- 4Q16 Reported EPS of $0.69
- Adjusted EPS (non-GAAP) of $0.99
- 4Q16 Net sales increased ~7 percent to
$1.55 billion
- Organic sales growth (non-GAAP) of ~5
percent
- FY16 Reported EPS of $3.54
- Adjusted EPS (non-GAAP) of $4.02
- FY16 Net sales increased ~2 percent to
$6.09 billion
- Organic sales growth (non-GAAP) of ~4
percent
- Expect FY17 Reported EPS of $4.10 to
$4.30
- Adjusted EPS (non-GAAP) of $4.30 to
$4.50
Avery Dennison Corporation (NYSE:AVY) today announced
preliminary, unaudited results for its fourth quarter and year
ended December 31, 2016. All non-GAAP financial measures referenced
in this document are reconciled to GAAP in the attached tables.
Unless otherwise indicated, comparisons are to the same periods in
the prior year.
“I am pleased to report another year of progress toward our
long-term goals,” said Mitch Butier, President and CEO. “We drove
strong organic sales growth and margin expansion through our
strategy to accelerate growth in high value categories and
disciplined execution in our base businesses.
“Label and Graphic Materials had another outstanding year and
the transformation of Retail Branding and Information Solutions is
on track. Results in our newly created Industrial and Healthcare
Materials segment were as anticipated, and it is well positioned
for profitable growth. I would like to thank our employees for
their dedication and focus on our continued success.
“In 2017, we expect to again deliver solid sales and earnings
growth,” said Butier. “We remain confident that the consistent
execution of our strategies will enable us to achieve our long-term
goal of superior value creation through a balance of profitable
growth and capital discipline.”
For more details on the company’s results, see the summary table
accompanying this news release, as well as the supplemental
presentation materials, “Fourth Quarter and Full Year 2016
Financial Review and Analysis,” posted on the company’s website at
www.investors.averydennison.com, and furnished to the SEC on Form
8-K.
Fourth Quarter 2016 Results by
Segment
Prior period amounts have been reclassified to reflect the
company’s new operating structure. The Label and Graphic Materials
segment includes Label and Packaging Materials, Graphics Solutions,
and Reflective Solutions (all previously reported in
Pressure-sensitive Materials). The Industrial and Healthcare
Materials segment includes Performance Tapes (previously reported
in Pressure-sensitive Materials), Fasteners Solutions (previously
reported in Retail Branding and Information Solutions), and Vancive
Medical Technologies (previously reported as a standalone segment).
Retail Branding and Information Solutions now includes tickets,
tags, and labels for apparel, radio-frequency identification, and
Printer Solutions.
Organic sales change refers to the increase or decrease in sales
excluding the estimated impact of currency translation, product
line exits, and acquisitions and divestitures. Adjusted operating
margin refers to income before interest expense and taxes,
excluding restructuring charges and other items, as a percentage of
sales.
Label and Graphic Materials
- Reported sales increased approximately
10 percent; on an organic basis, sales grew approximately 7
percent. Within the segment, sales in Label and Packaging Materials
increased mid-single digits and the combined Graphics and
Reflective businesses increased low-double digits on an organic
basis.
- Operating margin improved 70 basis
points to 11.3 percent, driven primarily by the impact of higher
volume. Adjusted operating margin also improved 70 basis
points.
Retail Branding and Information Solutions
- Reported sales increased approximately
3 percent; on an organic basis, sales grew approximately 5
percent.
- Operating margin improved 610 basis
points to 9.3 percent, primarily due to lower restructuring
charges. Adjusted operating margin improved 220 basis points as the
net savings associated with the business model transformation and
the impact of higher volume were partially offset by higher
employee-related costs.
Industrial and Healthcare Materials
- Reported sales decreased approximately
8 percent; on an organic basis, sales declined approximately 10
percent, as expected. Strong growth in industrial was more than
offset by an expected decline in healthcare categories.
- Operating margin declined 360 basis
points to 8.8 percent as the impact of lower volume was only
partially offset by the benefit of productivity initiatives.
Other
Share Repurchases / Equity Dilution from Long-Term
Incentives
In 2016, the company repurchased 3.8 million shares at an
aggregate cost of $262 million. Net of dilution, the company
reduced its share count by 2 million. The cost of repurchases, net
of proceeds from stock option exercises, was $191 million.
Income Taxes
The 2016 full year tax rate was 32.8 percent, in-line with our
previous expectation of 33 percent. The tax rate in 2017 is
expected to be in the low-thirty percent range.
Cost Reduction Actions
In 2016, the company realized approximately $82 million in
pre-tax savings from restructuring, net of transition costs, and
incurred pre-tax restructuring charges of approximately $20
million, the majority of which represent cash charges.
