Slide 1: Supplemental Presentation Materials: Fourth Quarter Financial Review and Analysis
Supplemental Presentation Materials Fourth Quarter Financial Review and Analysis (unaudited) January 29, 2010
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: Key Trends and Major Initiatives
Key Trends and Major Initiatives Delivered record free cash flow for the year of approx. $465 mil. Reduced debt by approx. $300 mil. in 2H09 Dramatically improved working capital productivity Reduced capital spending Reduced dividend While weakness in the macroeconomic environment drove volume decli
Slide 5: Key Trends and Major Initiatives (continued)
Key Trends and Major Initiatives (continued) Implemented aggressive restructuring program to reduce fixed cost structure Increased targeted savings to $180 mil. (annualized) when complete by mid-2010 Achieved approx. 75% run rate savings by end of 2009 Realized approx. $75 mil. in savings, net of tr
Slide 6: Fourth Quarter Summary
Fourth Quarter Summary Net sales grew approx. 1% from prior year Currency translation increased sales by 5% On an organic basis(1), net sales were down approx. 1% vs. prior year Operating margin declined modestly to 4.8% before restructuring, asset impairment charges, lease cancellation costs, and o
Slide 7: Fourth Quarter Summary (continued)
Fourth Quarter Summary (continued) On a sequential basis, operating margin before restructuring and other items declined 250 basis points, reflecting lower volume and segment mix, as well as raw material inflation and higher employee costs Full-year effective tax rate was approx. 6% Adjusted tax rat
Slide 8: Sales Trend Analysis
Sales Trend Analysis January 29, 2010 Fourth Quarter 2009 Financial Review and Analysis 8 Reported Sales Change (11.8%) (13.3%) (20.4%) (10.2%) 0.7% 4Q08 1Q09 2Q09 Organic Sales Change(1) (8.1%) (14.5%) (13.5%) (5.9%) (0.6%) Acquisitions 0.6% 0.6% -- -- -- Currency (4.4%) (6.4%) (6.9%) (4.3%) 4.5% E
Slide 9: Margin Analysis
9 Gross Profit Margin (total Company) 27.3% 25.0% 28.1% Operating Margin (non-GAAP(1)): Pressure-sensitive Materials 7.5% 5.3% 9.9% Retail Information Services 0.7% 1.1% (2.1%) Office and Consumer Products 13.5% 20.4% 16.8% Other specialty converting businesses (4.2%) (6.4%) 4.6% Total Company 4.8%
Slide 10: Key Factors Impacting Margin
Key Factors Impacting Margin Gross profit margin improved 230 basis points vs. prior year to 27.3% The benefit of restructuring and other productivity initiatives more than offset the margin impact of lower volume (i.e., reduced fixed-cost leverage) and unfavorable segment mix The effect of pricing
Slide 11: Fourth Quarter Segment Overview: Pressure-Sensitive Materials
11 Fourth Quarter Segment Overview PRESSURE-SENSITIVE MATERIALS Reported sales of $847 mil., up 5% compared with prior year Organic sales growth of approx. 2% Rate of change in sales (organic basis) for roll materials business, by region: Europe: low single-digit decline North America: flat Emerging
Slide 12: Fourth Quarter Segment Overview: Retail Information Services
12 Fourth Quarter Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $351 mil., down 2% compared with prior year Organic sales decline of approx. 2% Stabilization of inventory-to-sales ratios among retailers has contributed to significant improvement in trend vs. 1H Operating
Slide 13: Fourth Quarter Segment Overview: Office and Consumer Products
13 Fourth Quarter Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $205 mil., down 9% compared with prior year Organic sales decline of approx. 9% Corporate purchasing activity remains weak Excluding restructuring charges and other items, operating margin declined to 13.5%
Slide 14: Free Cash Flow
14 ($ Millions) 2009 2008 Net cash provided by operating activities $ 569.0 $ 539.7 Purchase of property, plant and equipment $ (72.2) $(128.5) Purchase of software and other deferred charges $ (30.6) $ (63.1) (Purchases) proceeds from sale of investments, net $ (0.5) $ 17.2 Free Cash Flow(1) $ 465.
Slide 15: Disciplined management of balance sheet contributing to Free Cash Flow trend
Disciplined management of balance sheet contributing meaningfully to Free Cash Flow trend 15 15 January 29, 2010 Fourth Quarter 2009 Financial Review and Analysis
Slide 16: Contributing Factors to 2010: Income Statement
16 Contributing Factors to 2010 Fourth Quarter 2009 Financial Review and Analysis January 29, 2010 Income Statement One less week in the fiscal year; 13 weeks in the first quarter vs. 14 in 2010 (represents a decrease in sales of approx. $50 mil. with a minimal impact to earnings) Currency translati
Slide 17: Contributing Factors to 2010: Cash Flow
Cash Flow Capital expenditures (including IT) of $125 to $150 mil. Pension contributions comparable to 2009 (approx. $50 mil.) Reduced cash requirements for restructuring (approx. $40 mil., vs. approx. $70 mil. in 2009) Sensitivity of Results to Revenue Growth Rates Depending on organic growth rate,
Slide 18: AS vee
AS vee DENNISON