Slide 1: Second Quarter 2008 Financial Review and Analysis
Second Quarter 2008 Financial Review and Analysis (Unaudited) July 22, 2008
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: Actions underway to address challenging near-term business conditions
Actions underway to address challenging near-term business conditions Sales trends somewhat mixed: Organic sales growth improved sequentially for the PSM Segment; emerging markets remain strong for materials businesses Weakness in the U.S. retail environment continued to drive sales declines (organi
Slide 5: Second Quarter Overview
Second Quarter Overview Net sales increased 20% over prior year; 1% decline in sales on an organic basis Net effect of Paxar and DM Label acquisitions was approx. 14% Currency added 7% ($0.05 benefit to earnings per share) Operating margin before restructuring and asset impairment charges and transi
Slide 6: Second Quarter Overview (continued)
Second Quarter Overview (continued) Effective tax rate for the quarter was 19% Annual effective tax rate for 2008 expected to be in the 14%-16% range Ongoing annual tax rate expected to be in the 17%-19% range for the foreseeable future, subject to significant volatility from quarter to quarter Repo
Slide 7: Underlying Sales Trends
Reported Sales Growth 8.1% 18.5% 21.4% 18.4% 20.0% 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). Q2-07 Q3-07 Q4-07 Organic Sales Growth(1) 2.0% (0.1)% (0.6)% (1.9)% (
Slide 8: Margin Analysis
Gross Profit Margin (total Company) 26.8% 28.1% 25.8% Operating Margin (non-GAAP(2)): Pressure-sensitive Materials 8.2% 9.9% 8.0% Retail Information Services (RIS) 7.0% 7.8% 1.0% Office and Consumer Products 17.3% 16.2% 11.1% Other Specialty Converting 3.5% 4.4% 5.8% Total Company 8.5% 9.3% 6.3% (1)
Slide 9: Key Factors Impacting Margin
Key Factors Impacting Margin (see Slide 18 for prior year reconciliation for Paxar) Gross profit margin before Paxar integration costs declined by 20 basis points compared to prior year margin Adjusting the prior year number to include pre-acquisition results of Paxar, gross profit margin declined 1
Slide 10: Pressure-Sensitive Materials
PRESSURE-SENSITIVE MATERIALS Reported sales of $980 mil., up 11% compared with prior year Organic sales growth of approx. 3%, representing modest pick-up from Q1 pace Change in sales for roll materials business by region, adjusted for the effect of currency and intercompany sales: Europe up at mid s
Slide 11: Q2-2008 Segment Overview: Retail Information Services
Q2-2008 Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $438 mil., up 100% compared with prior year due to the Paxar and DM Label acquisitions Organic sales decline of approx. 3% Continued weakness of domestic retail apparel market; sales growth trend for products destined
Slide 12: Paxar Integration Update
Paxar Integration Update Targeting approximately $120 mil. of annual synergies when complete; roughly 85% of targeted synergies expected to be captured in Company's run rate by year-end* Total synergies of approximately $21 mil. in Q2, up from $18 mil. in Q1 No change to anticipated cash costs of in
Slide 13: Q2-2008 Segment Overview: Office and Consumer Products, Other Specialty Converting
Q2-2008 Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $255 mil., down 3% compared with prior year Organic sales decline of approx. 6%, due to weak end market demand in North America and delay in orders related to back-to-school season Excluding restructuring charges, op
Slide 14: Second Quarter YTD Cash Flow and Debt-To-Total Capital
Second Quarter YTD Cash Flow and Debt-To-Total Capital (Millions, except as noted) 2008 2007 Net cash provided by operating activities $188.7 $130.9 Purchase of property, plant and equipment $ (69.1) $ (94.7) Purchase of software and other deferred charges $ (33.0) $ (29.0) Proceeds from sale of inv
Slide 15: 2008 Earnings Guidance (revised): Key Considerations
2008 Earnings Guidance (revised): Key Considerations Guidance for adjusted (non-GAAP) earnings per share (see Slide 17 for reconciliation to GAAP): $3.75 to $3.95 (from $4.00 to $4.30 previously) Reduction in expectations reflects $35 to $45 mil. increase in expected raw material inflation for the y
Slide 16: 2008 Earnings Guidance (revised): Key Assumptions
2008 Earnings Guidance (revised): Key Assumptions Reported revenue up nearly 12%, including approx. 5% benefit from currency, and 7% from acquisitions Sales flat to down slightly on an organic basis... incrementally higher sales benefit from pricing vs. April estimate Unfavorable segment mix vs. pre
Slide 17: 2008 Earnings and Free Cash Flow Guidance
2008 Earnings and Free Cash Flow Guidance 2008 Guidance Reported (GAAP) Earnings Per Share $3.35 - $3.55 Add Back: Estimated Integration Transition Costs, Restructuring and Asset Impairment Charges ~ $0.40 Adjusted (non-GAAP) Earnings Per Share $3.75 to $3.95 Capital Expenditures & Investments in So
Slide 18: Backup: Second Quarter Margin Comparison - Total Company
Backup: Second 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 19: Backup: Second Quarter Margin Comparison - RIS
Backup: Second Quarter Margin Comparison Reconciliation for Effects of Paxar - RIS Reconciliation for Effects of Paxar - RIS Reconciliation for Effects of Paxar - RIS