Slide 1: Supplemental Presentation Materials Second Quarter 2009 Financial Review and Analysis
Supplemental Presentation Materials Second Quarter 2009 Financial Review and Analysis (unaudited) July 30, 2009
Slide 2: Forward-looking statements
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. Such forward-looking statements and financial or other business targets are subject to certain ri
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation contains certain non-GAAP measures as defined by SEC rules. The most directly comparable GAAP measures have been included in the earnings news release for the quarter. Reconciliations of non-GAAP measures to the most directly comparable GAAP measu
Slide 4: Overview
July 30, 2009 Second Quarter 2009 Financial Review and Analysis 4 Overview Continued weakness in the global macroeconomic environment drove second quarter volume declines across all segments Operating margin contracted, as impact of lower volume more than offset pricing, productivity improvements, a
Slide 5: Dividend Reduction
July 30, 2009 Second Quarter 2009 Financial Review and Analysis 5 Dividend Reduction Reducing quarterly dividend from $0.41 to $0.20 per share (51% reduction) to focus on reducing debt and managing the cost of credit in light of continued economic uncertainty New dividend level accommodates increase
Slide 6: Dividend Reduction: Decision Factors
July 30, 2009 Second Quarter 2009 Financial Review and Analysis 6 Dividend Reduction: Decision Factors Company's precautionary FCF outlook, which assumes: Anticipated Headwinds: Continuation of poor market conditions (no recovery in 2010) Increased pension contributions Offset By: Increased restruct
Slide 7: Second Quarter Summary
Second Quarter 2009 Financial Review and Analysis 7 Second Quarter Summary Net sales declined 20% from prior year Currency translation reduced sales growth by 6.9% (approx. $0.04 negative impact to earnings per share) On an organic basis, net sales declined 14% Throughout this document, all referenc
Slide 8: Second Quarter Summary (continued)
8 Second Quarter Summary (continued) Expanded actions to reduce fixed costs Now anticipate more than $160 million of annualized savings from restructuring initiated in the fourth quarter of last year, with roughly $75 mil. of benefit (net of transition costs) expected in 2009 Achieved 50% run-rate s
Slide 9: Sales Analysis
9 Reported Sales Change 20.0% 2.6% (11.8%) (13.3%) (20.4%) Q2-08 Q3-08 Q4-08 Organic Sales Change(1) (0.6%) (2.4%) (8.1%) (14.5%) (13.5%) Acquisitions 13.5% 0.6% 0.6% 0.6% -- Currency 7.1% 4.5% (4.4%) (6.4%) (6.9%) Extra Week -- -- -- 7.0% -- Q1-09 Q2-09 Sales Analysis (1) Reported Sales Change (yea
Slide 10: Margin Analysis
10 Gross Profit Margin (total Company) 26.8% 26.8% 24.2% Operating Margin (non-GAAP(1)): Pressure-sensitive Materials 8.1% 8.5% 5.9% Retail Information Services (0.2)% 7.2% (3.7)% Office and Consumer Products 17.3% 17.6% 14.2% Other specialty converting businesses (2.4)% 3.7% (10.1)% Total Company 6
Slide 11: Key Factors Impacting Margin
11 Key Factors Impacting Margin Gross profit margin flat to prior year at 26.8% Reduced fixed-cost leverage offset by pricing, productivity improvements, and restructuring Marketing, general and administrative (MG&A) expense ratio increased by 2.0 points compared to the prior year Absolute MG&A spen
Slide 12: 2Q09 Segment Overview: Pressure-Sensitive Materials
12 2Q09 Segment Overview PRESSURE-SENSITIVE MATERIALS Reported sales of $794 mil., down 19% compared with prior year Organic sales decline of approx. 10% Rate of change in sales (organic basis) for roll materials business, by region: Europe: low double digit decline North America: mid single digit d
Slide 13: 2Q09 Segment Overview: Retail Information Services
13 2Q09 Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $332 mil., down 24% compared with prior year Organic sales decline of approx. 20% Operating margin before restructuring charges and other items declined to negative 0.2%, as reduced fixed-cost leverage more than offse
Slide 14: 2Q09 Segment Overview: Office and Consumer Products
14 2Q09 Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $217 mil., down 15% compared with prior year Organic sales decline of approx. 11% Excluding restructuring charges and other items, operating margin declined to 17.3% as productivity improvements and restructuring, as
Slide 15: Free Cash Flow
15 ($ Millions) 2009 2008 Net cash provided by operating activities $132.8 $ 188.7 Purchase of property, plant and equipment $ (30.5) $ (69.1) Purchase of software and other deferred charges $ (14.9) $ (33.0) Proceeds from sale of investments, net $ 0.1 $ 13.0 Free Cash Flow(1) $ 87.5 $ 99.6 Dividen
Slide 16: Update to Contributing Factors to 2009 Financial Results
16 Update to Contributing Factors to 2009 Financial Results Currency translation (at current rates, represents approx. 6% headwind to reported sales growth; approx. $30 mil. negative impact to EBIT vs. 2008) Estimated $75 mil. of savings (net of transition costs) from new restructuring actions Major
Slide 17: Avery Dennison
A AVERY DENNISON