Outlook
In its supplemental presentation materials, “Fourth Quarter and
Full Year 2016 Financial Review and Analysis,” the company provides
a list of factors that it believes will contribute to its 2017
financial results. Based on the factors listed and other
assumptions, the company expects 2017 earnings per share of $4.10
to $4.30.
Excluding an estimated $0.20 per share for restructuring charges
and other items, the company expects adjusted earnings per share
(non-GAAP) of $4.30 to $4.50.
Note: Throughout this release and the supplemental presentation
materials, amounts on a per share basis reflect fully diluted
shares outstanding.
About Avery Dennison
Avery Dennison (NYSE: AVY) is a global leader in
pressure-sensitive label and functional materials and labeling
solutions for apparel. The company’s applications and technologies
are an integral part of products used in every major industry. With
operations in more than 50 countries and more than 25,000 employees
worldwide, Avery Dennison serves customers in the consumer
packaging, graphical display, logistics, apparel, industrial and
healthcare industries. Headquartered in Glendale, California, the
company reported sales of $6.1 billion in 2016. Learn more at
www.averydennison.com.
“Safe Harbor” Statement under the Private
Securities Litigation Reform Act of 1995
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. These forward-looking statements,
and financial or other business targets, are subject to certain
risks and uncertainties. Actual results and trends may differ
materially from historical or anticipated results depending on a
variety of factors, including but not limited to risks and
uncertainties relating to the following: fluctuations in demand
affecting sales to customers; worldwide and local economic
conditions; fluctuations in currency exchange rates and other risks
associated with foreign operations, including in emerging markets;
the financial condition and inventory strategies of customers;
changes in customer preferences; fluctuations in cost and
availability of raw materials; our ability to generate sustained
productivity improvement; our ability to achieve and sustain
targeted cost reductions; the impact of competitive products and
pricing; loss of significant contracts or customers; collection of
receivables from customers; selling prices; business mix shift;
timely development and market acceptance of new products, including
sustainable or sustainably-sourced products; investment in
development activities and new production facilities; integration
of acquisitions and completion of potential dispositions; amounts
of future dividends and share repurchases; customer and supplier
concentrations; successful implementation of new manufacturing
technologies and installation of manufacturing equipment;
disruptions in information technology systems, including
cyber-attacks or other intrusions to network security; successful
installation of new or upgraded information technology systems;
data security breaches; volatility of financial markets; impairment
of capitalized assets, including goodwill and other intangibles;
credit risks; our ability to obtain adequate financing arrangements
and maintain access to capital; fluctuations in interest and tax
rates; changes in tax laws and regulations, and uncertainties
associated with interpretations of such laws and regulations;
outcome of tax audits; fluctuations in pension, insurance, and
employee benefit costs; the impact of legal and regulatory
proceedings, including with respect to environmental, health and
safety; changes in governmental laws and regulations; protection
and infringement of intellectual property; changes in political
conditions; the impact of epidemiological events on the economy and
our customers and suppliers; acts of war, terrorism, and natural
disasters; and other factors.
We believe that the most significant risk factors that could
affect our financial performance in the near-term include: (1) the
impacts of global economic conditions and political uncertainty on
underlying demand for our products and foreign currency
fluctuations; (2) competitors' actions, including pricing,
expansion in key markets, and product offerings; and (3) the degree
to which higher costs can be offset with productivity measures
and/or passed on to customers through selling price increases,
without a significant loss of volume.
For a more detailed discussion of these and other factors, see
“Risk Factors” and “Management’s Discussion and Analysis of Results
of Operations and Financial Condition” in our 2015 Form 10-K, filed
on February 24, 2016 with the Securities and Exchange Commission,
and subsequent quarterly reports on Form 10-Q. The forward-looking
statements included in this document are made only as of the date
of this document, and we undertake no obligation to update these
statements to reflect subsequent events or circumstances, other
than as may be required by law.
For more information and to listen to a live broadcast or an
audio replay of the quarterly conference call with analysts, visit
the Avery Dennison website at
www.investors.averydennison.com.
Fourth Quarter Financial Summary -
Preliminary, unaudited (in millions, except % and per share
amounts)
4Q 4Q
% Change vs.
