☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 95-1492269 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) | ||
207 Goode Avenue Glendale, California | 91203 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock, $1 par value | AVY | New York Stock Exchange | ||
1.25% Senior Notes due 2025 | AVY25 | Nasdaq Stock Market |
☒ Large accelerated filer | ☐ Accelerated filer | ☐ Non-accelerated filer | ☐ Smaller reporting company | ☐ Emerging growth company |
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Item 1. | ||||||
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Item 2. | ||||||
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28 | ||||||
Item 3. | 32 | |||||
Item 4. | 32 | |||||
Item 1. | 33 | |||||
Item 1A. | 33 | |||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
Signatures | ||||||
Exhibits |
● | COVID-19 |
● | International Operations – worldwide and local economic and market conditions; changes in political conditions; and fluctuations in foreign currency exchange rates and other risks associated with foreign operations, including in emerging markets |
● | Our Business – changes in our markets due to competitive conditions, technological developments, environmental standards, laws and regulations, and customer preferences; fluctuations in demand affecting sales to customers; execution and integration of acquisitions, including the |
● | The Vestcom |
● | Income Taxes – fluctuations in tax rates; changes in tax laws and regulations, and uncertainties associated with interpretations of such laws and regulations; retention of tax incentives; outcome of tax audits; and the realization of deferred tax assets |
● | Information Technology – disruptions in information technology systems, including cyber-attacks or other intrusions to network security; successful installation of new or upgraded information technology systems; and data security breaches |
● | Human Capital – recruitment and retention of employees; fluctuations in employee benefit costs; and collective labor arrangements |
● | Our Indebtedness – credit risks; our ability to obtain adequate financing arrangements and maintain access to capital; volatility of financial markets; fluctuations in interest rates; and compliance with our debt covenants |
● | Ownership of Our Stock – potential significant variability of our stock price and amounts of future dividends and share repurchases |
● | Legal and Regulatory Matters – protection and infringement of intellectual property and impact of legal and regulatory proceedings, including with respect to environmental, health and safety, anti-corruption and trade compliance |
● | Other Financial Matters – fluctuations in pension costs and goodwill impairment |
ITEM 1. | FINANCIAL STATEMENTS |
(Dollars in millions, except per share amount) | July 3, 2021 | January 2, 2021 | October 2, 2021 | January 2, 2021 | ||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 344.8 | $ | 252.3 | $ | 207.2 | $ | 252.3 | ||||||||
Trade accounts receivable, less allowances of $39.4 and $44.6 at | 1,338.9 | 1,235.2 | ||||||||||||||
Trade accounts receivable, less allowances of $37 | 1,441.2 | 1,235.2 | ||||||||||||||
Inventories, net | 824.8 | 717.2 | 879.1 | 717.2 | ||||||||||||
