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Avery Dennison Comments on Q2 Outlook, Sales to Be 5% Lower, To Layoff More

Press release from the issuing company

PASADENA, Calif.-June 20, 2001--Avery Dennison Corp. today announced that, based on sales data for the first two months of the current quarter, revenue for the second quarter of 2001 is projected to be approximately 5 percent lower than the company's previously announced expectations. Revenue for the second quarter is now expected to be in the range of $955 million to $965 million, and earnings per share, on a diluted basis, are expected to be in the range of $0.60 per share to $0.64 per share. Diluted earnings per share were previously expected to be in the range of $0.68 to $0.72 per share. The company is attributing its projected second-quarter sales decline to several factors, including decreased rates of international growth, especially in Europe where the rapid deterioration of economic conditions is now impacting sales growth for most of the company's operations in the region, as well as in Asia and Latin America. In addition, the company indicated that new inventory reduction efforts implemented at one of the office product superstore chains and a delay of orders related to the "back-to-school'' season will negatively impact second-quarter results. "We are taking aggressive actions throughout the company to align operations with the sluggish conditions in our markets,'' said Philip M. Neal, chairman and chief executive officer of Avery Dennison. "By the end of the second quarter, we will have reduced our U.S. workforce by more than 5 percent since the economic slowdown started late last year. "We are now implementing cost-cutting measures in Europe. In total, we expect to reduce our permanent headcount worldwide by approximately 450 positions this year, which is 100 more positions than previously announced. In addition, we have reduced the temporary workforce in our office products business to reflect current order patterns.'' Avery Dennison said that it expects the slower international growth and the weakened Euro, which has declined by more than 10 percent since the beginning of the year, to impact results in the second half of 2001. The company indicated that if current economic trends in its markets continue unchanged and currency exchange rates remain at existing levels, earnings for the last half of 2001 are projected to be in the range of $1.25 per share to $1.41 per share, resulting in full-year projected earnings in the range of $2.50 per share to $2.70 per share. "While we are intensely focused on reducing expenses during this period of continued economic weakness, we remain fully committed to our aggressive top-line growth strategies,'' said Neal. "Our product development efforts continue unabated, as we develop innovative office products and introduce new applications for our proprietary pressure-sensitive adhesive materials in expanding markets. "In addition, our superior financial strength positions us well for strategic acquisition and other investment opportunities that may emerge during difficult market conditions. "Our core markets provide excellent long-term growth potential while our industry-leading Avery and Fasson brands continue to expand share in key markets around the world,'' said Neal. "We look forward to returning to double-digit earnings growth when global economic conditions improve and historic volume growth levels resume.'' Results for the second quarter of 2001 will be announced on July 24, 2001, at 8 a.m. (PDT). Further information on the company's second-quarter earnings will be discussed in a teleconference, which will be available via Webcast on the Internet, on July 24, 2001, at 11 a.m. (PDT).

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