $ 136.9 $
119.4 12.3 % 10.1
% Retail Branding and Information
Solutions Operating income and margins, as
reported $ 10.0 $ 28.3 2.6
% 6.8 % Adjustments: Restructuring costs:
Severance and related costs 11.8 4.4 3.1 % 1.1 % Asset impairment
and lease cancellation charges 0.5 1.8 0.1 % 0.4 % Loss on sale of
product line and related exit costs 7.7 --- 2.0 % --- Gain on sale
of asset --- (0.6 ) ---
(0.1 %)
Adjusted operating income and margins (non-GAAP)
$ 30.0 $ 33.9
7.8 % 8.2 %
Vancive Medical Technologies Operating loss
and margins, as reported $ (1.4 ) $
(1.7 ) (7.7 %) (8.3 %)
Adjustment: Restructuring costs: Severance and related costs
0.6 --- 3.3 % ---
Adjusted operating loss and margins (non-GAAP) $
(0.8 ) $ (1.7 )
(4.4 %) (8.3 %)
A-5
AVERY DENNISON
PRELIMINARY SUPPLEMENTARY
INFORMATION
(In millions, except %)
(UNAUDITED)
Six Months Year-to-Date NET SALES
OPERATING INCOME OPERATING MARGINS 2015 2014
2015 (1)
2014 (2)
2015 2014 Pressure-sensitive Materials $ 2,234.7 $
2,324.4 $ 252.7 $ 198.5 11.3 % 8.5 % Retail Branding and
Information Solutions 771.9 802.1 29.2 44.9 3.8 % 5.6 % Vancive
Medical Technologies 37.4 39.4 (3.5 ) (4.3 ) (9.4 %) (10.9 %)
Corporate Expense N/A N/A (47.5 )
(43.2 ) N/A N/A TOTAL
FROM CONTINUING OPERATIONS $ 3,044.0 $ 3,165.9 $ 230.9
$ 195.9 7.6 % 6.2 %
(1) Operating income for 2015 includes
severance and related costs of $30.3, asset impairment and lease
cancellation charges of $3.6, and loss on sale of product line and
related exit costs of $10.3, partially offset by gain on sale of
asset of $1.7 and legal settlement of $.5. Of the total $42, the
Pressure-sensitive Materials segment recorded $12.7, the Retail
Branding and Information Solutions segment recorded $25.5, the
Vancive Medical Technologies segment recorded $1.7, and Corporate
recorded $2.1.
(2) Operating income for 2014 includes
severance and related costs of $42.9, asset impairment charges of
$2.9, and loss from curtailment of pension obligation of $.6,
partially offset by gain on sale of asset of $.6. Of the total
$45.8, the Pressure-sensitive Materials segment recorded $34.2 and
the Retail Branding and Information Solutions segment recorded
$11.6.
RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY
INFORMATION Six Months Year-to-Date
OPERATING INCOME
OPERATING MARGINS
2015 2014 2015 2014
Pressure-sensitive
Materials Operating income and margins, as
reported $ 252.7 $ 198.5
11.3 % 8.5 % Adjustments: Restructuring
costs: Severance and related costs 11.3 32.8 0.5 % 1.4 % Asset
impairment charges 3.1 0.8 0.2 % 0.1 % Gain on sale of asset (1.7 )
--- (0.1 %) --- Loss from curtailment of pension obligation
--- 0.6 --- ---
Adjusted operating income and margins (non-GAAP) $
265.4 $ 232.7 11.9
% 10.0 % Retail
Branding and Information Solutions Operating income
and margins, as reported $ 29.2 $
44.9 3.8 % 5.6 % Adjustments:
Restructuring costs: Severance and related costs 15.2 10.1 2.0 %
1.3 % Asset impairment and lease cancellation charges 0.5 2.1 0.1 %
0.2 % Loss on sale of product line and related exit costs 10.3 ---
1.3 % --- Legal settlement (0.5 ) --- (0.1 %) --- Gain on sale of
asset --- (0.6 ) --- (0.1
%)
Adjusted operating income and margins (non-GAAP) $
54.7 $ 56.5 7.1
% 7.0 % Vancive Medical
Technologies Operating loss and margins, as