P/Y
2016
2015
Reported
Organic
(a)
Net sales, by segment: Label and Graphic Materials
$
1,063.8 $ 970.6 10 % 7 % Retail
Branding and Information Solutions
375.9 363.2
3 % 5 % Industrial and Healthcare Materials
111.1 121.0 (8
%) (10 %) Total net sales
$ 1,550.8 $
1,454.8 7 % 5 %
As Reported (GAAP) Adjusted Non-GAAP (b) 4Q
4Q %
% of
Sales
4Q 4Q %
% of
Sales
2016
2015
Change
2016
2015
2016
2015
Change
2016
2015
Operating income (loss) / operating
margins before interest and taxes, by segment:
Label and Graphic Materials
$ 120.6 $
102.5 11.3 % 10.6 % $ 122.6 $
104.8 11.5 % 10.8 % Retail Branding and Information Solutions
34.8 11.8 9.3 % 3.2 %
37.5 28.2 10.0 % 7.8 % Industrial and Healthcare Materials
9.8 15.0 8.8 % 12.4 %
10.8 15.5 9.7 % 12.8 % Corporate expense
(24.4
) (22.6 ) (25.3 )
(22.5 )
Total operating income before interest and
taxes / operating margins
$ 140.8 $ 106.7 32 %
9.1 % 7.3 % $ 145.6 $ 126.0 16 % 9.4 %
8.7 % Interest expense
$ 14.5 $
15.2 $ 14.5 $ 15.2 Income from continuing operations
before taxes
$ 126.3 $ 91.5 38
% 8.1 % 6.3 % $ 131.1 $ 110.8 18
% 8.5 % 7.6 % Provision for income taxes
$
64.3 $ 35.0 $ 42.1 $ 32.5 Income from
continuing operations
$ 62.0 $ 56.5
10 % 4.0 % 3.9 % $ 89.0 $
78.3 14 % 5.7 % 5.4 % Income from discontinued operations
(c)
--- $ 0.5 n/m Net income
$ 62.0 $ 57.0 9 %
4.0 % 3.9 % Net income per
common share, assuming dilution: Continuing operations
$ 0.69 $ 0.61 13 % $ 0.99
$ 0.85 16 % Discontinued operations
--- 0.01
n/m Total Company
$ 0.69 $
0.62 11 %
2016
2015
4Q Free Cash Flow from Continuing Operations (d) $ 139.4 $ 138.3
Previously reported segment results have been reclassified
to reflect our new operating structure. See accompanying schedules
A-4 to A-8 for reconciliations from GAAP to non-GAAP financial
measures. (a)
Percentage change in sales excluding the
estimated impact of currency translation, product line exits,
acquisitions and divestitures, and, where applicable, the extra
week in our fiscal year.
(b) Excludes restructuring charges and other items. (c) Relates to
the 2013 sale of our former Office and Consumer Products and
Designed and Engineered Solutions businesses. (d) Free cash flow
refers to cash flow from continuing operations, less payments for
property, plant and equipment, software and other deferred charges,
plus proceeds from sales of property, plant and equipment, plus
(minus) net proceeds from sales (purchases) of investments, plus
(minus) free cash outflow (inflow) from discontinued operations.
Full Year Financial Summary - Preliminary,
unaudited (in millions, except % and per share amounts)
FY
FY
% Change vs.
P/Y
2016
2015
Reported
Organic
(a)
Net sales, by segment: Label and Graphic Materials
$
4,187.3 $ 4,032.1 4 % 5 % Retail
Branding and Information Solutions
1,445.4 1,443.4
-- 3 % Industrial and Healthcare Materials
453.8 491.4 (8
%) (8 %) Total net sales
$ 6,086.5 $
5,966.9 2 % 4 %
As Reported (GAAP) Adjusted Non-GAAP (b) FY
FY %
% of
Sales
FY FY %
% of
Sales
2016
2015
Change
2016
2015
2016
2015
Change
2016
2015
Operating income (loss) / operating
margins before interest and taxes, by segment:
Label and Graphic Materials
$ 516.2 $
453.4 12.3 % 11.2 % $ 529.2 $
465.5 12.6 % 11.5 % Retail Branding and Information Solutions
102.6 51.6 7.1 % 3.6 %
112.4 97.3 7.8 % 6.7 % Industrial and Healthcare Materials
54.6 57.1 12.0 % 11.6 %
56.5 65.1 12.5 % 13.2 % Corporate expense
(136.4
) (92.7 ) (95.9 )
(91.2 )
Total operating income before interest and
taxes / operating margins
$ 537.0 $ 469.4 14 %
8.8 % 7.9 % $ 602.2 $ 536.7 12 % 9.9 %
9.0 % Interest expense
$ 59.9 $
60.5 $ 59.9 $ 60.5 Income from continuing operations
before taxes
$ 477.1 $ 408.9 17
% 7.8 % 6.9 % $ 542.3 $ 476.2 14
% 8.9 % 8.0 % Provision for income taxes
$
156.4 $ 134.5 $ 177.8 $ 156.7 Income
from continuing operations
$ 320.7 $
274.4 17 % 5.3 % 4.6
% $ 364.5 $ 319.5 14 % 6.0 % 5.4 % Income from
discontinued operations (c)
--- ($0.1 )
n/m Net income
$ 320.7 $
274.3 17 % 5.3 % 4.6
% Net income per common share, assuming dilution:
Continuing operations
$ 3.54 $
2.95 20 % $ 4.02 $ 3.44 17 %
Discontinued operations
--- --- n/m
Total Company
$ 3.54 $ 2.95 20
%
2016
2015
Free Cash Flow from Continuing Operations (d) $ 387.1 $ 329.4
Previously reported segment results have been reclassified
to reflect our new operating structure. See accompanying schedules
A-4 to A-8 for reconciliations from GAAP to non-GAAP financial
measures. (a)
Percentage change in sales excluding the
estimated impact of currency translation, product line exits,
acquisitions and divestitures, and, where applicable, the extra
week in our fiscal year.
