Slide 1: Third Quarter 2007 Financial Review and Analysis (Unaudited)
Third Quarter 2007 Financial Review and Analysis (Unaudited) October 23, 2007
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
Overview Net sales increased 18.5% over prior year Net effect of Paxar acquisition was approx. 14.5% Unit volume growth was approx. 1.5% Negative impact from price/mix changes (~ 1.5% reduction in sales) Operating margin before restructuring and asset impairment charges and transition costs associat
Slide 5: Overview (continued)
Overview (continued) Effective tax rates for the quarter and year-to-date were 11.4% and 19.1%, respectively. Full year rate expected to be in the range of 18-20%, below original guidance of 20-22%, Reported E.P.S. of $0.59 includes: $0.24 of restructuring and asset impairment charges, including $0.
Slide 6: Management Analysis of Underlying Sales Trends
Unit Volume Growth (est.) 3.0% 1.0% 1.5% 2.5% 1.5% Reported Sales Growth 4.6% 3.5% 3.9% 8.1% 18.5% Management Analysis of Underlying Sales Trends (1) Reported Sales Growth less the impacts of foreign currency translation and acquisitions, net of divestitures (calculation may not tie due to rounding)
Slide 7: Margin Analysis
Gross Profit Margin (Total Company) 27.8% 28.7% Operating Margin (non-GAAP(2)): Pressure-Sensitive Materials 9.4% 10.2% 9.8% Office and Consumer Products 18.2% 16.0% 16.2% Retail Information Services (RIS) 3.5% 5.9% n/a Other Specialty Converting 5.8% 5.0% 4.2% Total Company 9.0% 9.2% Impact of RFID
Slide 8: Key Factors Impacting Margin
Key Factors Impacting Margin (see Slide 15 for prior year reconciliation for Paxar) Gross profit margin before Paxar integration costs improved 20 basis points compared to prior year margin, as reported Adjusting the prior year number to include Paxar, gross profit margin declined 90 basis points Th
Slide 9: Pressure-Sensitive Materials Segment Overview
PRESSURE-SENSITIVE MATERIALS Reported sales of $868 mil., up 5% compared with prior year Organic sales growth of approx. 1% Change in sales for roll materials business by region, adjusted for the effect of currency: Europe roughly comparable to prior year North America declined at low single digit r
Slide 10: Retail Information Services Segment Overview
Q3-2007 Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $388 mil., up 136% compared with prior year primarily due to the Paxar acquisition Organic sales growth of approx. 1% Slowdown vs. historical trend and long-term target reflects decline in ticket and tag orders for ap
Slide 11: Paxar Acquisition Targets and Integration Costs
Target Target Est. Pre-Tax Target Pre-Tax Cost Annual E.P.S. Depreciation & EBITDA(1) Savings Accretion(1) Amortization Accretion 2008 $80 - $90 $0.40 - $0.50 $60 - $65 $190 - $200 2009 $105 - $120 $0.70 - $0.80 $65 - $70 $230 - $240 2010 $115 - $125 $0.90 - $1.00 $65 - $70 $245 - $255 Financing Wei
Slide 12: Office and Consumer Products; Other Specialty Converting
Q3-2007 Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $267 mil., down 5% compared with prior year Organic sales decline of approx. 7% Shift in timing of back-to-school orders from Q3 to Q2 and effect of exiting certain low-margin business contributed an estimated 6.5 po
Slide 13: Third Quarter YTD Cash Flow and Debt-To-Total Capital
Third Quarter YTD Cash Flow and Debt-To-Total Capital (Millions, except as noted) 2007 2006 Cash flow from operations $302.9 $359.9 Payment for capital expenditures $136.3 $110.6 Payment for software and other deferred charges $ 39.1 $ 24.2 Free Cash Flow(1) $127.5 $225.1 Dividends $128.0 $128.5 Sha
Slide 14: Updated 2007 Earnings Guidance: Key Assumptions
Reported revenues expected to be up 12.5%-13.5% for the full year, including approx. 8% benefit from the Paxar acquisition, net of divestitures, and approx. 4.0% to 4.5% benefit from currency translation Operating margin of approx. 9% before Paxar integration-related transition costs, reflecting: Mo
Slide 15: Backup: Third Quarter Margin Comparison - Total Company
Backup: Third Quarter Margin Comparison Reconciliation for Effects of Paxar - Total Company Reconciliation for Effects of Paxar - Total Company Reconciliation for Effects of Paxar - Total Company
Slide 16: Backup: Third Quarter Margin Comparison - RIS
Backup: Third Quarter Margin Comparison Reconciliation for Effects of Paxar - RIS Reconciliation for Effects of Paxar - RIS Reconciliation for Effects of Paxar - RIS