Other current assets | 233.1 | 211.5 | 251.0 | 211.5 | ||||||||||||
Total current assets | 2,741.6 | 2,416.2 | 2,778.5 | 2,416.2 | ||||||||||||
Property, plant and equipment, net | 1,344.8 | 1,343.7 | 1,405.5 | 1,343.7 | ||||||||||||
Goodwill | 1,145.0 | 1,136.4 | 1,896.7 | 1,136.4 | ||||||||||||
Other intangibles resulting from business acquisitions, net | 216.7 | 224.9 | 931.5 | 224.9 | ||||||||||||
Deferred tax assets | 188.5 | 197.7 | 152.7 | 197.7 | ||||||||||||
Other assets | 785.9 | 765.0 | 802.8 | 765.0 | ||||||||||||
$ | 6,422.5 | $ | 6,083.9 | $ | 7,967.7 | $ | 6,083.9 | |||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Short-term borrowings and current portion of long-term debt and finance leases | $ | 33.6 | $ | 64.7 | $ | 398.8 | $ | 64.7 | ||||||||
Accounts payable | 1,226.5 | 1,050.9 | 1,268.2 | 1,050.9 | ||||||||||||
Accrued payroll and employee benefits | 241.5 | 239.0 | 283.6 | 239.0 | ||||||||||||
Other current liabilities | 580.9 | 571.4 | 658.8 | 571.4 | ||||||||||||
Total current liabilities | 2,082.5 | 1,926.0 | 2,609.4 | 1,926.0 | ||||||||||||
Long-term debt and finance leases | 2,020.2 | 2,052.1 | 2,800.2 | 2,052.1 | ||||||||||||
Long-term retirement benefits and other liabilities | 506.9 | 503.6 | 504.1 | 503.6 | ||||||||||||
Deferred tax liabilities and income taxes payable | 109.3 | 117.3 | 254.8 | 117.3 | ||||||||||||
Commitments and contingencies (see Note 12) | 0 | 0 | 0 | 0 | ||||||||||||
Shareholders’ equity: | ||||||||||||||||
Common stock, $1 par value per share, authorized – 400,000,000 shares at July 3, 2021 and January 2, 2021; issued – 124,126,624 shares at July 3, 2021 and January 2, 2021; outstanding – 82,951,904 shares and 83,151,174 shares at July 3, 2021 and January 2, 2021, respectively | 124.1 | 124.1 | ||||||||||||||
Common stock, $1 par value per share, authorized – 400,000,000 shares at October 2, 2021 and January 2, 2021; issued – 124,126,624 shares at October 2, 2021 and January 2, 2021; outstanding – 82,833,721 83,151,174 shares at October 2, 2021 and January 2, 2021, respectively | 124.1 | 124.1 | ||||||||||||||
Capital in excess of par value | 846.5 | 862.1 | 854.8 | 862.1 | ||||||||||||
Retained earnings | 3,637.3 | 3,349.3 | 3,749.7 | 3,349.3 | ||||||||||||
Treasury stock at cost, 41,174,720 shares and 40,975,450 shares at July 3, 2021 and January 2, 2021, respectively | (2,576.7 | ) | (2,501.0 | ) | ||||||||||||
Treasury stock at cost, 41,292,903 | (2,606.4 | ) | (2,501.0 | ) | ||||||||||||
Accumulated other comprehensive loss | (327.6 | ) | (349.6 | ) | (323.0 | ) | (349.6 | ) | ||||||||
Total shareholders’ equity | 1,703.6 | 1,484.9 | 1,799.2 | 1,484.9 | ||||||||||||
$ | 6,422.5 | $ | 6,083.9 | $ | 7,967.7 | $ | 6,083.9 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions, except per share amounts) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Net sales | $ | 2,102.0 | $ | 1,528.5 | $ | 4,153.3 | $ | 3,251.5 | $ | 2,071.8 | $ | 1,729.1 | $ | 6,225.1 | $ | 4,980.6 | ||||||||||||||||
Cost of products sold | 1,525.7 | 1,145.6 | 2,980.0 | 2,383.5 | 1,517.4 | 1,244.9 | 4,497.4 | 3,628.4 | ||||||||||||||||||||||||
Gross profit | 576.3 | 382.9 | 1,173.3 | 868.0 | 554.4 | 484.2 | 1,727.7 | 1,352.2 | ||||||||||||||||||||||||