(b) Excludes restructuring charges and other items. (c) Relates to
the 2013 sale of our former Office and Consumer Products and
Designed and Engineered Solutions businesses. (d) Free cash flow
refers to cash flow from continuing operations, less payments for
property, plant and equipment, software and other deferred charges,
plus proceeds from sales of property, plant and equipment, plus
(minus) net proceeds from sales (purchases) of investments, plus
(minus) free cash outflow (inflow) from discontinued operations.
A-1
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In millions, except per
share amounts) (UNAUDITED)
Three Months Ended Twelve Months Ended Dec.
31, 2016 Jan. 02, 2016 Dec. 31, 2016 Jan. 02,
2016
Net sales $
1,550.8 $ 1,454.8 $ 6,086.5 $ 5,966.9 Cost of products sold
1,125.4 1,062.5 4,386.8 4,321.1
Gross profit 425.4 392.3 1,699.7 1,645.8
Marketing, general & administrative expense 279.8 266.3
1,097.5 1,108.1 Interest expense 14.5 15.2 59.9 60.5
Other expense, net(1) 4.8 19.3 65.2 68.3
Income from continuing
operations before taxes 126.3 91.5 477.1 408.9 Provision for
income taxes 64.3 35.0 156.4 134.5
Income from continuing operations 62.0
56.5 320.7 274.4 Income (loss) from discontinued operations
--- 0.5 --- (0.1 )
Net income $ 62.0 $ 57.0 $ 320.7 $ 274.3
Per share
amounts: Net income per common share, assuming dilution
Continuing operations $ 0.69 $ 0.61 $ 3.54 $ 2.95
Discontinued operations --- 0.01 --- ---
Net income per common share,
assuming dilution $ 0.69 $ 0.62 $ 3.54 $ 2.95
Weighted average number of common shares
outstanding, assuming dilution
90.1 92.5 90.7
92.9
(1)
"Other expense, net" for the fourth quarter of 2016 includes
severance and related costs of $4, asset impairment and lease
cancellation charges of $1.3, and transaction costs of $.9,
partially offset by gain on sale of assets of $1.4. "Other
expense, net" for the fourth quarter of 2015 includes severance and
related costs of $17.5, asset impairment and lease cancellation
charges of $1.5, and net loss from curtailment and settlement of
pension obligations of $.3. "Other expense, net" for fiscal
year 2016 includes severance and related costs of $14.7, asset
impairment and lease cancellation charges of $5.2, loss from
settlement of pension obligations of $41.4, and transaction costs
of $5, partially offset by net gain on sales of assets of $1.1.
"Other expense, net" for fiscal year 2015 includes severance
and related costs of $52.5, asset impairment and lease cancellation
charges of $7, loss on sale of product line and related exit costs
of $10.5, and net loss from curtailment and settlement of pension
obligations of $.3, partially offset by gain on sale of asset of
$1.7 and legal settlements of $.3.
