Avery Dennison Corp. (AVY) filed Quarterly Report for the period ended 2009-10-03.
Avery Dennision Corporation produces pressure-sensitive adhesives and materials and the production of consumer and converted products. Some pressure-sensitive adhesives and materials are ``converted`` into labels and other products through embossing, printing, stamping and die-cutting, and some are sold in unconverted form as base materials, tapes and reflective sheeting. The company also manufactures and sells a variety of consumer and converted products and other items not involving pressure-sensitive components, such as notebooks, three-ring binders, among others. Avery Dennison Corp. has a market cap of $4.43 billion; its shares were traded at around $39.28 with a P/E ratio of 23 and P/S ratio of 0.7. The dividend yield of Avery Dennison Corp. stocks is 2%. Avery Dennison Corp. had an annual average earning growth of 4.4% over the past 10 years. GuruFocus rated Avery Dennison Corp. the business predictability rank of 4.5-star.
Highlight of Business Operations:
In the first nine months of 2009, we had a net loss of approximately $797 million compared to a net income of approximately $224 million in the same period in 2008.
In the first quarter of 2009, we recorded non-cash impairment charges of $832 million for the retail information services reporting unit, of which $820 million is related to goodwill and $12 million is related to indefinite-lived intangible assets. We completed our impairment test of goodwill and indefinite-lived intangible assets (“goodwill impairment”) in the second quarter of 2009, with no additional impairment charge recorded thereafter.
In connection with the acquisition of Paxar Corporation (“Paxar”), we acquired approximately $30 million of intangible assets, consisting of certain trade names and trademarks, which are not subject to amortization because they have an indefinite useful life. As part of the interim goodwill impairment test completed in the second quarter of 2009, which is discussed above, we recorded an additional non-cash impairment charge of $12 million related to these indefinite-lived intangible assets in the first quarter of 2009, with no additional impairment charge recorded thereafter.
In the fourth quarter of 2008, we initiated restructuring actions that are now expected to generate approximately $160 million in annualized savings by the middle of 2010, of which an estimated $75 million, net of transition costs, is expected to benefit 2009. We expect to incur approximately $100 million of cash restructuring charges associated with these actions, with the majority to be incurred by the end of 2009. Additionally, we have incurred approximately $30 million of non-cash charges through the end of the third quarter of 2009. At the end of the third quarter, we achieved run-rate savings representing nearly 70% of our target.
On July 30, 2009 and October 22, 2009, we declared a dividend of $.20 per share, a reduction from our previous dividend of $.41 per share in the same periods in 2008. This precautionary action was taken in response to the possibility of continued poor market conditions beyond 2009, to focus on reducing debt and to plan for increased pension funding requirements.
In the third quarter of 2008, “Other expense, net” consisted of severance and other employee-related costs of $8.7 million and asset impairment and lease cancellation charges of $3.8 million (primarily in the Pressure-sensitive Materials segment). Restructuring costs in the third quarter of 2008 relate to a reduction in headcount of approximately 310 positions across all segments and geographic regions.
AVY is in the portfolios of Arnold Van Den Berg of Century Management, Brian Rogers of T Rowe Price Equity Income Fund, John Hussman of Hussman Economtrics Advisors, Inc., PRIMECAP Management, Richard Aster Jr of Meridian Fund.
Rate This Article: |
  |