Slide 1: Third Quarter 2009 Financial Review and Analysis
Supplemental Presentation Materials Third Quarter 2009 Financial Review and Analysis (unaudited) October 27, 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
October 27, 2009 Third Quarter 2009 Financial Review and Analysis 4 Overview Continued weakness in the macroeconomic environment drove volume declines in all segments Rate of volume decline improved vs. the first half of 2009 Inventory levels in many markets appear to be stabilizing End markets rema
Slide 5: Third Quarter Summary
Third Quarter Summary Net sales declined 10% from prior year Currency translation reduced sales growth by 4% On an organic basis(1), net sales declined 6% Operating margin increased to 7.3% before restructuring, asset impairment charges, lease cancellation costs, and other items Restructuring and pr
Slide 6: Third Quarter Summary (continued)
Third Quarter Summary (continued) Restructuring update: Anticipating $160 mil. of annualized savings from restructuring initiated in the fourth quarter of last year, with approx. $75 mil. of benefit (net of transition costs) expected in 2009 Achieved a run rate of nearly 70% of savings target at end
Slide 7: Sales Analysis
7 Reported Sales Change 2.5% (11.8%) (13.3%) (20.4%) (10.2%) 3Q08 4Q08 1Q09 Organic Sales Change(1) (2.5%) (8.1%) (14.5%) (13.5%) (5.9%) Acquisitions 0.6% 0.6% 0.6% -- -- Currency 4.5% (4.4%) (6.4%) (6.9%) (4.3%) Extra Week -- -- 7.0% -- -- 2Q09 3Q09 Sales Analysis (1) Reported Sales Change (year-ov
Slide 8: Margin Analysis
8 Gross Profit Margin (total Company) 28.1% 25.2% 26.8% Operating Margin (non-GAAP(1)): Pressure-sensitive Materials 9.9% 7.3% 8.1% Retail Information Services (2.1%) 1.9% (0.2%) Office and Consumer Products 16.8% 17.4% 17.3% Other specialty converting businesses 4.6% 1.8% (2.4)% Total Company 7.3%
Slide 9: Key Factors Impacting Margin
Key Factors Impacting Margin Gross profit margin improved 290 basis points vs. prior year to 28.1% The benefit of restructuring and other productivity initiatives more than offset the margin impact of lower volume (i.e., reduced fixed-cost leverage) The effect of pricing and material cost trends has
Slide 10: Third Quarter Segment Overview: Pressure-Sensitive Materials
10 Third Quarter Segment Overview PRESSURE-SENSITIVE MATERIALS Reported sales of $851 mil., down 9% compared with prior year Organic sales decline of approx. 3% Rate of change in sales (organic basis) for roll materials business, by region: Europe: mid single-digit decline North America: low single-
Slide 11: Third Quarter Segment Overview: Retail Information Services
11 Third Quarter Segment Overview (continued) RETAIL INFORMATION SERVICES Reported sales of $325 mil., down 14% compared with prior year Organic sales decline of approx. 11% Operating margin before restructuring charges and other items declined to negative 2.1%, as reduced fixed-cost leverage, prici
Slide 12: Segment Overview: Office and Consumer Products; Other Specialty Converting
12 Third Quarter Segment Overview (continued) OFFICE AND CONSUMER PRODUCTS Reported sales of $243 mil., down 7% compared with prior year Organic sales decline of approx. 4%, despite strong back-to-school sales Corporate purchasing activity remains weak Excluding restructuring charges and other items
Slide 13: Free Cash Flow
13 ($ Millions) 2009 2008 Net cash provided by operating activities $ 316.9 $ 382.3 Purchase of property, plant and equipment $ (46.7) $ (97.8) Purchase of software and other deferred charges $ (20.4) $ (49.2) Proceeds from sale of investments, net $ 0.3 $ 16.2 Free Cash Flow(1) $ 250.1 $ 251.5 (1)
Slide 14: Factors Impacting 2009 Results
14 Factors Impacting 2009 Results Currency translation (at current rates, represents approx. 4% headwind to reported sales growth; approx. $20 mil. negative impact to EBIT vs. 2008) Estimated $75 mil. of savings (net of transition costs) from new restructuring actions Estimated $110 mil. restructuri
Slide 15: Avery Dennison
A AVERY DENNISON