A-2
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED BALANCE SHEETS (In millions)
(UNAUDITED)
ASSETS
Dec. 31, 2016
Jan. 02, 2016
Current assets: Cash and cash equivalents $ 195.1 $ 158.8 Trade
accounts receivable, net 1,001.0 964.7 Inventories, net 519.1 478.7
Assets held for sale 6.8 2.5 Other current assets 182.8 170.7
Total current assets 1,904.8 1,775.4 Property, plant and
equipment, net 915.2 847.9 Goodwill 793.6 686.2 Other intangibles
resulting from business acquisitions, net 66.7 45.8 Non-current
deferred income taxes 313.2 372.2 Other assets 402.9 406.2
$ 4,396.4 $
4,133.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Short-term borrowings and current portion of
long-term debt and capital leases $ 579.1 $ 95.3 Accounts payable
841.9 814.6 Other current liabilities 583.3 549.2
Total current
liabilities 2,004.3 1,459.1 Long-term debt and capital
leases 713.4 963.6 Other long-term liabilities 753.2 745.3
Shareholders' equity: Common stock 124.1 124.1 Capital in excess of
par value 852.0 834.0 Retained earnings 2,473.3 2,277.6 Treasury
stock at cost (1,772.0 ) (1,587.0 ) Accumulated other comprehensive
loss (751.9 ) (683.0 )
Total shareholders' equity 925.5 965.7
$ 4,396.4 $ 4,133.7
A-3
AVERY DENNISON CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions)
(UNAUDITED) Twelve Months Ended
Dec. 31, 2016
Jan. 02, 2016
Operating Activities: Net income $
320.7 $ 274.3 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 117.5
125.2 Amortization 62.6 63.1 Provision for doubtful
accounts and sales returns 54.4 46.5 Net losses from asset
impairments and sales/disposals of assets 1.5 12.2
Stock-based compensation 27.2 26.3 Loss from settlement of
pension obligations 41.4 --- Other non-cash expense and loss
46.2 50.1 Changes in assets and liabilities and other
adjustments
(86.2
) (124.0 )
Net cash provided by operating activities 585.3 473.7
Investing Activities: Purchases of property,
plant and equipment (176.9 ) (135.8 ) Purchases of software
and other deferred charges (29.7 ) (15.7 ) Proceeds from
sales of property, plant and equipment 8.5 7.6 Purchases of
investments, net (0.1 ) (0.5 ) Payments for acquisitions and
equity method investments, net of cash acquired (237.2 ) ---
Other --- 1.5
Net cash used in investing activities (435.4 )
(142.9 )
Financing Activities: Net increase
(decrease) in borrowings (maturities of 3 months or less) 234.9
(98.4 ) Payments of debt (maturities greater than 3 months)
(2.7 ) (7.4 ) Dividends paid (142.5 ) (133.1 ) Share
repurchases (262.4 ) (232.3 ) Proceeds from exercises of
stock options, net 71.0 104.0 Other (4.5 ) (0.1 )
Net
cash used in financing activities (106.2 ) (367.3 )
Effect of
foreign currency translation on cash balances (7.4 ) (11.9 )
Increase (decrease) in cash and cash equivalents 36.3 (48.4 )
Cash and cash equivalents, beginning of year 158.8 207.2
Cash and cash equivalents, end of year $ 195.1
$ 158.8
A-4
Reconciliation of Non-GAAP Financial Measures in
Accordance with SEC Regulations G and S-K We report our
financial results in conformity with accounting principles
generally accepted in the United States of America, or GAAP, and
also communicate with investors using certain non-GAAP financial
measures. These non-GAAP financial measures are not in accordance
with, nor are they a substitute for or superior to, the comparable
GAAP financial measures. These non-GAAP financial measures are
intended to supplement presentation of our financial results that
are prepared in accordance with GAAP. Based upon feedback from
investors and financial analysts, we believe that the supplemental
non-GAAP financial measures we provide are useful to their
assessment of our performance and operating trends, as well as
liquidity. Our non-GAAP financial measures exclude the
impact of certain events, activities, or strategic decisions. The
accounting effects of these events, activities or decisions, which
are included in the GAAP financial measures, may make it difficult
to assess our underlying performance in a single period. By
excluding the accounting effects, both positive and negative, of
certain items (e.g., restructuring charges, legal settlements,
certain effects of strategic transactions and related costs, losses
from debt extinguishments, losses from curtailment and settlement
of pension obligations, gains or losses on sales of certain assets,
and other items), we believe that we are providing meaningful
supplemental information to facilitate an understanding of our core
operating results and liquidity measures. These non-GAAP financial
measures are used internally to evaluate trends in our underlying
performance, as well as to facilitate comparison to the results of
competitors for a single period. While some of the items we exclude
from GAAP financial measures recur, they tend to be disparate in
amount, frequency, or timing. We use the following non-GAAP
financial measures in the accompanying news release and
presentation: Organic sales change refers to the increase or
decrease in sales excluding the estimated impact of currency
translation, product line exits, acquisitions and divestitures,
and, where applicable, the extra week in our fiscal year. The
estimated impact of currency translation is calculated on a
constant currency basis, with prior period results translated at
current period average exchange rates to exclude the effect of
currency fluctuations. We believe that organic sales change assists
investors in evaluating the sales growth from the ongoing
activities of our businesses and provides greater ability to
evaluate our results from period to period. Adjusted
operating margin refers to income from continuing operations before
interest expense and taxes, excluding restructuring charges and
other items, as a percentage of sales. Adjusted income from
continuing operations refers to reported income from continuing
operations tax-effected at the full year tax rate, and adjusted for
tax-effected restructuring charges and other items. Adjusted
EPS refers to reported income from continuing operations per common
share, assuming dilution, tax-effected at the full year tax rate,
and adjusted for tax-effected restructuring charges and other
items. We believe that adjusted operating margin, adjusted
income from continuing operations, and adjusted EPS assist
investors in understanding our core operating trends and comparing
our results with those of our competitors. Free cash flow
refers to cash flow from operations, less payments for property,
plant and equipment, software and other deferred charges, plus
proceeds from sales of property, plant and equipment, plus (minus)
net proceeds from sales (purchases) of investments, plus (minus)
free cash outflow (inflow) from discontinued operations. We believe
that free cash flow assists investors by showing the amount of cash
we have available for debt reductions, dividends, share
repurchases, and acquisitions. The following reconciliations
are provided in accordance with Regulations G and S-K and reconcile
our non-GAAP financial measures with the most directly comparable
GAAP financial measures.