reported $ (3.5 ) $ (4.3
) (9.4 %) (10.9 %) Adjustment:
Restructuring costs: Severance and related costs 1.7
--- 4.6 % ---
Adjusted
operating loss and margins (non-GAAP) $ (1.8
) $ (4.3 ) (4.8 %)
(10.9 %)
A-6
AVERY DENNISON PRELIMINARY CONDENSED CONSOLIDATED
BALANCE SHEETS (In millions) (UNAUDITED)
ASSETS Jul. 04, 2015 Jun. 28, 2014
Current
assets: Cash and cash equivalents $ 246.0 $ 221.9 Trade accounts
receivable, net 1,011.4 1,114.6 Inventories, net 512.1 560.4 Assets
held for sale 2.0 2.2 Other current assets 226.6 230.8
Total current
assets 1,998.1 2,129.9 Property, plant and equipment, net
851.7 905.3 Goodwill 698.4 758.6 Other intangibles resulting from
business acquisitions, net 55.7 83.4 Non-current deferred income
taxes 300.3 250.7 Other assets 449.4 488.7
$ 4,353.6 $ 4,616.6
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities: Short-term borrowings and
current portion of long-term debt and capital leases $ 182.2 $
227.5 Accounts payable 856.0 871.4 Other current liabilities 512.6
523.8 Total
current liabilities 1,550.8 1,622.7 Long-term debt and
capital leases 969.5 945.2 Other long-term liabilities 736.6 619.6
Shareholders' equity: Common stock 124.1 124.1 Capital in excess of
par value 818.0 811.7 Retained earnings 2,213.2 2,063.4 Treasury
stock at cost (1,455.2 ) (1,291.5 ) Accumulated other comprehensive
loss (603.4 ) (278.6 )
Total shareholders' equity 1,096.7 1,429.1
$ 4,353.6 $
4,616.6
A-7
AVERY DENNISON PRELIMINARY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In millions)
(UNAUDITED)
Six Months Ended
Jul. 04, 2015
Jun. 28, 2014
Operating Activities:
Net income
$
134.9
$ 113.7 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation 64.9 66.0
Amortization 31.8 33.4 Provision for doubtful accounts and sales
returns 15.2 9.8 Net losses from asset impairments and
sales/disposals of assets 11.1 3.8 Stock-based compensation 13.2
14.5 Other non-cash expense and loss 26.7 25.9 Changes in assets
and liabilities and other adjustments (126.9 ) (257.3 )
Net cash provided
by operating activities 170.9 9.8
Investing Activities: Purchases
of property, plant and equipment (56.4 ) (67.5 ) Purchases of
software and other deferred charges (4.0 ) (14.4 ) Proceeds from
sales of property, plant and equipment 2.8 0.6 (Purchases) sales of
investments, net (0.3 ) 0.1 Other 1.5 ---
Net cash used in investing
activities (56.4 ) (81.2 )
Financing Activities: Net (decrease)
increase in borrowings (maturities of 90 days or less) (15.8 )
145.0 Payments of debt (maturities longer than 90 days) (5.5 ) (0.8
) Dividends paid (65.7 ) (60.9 ) Share repurchases (61.5 ) (153.4 )
Proceeds from exercises of stock options, net 61.3 18.4 Other (4.0
) (2.7 )
Net cash used in financing activities (91.2 ) (54.4 )
Effect of foreign
currency translation on cash balances (4.3 ) (3.9 )
Increase (decrease) in
cash and cash equivalents 19.0 (129.7 ) Cash and cash equivalents,
beginning of year 227.0 351.6
Cash and cash equivalents, end of
period
$
246.0
$ 221.9
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150729005452/en/
Avery Dennison CorporationMedia Relations:Beth Hoang,
213-403-0611beth.hoang@averydennison.comorInvestor
Relations:Cynthia S. Guenther,
626-304-2204investorcom@averydennison.com
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