Slide 1: First Quarter 2006 Financial Review and Analysis (Unaudited)
First Quarter 2006 Financial Review and Analysis (Unaudited) April 25, 2006 Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information presented in this document 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 factor
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. As required by these rules, we have provided a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, which have been included with the financial statements ac
Slide 4: Overview
Overview While currency translation drove a modest decline in reported sales, the combination of higher volume, as well as improvements in gross profit margin, operating expense ratio, and the tax rate, delivered a 19% increase in GAAP E.P.S. (continuing operations), or 21% increase before restructu
Slide 5: Sales Trend (continuing operations)
Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 0.08 0.04 0.008 0.044 0.066 0.045 0.082 0.071 0.065 0.022 0.01 -0.011 0 0.016 0.04 0 Sales Trend (continuing operations) Acquisitions, Net of Divestitures 0.4% 0.6% 0.3% 0.0% (0.3)% Price/Mix + 2% + 2% + 2% + 1% + 1%
Slide 6: Margin Analysis (continuing operations)
Gross Profit Margin (Total Company) 26.6% 26.2% 27.8% Operating Margin*: Pressure-Sensitive Materials 8.9% 9.0% 8.6% Office and Consumer Products 15.3% 12.6% 22.4% Retail Information Services 6.8% 3.7% 8.0% Other Specialty Converting 3.3% 2.6% 1.7% Total Company 8.3% 7.3% 9.4% Impact of RFID on repo
Slide 7: Key Factors Impacting Margin
Key Factors Impacting Margin Gross profit margin increased 40 basis points compared with prior year to 26.6% Improvement from productivity gains, as well as inventory write-offs in prior period (over 200 b.p. combined), were offset by: Material cost and energy-related inflation in excess of associat
Slide 8: Stock Option Expense
Stock Option Expense Stock Option Expense
Slide 9: Raw Material Update
Raw Material Update Paper-based commodities represent largest category of raw materials, representing approx. 45-50% of total spend Large share of raw material purchases tied to oil based commodities: Plastic films and resins - polypropylene, polyethylene, polyester, and vinyls, among others - repre
Slide 10: Restructuring Summary (Continuing Operations)
Restructuring Summary (Continuing Operations)
Slide 11: Q1-2006 Segment Overview: Pressure-Sensitive Materials
PRESSURE-SENSITIVE MATERIALS Reported sales of $787 mil., approximately even with prior year Unit volume growth and positive contribution from price and mix were offset by a negative impact from currency translation, primarily the Euro Organic sales growth of approx. 3% (vs. adj. 1% in Q4-05) Change
Slide 12: Q1-2006 Segment Overview (continued): Office and Consumer Products
Q1-2006 Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $240 mil., down approx. 7% compared with prior year Sales decline due in roughly equal measure to the negative impact from currency translation, the divestiture of filing product lines in Europe, and the decision to
Slide 13: Q1-2006 Segment Overview (continued): Retail Information Services
Q1-2006 Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $165 mil., up 5% compared with prior year Increase primarily due to core unit volume growth Modest benefit from small acquisition last year was more than offset by currency translation Organic sales growth of approx.
Slide 14: First Quarter Balance Sheet and Cash Flow
First Quarter Balance Sheet and Cash Flow Millions, except as noted 2006 2005 Cash flow from operations(1) $ 21.7 $ (2.7) Payment for capital expenditures $ 51.5 $ 43.9 Payment for software $ 8.8 $ 4.9 Free Cash Flow(2) $(38.6) $(51.5) Dividends $ 42.8 $ 41.9 Total debt to total capital 41.2% 44.4%
Slide 15: 2006 Earnings Guidance: Key Considerations
2006 Earnings Guidance: Key Considerations Factors contributing to earnings growth: Improvement in underlying growth rate... projecting reported revenue growth (continuing operations) of 2-3% Volume up 2-3%, net of 2 points loss from product line divestitures and other offsets Price/mix expected to
Slide 16: 2006 Earnings Guidance Key Assumptions
2006 Earnings Guidance Key Assumptions: Reported revenue up 2% to 3%, including -1% impact from currency Raw material inflation of approximately 2% in 2006 ($50 to $60 million) Operating margin (incl. RFID and stock option expense) of 9% to 10% Interest expense of $55 to $60 million Tax rate in the