A-5
AVERY DENNISON CORPORATION PRELIMINARY RECONCILIATION
FROM GAAP TO NON-GAAP FINANCIAL MEASURES (In millions,
except % and per share amounts)
(UNAUDITED) Three Months Ended Twelve
Months Ended Dec. 31, 2016 Jan. 02, 2016
Dec. 31, 2016 Jan. 02, 2016
Reconciliation from GAAP to Non-GAAP
Operating Margins: Net sales $ 1,550.8 $ 1,454.8 $
6,086.5 $ 5,966.9
Income from continuing operations
before taxes $ 126.3 $ 91.5 $ 477.1 $ 408.9
Income from continuing operations before taxes
as a percentage of sales
8.1 % 6.3 %
7.8 % 6.9 %
Adjustment: Interest expense $ 14.5 $ 15.2 $
59.9 $ 60.5
Operating income from continuing operations
before interest expense and taxes $ 140.8 $ 106.7 $ 537.0 $ 469.4
Operating Margins
9.1 % 7.3 % 8.8 %
7.9 %
As reported income from continuing operations before taxes $
126.3 $ 91.5 $ 477.1 $ 408.9 Adjustments(1) N/A N/A N/A (1.0 )
Previously reported income from continuing operations before
taxes N/A N/A N/A 407.9 Adjustments: Restructuring
charges: Severance and related costs 4.0 17.5 14.7 52.5
Asset impairment and lease cancellation charges 1.3 1.5 5.2
7.0 Loss from settlement and curtailment of pension
obligations --- 0.3 41.4 0.3 Other items(2) (0.5 ) --- 3.9
8.5 Interest expense 14.5 15.2 59.9 60.5
Adjusted operating income from continuing operations before
interest expense and taxes (non-GAAP) $ 145.6 $ 126.0 $ 602.2 $
536.7
Adjusted Operating
Margins (non-GAAP) 9.4 % 8.7 % 9.9 % 9.0 %
Reconciliation from GAAP to
Non-GAAP Income from Continuing Operations: As reported
income from continuing operations $ 62.0 $ 56.5 $ 320.7 $ 274.4
Adjustments(1) N/A N/A N/A (0.6 ) Previously reported income
from continuing operations N/A N/A N/A 273.8 Adjustments:
Restructuring charges 5.3 19.0 19.9 59.5 Loss from
settlement and curtailment of pension obligations --- 0.3 41.4 0.3
Other items(2) (0.5 ) --- 3.9 8.5 Tax effect of pre-tax adjustments
22.2 2.5 (21.4 ) (22.6 )
Adjusted Income from Continuing Operations (non-GAAP)
$ 89.0 $ 78.3 $ 364.5 $
319.5
A-5
(continued)
AVERY DENNISON CORPORATION PRELIMINARY RECONCILIATION
FROM GAAP TO NON-GAAP FINANCIAL MEASURES (In millions,
except % and per share amounts)
(UNAUDITED) Three Months Ended Twelve
Months Ended Dec. 31, 2016 Jan. 02, 2016
Dec. 31, 2016 Jan. 02, 2016
Reconciliation from GAAP to
Non-GAAP Income per Common Share from Continuing Operations:
As reported income per common share from continuing
operations, assuming dilution $ 0.69 $ 0.61 $ 3.54 $ 2.95
Adjustments(1) N/A N/A N/A --- Previously reported
income per common share from continuing operations, assuming
dilution N/A N/A N/A 2.95 Adjustments per common share, net
of tax: Restructuring charges, loss from settlement and
curtailment of pension obligations, and other items(2) 0.30 0.24
0.48 0.49
Adjusted Income per Common Share from
Continuing Operations, assuming dilution (non-GAAP)
$ 0.99 $ 0.85 $ 4.02 $ 3.44
Weighted average number of common shares outstanding,
assuming dilution 90.1 92.5 90.7 92.9
(1)
GAAP adjustment for 2015 reflects the
previously disclosed impact of the third quarter of 2015 revision
to certain benefit plan balances, which had an immaterial impact to
the non-GAAP amounts.
(2)
Includes transaction costs, loss on sale
of product line and related exit costs, gain/loss on sales of
assets, and legal settlements.
