PASADENA, Calif.--Jan. 22, 2002--Avery Dennison reported fourth quarter 2001 diluted earnings per share of $.59, or $.61 per share before a charge related to the recent currency devaluation in Argentina. This compares with $.69 per share for the fourth quarter a year ago. 2001 year-end earnings per share were $2.47, which compares with $2.84 per share in 2000. Earnings were consistent with the expectation that the Company had set previously and, excluding the effect of the currency devaluation in Argentina, exceeded the analyst consensus estimate for the quarter.
"We are pleased that our businesses either maintained or expanded their market share positions during the past twelve months, despite a modest decline in sales from last year's levels,'' said Philip M. Neal, chairman and chief executive officer of Avery Dennison. "Additionally, our focus on cost reduction and productivity improvement strategies has served us well in this challenging business climate.''
Excluding the impact of currency exchange rates, domestic and international sales increased for the Pressure-sensitive Adhesives and Materials sector, while sales declined, both domestically and internationally, in the Consumer and Converted Products sector.
In the Pressure-sensitive Adhesives and Materials sector, performance was fueled in the fourth quarter of 2001 by double-digit unit volume growth at the North American Fasson Roll business, complemented by solid unit volume growth for most international operations in the pressure-sensitive materials business. The Company continued to experience weakness, however, in sales in the Graphics and Specialty Tapes businesses.
The Consumer and Converted Products sector reported a reduction in sales for the fourth quarter, due in part to the customer order in the office products business pulled forward into the fourth quarter of 2000, as noted earlier in this news release. Adjusting for this factor, the decline in sales for the fourth quarter of 2001 was comparable to the decline posted in the third quarter of 2001, reflecting general economic weakness impacting the Company's office products, ticketing services and other businesses in the sector.
During the fourth quarter, the Company realized a gain of approximately $20 million on the sale of a non-strategic business unit. This gain was offset by approximately $20 million in charges to fourth quarter earnings for a variety of cost reduction actions currently being implemented. These measures will result in annualized cost savings of approximately $15 million and include a headcount reduction of approximately 400 positions spread throughout the Company's operations.
As announced earlier this month, Avery Dennison reported that completion of its planned acquisition of Jackstadt GmbH has been delayed due to specific issues raised by the German Federal Cartel Office related to market share in that country. Avery Dennison and Jackstadt are responding to regulators with additional information and both companies hope for resolution in the next few months, but the outcome remains uncertain.
"Although we are encouraged by some positive signs in parts of our business, we are cautious with regard to the near-term outlook for earnings. As a result, we are projecting an earnings-per-share range of $.60 to $.65 for the first quarter of 2002,'' said Neal. "Assuming top-line growth for our office products and more economically-sensitive businesses later in the year, we expect earnings for the full year to be in the range of $2.50 to $2.70, excluding the impact of the change in goodwill accounting and the pending acquisition of Jackstadt.''
The Company said it expects the full-year impact from the change in goodwill accounting to represent a benefit of approximately $.13 per share on an after-tax basis.
"We remain highly confident about our long-term growth potential, despite the short-term challenges that all companies face today,'' said Neal. "We fully expect continued improvement in our core businesses as this year progresses. We look forward to a number of exciting new product introductions from businesses throughout the Company, in addition to the development of several new markets for us. Our strong balance sheet and excellent cash flow continue to enable us to build market share, grow through acquisitions and invest in new technologies and products.''
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