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Avery Dennison sales decline modestly in Q1

26 Apr '12
4 min read

Other
The company repurchased 2.4 million shares during the first quarter at an aggregate cost of $72 million.

Results of Discontinued Operations
Due to the company's pending divestiture of its Office and Consumer Products business ("OCP"), earnings from OCP and certain costs associated with the transaction are reported as income or loss from discontinued operations (net of tax) in the consolidated income statement.

Earnings per share from discontinued operations declined from $0.07 to a loss of ($0.03). Excluding restructuring and transaction costs and other items, adjusted earnings per share from discontinued operations was unchanged.

The company continues to expect the sale of OCP to be completed in the second half of 2012.

Taxes
The first quarter effective tax rate was 29 percent. The adjusted tax rate for the first quarter increased from 24 to 34 percent, in line with expectations.

Cost Reduction Actions
In the first quarter, the company continued to reduce fixed costs through restructuring actions. The company estimates approximately $6 million in annualized savings from actions taken during the quarter, with approximately three-quarters of the benefit expected to be realized in 2012. The company incurred approximately $7 million in charges associated with these actions during the first quarter. The company continues to identify and assess further opportunities to increase productivity through restructuring.

Outlook
In the company's supplemental presentation materials, "First Quarter 2012 Financial Review and Analysis," the company provides a list of factors that it believes will contribute to its 2012 financial results. Based on the factors listed and other assumptions, the company is maintaining its previous guidance of 2012 earnings per share from continuing operations of $1.65 to $2.00 and free cash flow from continuing operations of $275 million to $325 million. Excluding an estimated $0.15 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share from continuing operations of $1.80 to $2.15.

Avery Dennison Corporation

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