(UNAUDITED) Three
Months Ended Twelve Months Ended Dec. 31,
2016 Jan. 02, 2016 Dec. 31, 2016 Jan. 02,
2016
Reconciliation
of Free Cash Flow: Net cash provided by operating
activities $ 219.6 $ 191.5 $ 585.3 $ 473.7 Purchases of
property, plant and equipment (72.0 ) (46.2 ) (176.9 ) (135.8 )
Purchases of software and other deferred charges (13.1 )
(6.7 ) (29.7 ) (15.7 ) Proceeds from sales of property,
plant and equipment 4.2 0.5 8.5 7.6 Sales (purchases) of
investments, net 0.7 (0.3 ) (0.1 ) (0.5 ) Plus: free cash
(inflow) outflow from discontinued operations --- (0.5 ) --- 0.1
Free Cash Flow -
Continuing Operations (non-GAAP) $ 139.4
$ 138.3 $ 387.1 $ 329.4
A-6
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
Fourth Quarter Ended NET SALES OPERATING
INCOME OPERATING MARGINS 2016 2015
2016 (1)
2015 (2)
2016 2015 Label and Graphic Materials $
1,063.8 $ 970.6 $ 120.6 $ 102.5 11.3 % 10.6 % Retail Branding and
Information Solutions 375.9 363.2 34.8 11.8 9.3 % 3.2 % Industrial
and Healthcare Materials 111.1 121.0 9.8 15.0 8.8 % 12.4 %
Corporate Expense N/A N/A (24.4 )
(22.6 ) N/A N/A TOTAL
FROM CONTINUING OPERATIONS $ 1,550.8 $ 1,454.8 $ 140.8
$ 106.7 9.1 % 7.3 % (1)
Operating income for the fourth quarter of 2016 includes severance
and related costs of $4, asset impairment and lease cancellation
charges of $1.3, and transaction costs of $.9, partially offset by
gain on sale of assets of $1.4. Of the total $4.8, the Label and
Graphic Materials segment recorded $2, the Retail Branding and
Information Solutions segment recorded $2.7, the Industrial and
Healthcare Materials segment recorded $1, and Corporate recorded
($.9). (2) Operating income for the fourth quarter of 2015
includes severance and related costs of $17.5, asset impairment and
lease cancellation charges of $1.5, and net loss from curtailment
and settlement of pension obligations of $.3. Of the total $19.3,
the Label and Graphic Materials segment recorded $2.3, the Retail
Branding and Information Solutions segment recorded $16.4, the
Industrial and Healthcare Materials segment recorded $.5, and
Corporate recorded $.1. Previously reported segment results
have been reclassified to reflect our new operating structure.
RECONCILIATION FROM GAAP TO NON-GAAP SUPPLEMENTARY
INFORMATION Fourth Quarter Ended OPERATING INCOME
OPERATING MARGINS 2016 2015
2016 2015
Label and Graphic
Materials
Operating income and margins, as reported $ 120.6 $ 102.5 11.3 %
10.6 % Adjustments: Restructuring charges: Severance and related
costs 1.0 1.5 0.1 % 0.1 % Asset impairment charges 0.2 0.6 --- 0.1
% Transaction costs 0.8 --- 0.1 % --- Net loss from curtailment and
settlement of pension obligations ---
0.2 --- --- Adjusted operating income
and margins (non-GAAP) $ 122.6 $ 104.8 11.5 %
10.8 %
Retail Branding
and Information Solutions
Operating income and margins, as reported $ 34.8 $ 11.8 9.3 % 3.2 %
Adjustments: Restructuring charges: Severance and related costs 3.0
15.5 0.8 % 4.3 % Asset impairment and lease cancellation charges
1.1 0.9 0.3 % 0.3 % Gain on sale of assets (1.4 )
--- (0.4 %) --- Adjusted operating
income and margins (non-GAAP) $ 37.5 $ 28.2
10.0 % 7.8 %
Industrial and
Healthcare Materials
Operating income and margins, as reported $ 9.8 $ 15.0 8.8 % 12.4 %
Adjustments: Restructuring charges: Severance and related costs ---
0.5 --- 0.4 % Transaction costs 1.0 ---
0.9 % --- Adjusted operating income and
margins (non-GAAP) $ 10.8 $ 15.5 9.7 %
12.8 %
A-7
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (In millions, except %) (UNAUDITED)
Twelve Months Year-to-Date NET SALES OPERATING
INCOME OPERATING MARGINS 2016 2015
2016 (1)
2015 (2)
2016 2015 Label and Graphic Materials $
4,187.3 $ 4,032.1 $ 516.2 $ 453.4 12.3 % 11.2 % Retail Branding and
Information Solutions 1,445.4 1,443.4 102.6 51.6 7.1 % 3.6 %
Industrial and Healthcare Materials 453.8 491.4 54.6 57.1 12.0 %
11.6 % Corporate Expense N/A N/A (136.4
) (92.7 ) N/A N/A TOTAL
FROM CONTINUING OPERATIONS $ 6,086.5 $ 5,966.9 $ 537.0
$ 469.4 8.8 % 7.9 % (1)
Operating income for fiscal year 2016 includes severance and
related costs of $14.7, asset impairment and lease cancellation
charges of $5.2, loss from settlement of pension obligations of
$41.4, and transaction costs of $5, partially offset by net gain on
sales of assets of $1.1. Of the total $65.2, the Label and Graphic
Materials segment recorded $13, the Retail Branding and Information
Solutions segment recorded $9.8, the Industrial and Healthcare
Materials segment recorded $1.9, and Corporate recorded $40.5.
