• The Company's annual effective tax rate for 2008 is expected to be in the 15 percent to 18 percent range, with the ongoing annual tax rate expected to be in the 17 percent to 19 percent range for the foreseeable future, subject to significant volatility from quarter to quarter. The effective tax rate for he quarter was a negative 12.3 percent, primarily due to the recognition of a $21 million tax benefit, arising from an increased ability to realize deferred tax assets.
Segment Highlights:
• Pressure-sensitive Materials reported sales of $920 million, up 7 percent from the prior year. Organic sales growth for the segment was approximately 1 percent.
Segment operating margin (GAAP basis) was 7.6 percent, compared to 9.5 percent for the same period last year. Before restructuring and asset impairment charges, operating margin was 8.0 percent, compared to 9.7 percent for the same period last year.
• Retail Information Services sales grew 138 percent to $372 million, though sales declined about 1 percent before the benefits from the Paxar acquisition and currency translation. The business continued to be impacted by the decline in orders for apparel shipped to North American retailers and brand owners, reflecting a weak domestic retail environment.
Segment operating margin (GAAP basis) was negative 1.2 percent, compared to 4.3 percent for the same period last year. Before transition costs and restructuring charges associated with the Paxar integration, operating margin was 1 percent, compared to 4.3 percent for the same period last year.
• Office and Consumer Products sales declined 9 percent to $194 million. Organic sales decline for the segment was approximately 12 percent, due to customer inventory reductions and weak end user demand.
Segment operating margin (GAAP basis) was 11.1 percent, compared to 12.4 percent for the same period last year. Before restructuring charges, operating margin was 11.1 percent, compared to 12.6 percent for the same period last year.
Outlook for the Year:
Avery Dennison announced that it revised its expectations for reported (GAAP) earnings for 2008 to be in the range of $3.60 to $3.90 per share, including an estimated $0.40 per share in restructuring and asset impairment charges and acquisition integration costs.
These charges and costs are subject to revision, as plans have not been finalized. Excluding these items, the Company now expects full year earnings per share for 2008 to be in the range of $4.00 to $4.30 per share.
The Company's earnings expectations reflect an assumption of reported revenue growth in the range of 10 to 12 percent, including a 7 percent contribution from acquisitions and an estimated 5 percent benefit from currency translation. The Company reconfirmed its expectations for 2008 free cash flow to be in the range of $400 million to $450 million.
Avery Dennison Corporation
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