(2) Operating income for fiscal year 2015 includes severance
and related costs of $52.5, asset impairment and lease cancellation
charges of $7, loss on sale of product line and related exit costs
of $10.5, and net loss from curtailment and settlement of pension
obligations of $.3, partially offset by gain on sale of asset of
$1.7 and legal settlements of $.3. Of the total $68.3, the Label
and Graphic Materials segment recorded $12.1, the Retail Branding
and Information Solutions segment recorded $45.7, the Industrial
and Healthcare Materials segment recorded $8, and Corporate
recorded $2.5. Previously reported segment results have been
reclassified to reflect our new operating structure.
RECONCILIATION FROM GAAP TO NON-GAAP SUPPLEMENTARY
INFORMATION Twelve Months Year-to-Date OPERATING
INCOME OPERATING MARGINS 2016
2015 2016 2015
Label and Graphic
Materials
Operating income and margins, as reported $ 516.2 $ 453.4 12.3 %
11.2 % Adjustments: Restructuring charges: Severance and related
costs 5.8 12.8 0.1 % 0.3 % Asset impairment charges 2.7 0.8 0.1 %
--- Transaction costs 4.5 --- 0.1 % --- Gain on sale of asset ---
(1.7 ) --- --- Net loss from curtailment and settlement of pension
obligations --- 0.2 ---
--- Adjusted operating income and margins (non-GAAP)
$ 529.2 $ 465.5 12.6 % 11.5 %
Retail Branding
and Information Solutions
Operating income and margins, as reported $ 102.6 $ 51.6 7.1 % 3.6
% Adjustments: Restructuring charges: Severance and related costs
8.4 34.1 0.6 % 2.3 % Asset impairment and lease cancellation
charges 2.1 1.6 0.2 % 0.1 % Net gain on sales of assets (1.1 ) ---
(0.1 %) --- Loss on sale of product line and related transaction
and exit costs 0.4 10.5 --- 0.7 % Legal settlement ---
(0.5 ) --- --- Adjusted
operating income and margins (non-GAAP) $ 112.4 $
97.3 7.8 % 6.7 %
Industrial and
Healthcare Materials
Operating income and margins, as reported $ 54.6 $ 57.1 12.0 % 11.6
% Adjustments: Restructuring charges: Severance and related costs
0.5 3.4 0.1 % 0.7 % Asset impairment charges 0.4 4.6 0.1 % 0.9 %
Transaction costs 1.0 --- 0.3 %
--- Adjusted operating income and margins (non-GAAP)
$ 56.5 $ 65.1 12.5 % 13.2 %
A-8
AVERY DENNISON CORPORATION PRELIMINARY SUPPLEMENTARY
INFORMATION (UNAUDITED) Fourth
Quarter 2016
TotalCompany
Label andGraphic Materials
Retail Brandingand
InformationSolutions
Industrial andHealthcareMaterials
Reconciliation of GAAP to Non-GAAP sales change Reported
sales change 7 % 10 % 3 % (8 %) Foreign currency translation 1 % 1
% 1 % 1 % Acquisitions/divestitures
(3
%) (3 %) --- (3 %)
Organic sales change (non-GAAP)(1) 5 %
7 % 5 % (10 %)
Full Year 2016
TotalCompany
Label andGraphic Materials
Retail Brandingand
InformationSolutions
Industrial andHealthcareMaterials
Reconciliation of GAAP to Non-GAAP sales change Reported
sales change 2 % 4 % --- (8 %)
Foreign currency translation
3 % 3 % 2 % 2 % Acquisitions/divestitures (1 %)
(1 %) 2 % (2 %)
Organic sales change (non-GAAP)(1) 4 %
5 % 3 % (8 %)
(1) Totals may not sum due to
rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170201005460/en/
Avery Dennison CorporationMedia Relations:Rob Six,
626-304-2361rob.six@averydennison.comorInvestor
Relations:Garrett Gabel,
626-304-2399investorcom@averydennison.com
Avery Dennison (NYSE:AVY)
Historical Stock Chart
From Aug 2024 to Sep 2024
Avery Dennison (NYSE:AVY)
Historical Stock Chart
From Sep 2023 to Sep 2024