Marketing, general and administrative expense | 307.0 | 219.4 | 619.3 | 500.4 | 296.9 | 258.3 | 916.2 | 758.7 | ||||||||||||||||||||||||
Other expense (income), net | (.6 | ) | 40.0 | .3 | 44.9 | 16.0 | 12.4 | 16.3 | 57.3 | |||||||||||||||||||||||
Interest expense | 16.0 | 20.0 | 32.2 | 38.8 | 18.0 | 15.6 | 50.2 | 54.4 | ||||||||||||||||||||||||
Other non-operating expense (income), net | (1.4 | ) | .2 | (2.7 | ) | (.3 | ) | (.9 | ) | .1 | (3.6 | ) | (.2 | ) | ||||||||||||||||||
Income before taxes | 255.3 | 103.3 | 524.2 | 284.2 | 224.4 | 197.8 | 748.6 | 482.0 | ||||||||||||||||||||||||
Provision for (benefit from) income taxes | 70.4 | 22.2 | 128.5 | 68.5 | 59.2 | 46.3 | 187.7 | 114.8 | ||||||||||||||||||||||||
Equity method investment (losses) gains | (1.1 | ) | (1.4 | ) | (2.4 | ) | (1.8 | ) | (1.1 | ) | (1.0 | ) | (3.5 | ) | (2.8 | ) | ||||||||||||||||
Net income | $ | 183.8 | $ | 79.7 | $ | 393.3 | $ | 213.9 | $ | 164.1 | $ | 150.5 | $ | 557.4 | $ | 364.4 | ||||||||||||||||
Per share amounts: | ||||||||||||||||||||||||||||||||
Net income per common share | $ | 2.21 | $ | .96 | $ | 4.74 | $ | 2.56 | $ | 1.98 | $ | 1.80 | $ | 6.72 | $ | 4.37 | ||||||||||||||||
Net income per common share, assuming dilution | $ | 2.19 | $ | .95 | $ | 4.69 | $ | 2.55 | $ | 1.96 | $ | 1.79 | $ | 6.64 | $ | 4.34 | ||||||||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||||||||||
Common shares | 83.0 | 83.4 | 83.0 | 83.4 | 82.9 | 83.5 | 83.0 | 83.4 | ||||||||||||||||||||||||
Common shares, assuming dilution | 83.8 | 83.8 | 83.9 | 83.9 | 83.7 | 84.0 | 83.9 | 84.0 |
�� | ||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Net income | $ | 183.8 | $ | 79.7 | $ | 393.3 | $ | 213.9 | $ | 164.1 | $ | 150.5 | $ | 557.4 | $ | 364.4 | ||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||||||||
Foreign currency translation | 10.1 | 13.6 | 17.7 | (55.0 | ) | 1.4 | 9.5 | 19.1 | (45.5 | ) | ||||||||||||||||||||||
Pension and other postretirement benefits | .8 | .7 | 2.0 | 1.3 | 1.3 | .6 | 3.3 | 1.9 | ||||||||||||||||||||||||
Cash flow hedges | 7.6 | (5.5 | ) | 2.3 | (1.4 | ) | 1.9 | (.8 | ) | 4.2 | (2.2 | ) | ||||||||||||||||||||
Other comprehensive income (loss), net of tax | 18.5 | 8.8 | 22.0 | (55.1 | ) | 4.6 | 9.3 | 26.6 | (45.8 | ) | ||||||||||||||||||||||
Total comprehensive income, net of tax | $ | 202.3 | $ | 88.5 | $ | 415.3 | $ | 158.8 | $ | 168.7 | $ | 159.8 | $ | 584.0 | $ | 318.6 |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Operating Activities | ||||||||||||||||
Net income | $ | 393.3 | $ | 213.9 | $ | 557.4 | $ | 364.4 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation | 80.8 | 74.6 | 122.9 | 113.7 | ||||||||||||
Amortization | 28.8 | 23.2 | 48.6 | 36.1 | ||||||||||||
Provision for credit losses and sales returns | 17.5 | 38.8 | 26.1 | 50.4 | ||||||||||||
Stock-based compensation | 18.5 | 1.4 | 27.1 | 12.1 | ||||||||||||
Pension plan settlement loss | .4 | — | 1.0 | — | ||||||||||||
Deferred taxes and other non-cash taxes | 10.6 | 16.4 | (1.5 | ) | 17.1 | |||||||||||
Other non-cash expense and loss (income and gain), net | 13.8 | 16.7 | 17.7 | 35.3 | ||||||||||||
Changes in assets and liabilities and other adjustments | (86.9 | ) | (201.0 | ) | (36.5 | ) | (187.3 | ) | ||||||||
Net cash provided by operating activities | 476.8 | 184.0 | 762.8 | 441.8 | ||||||||||||
Investing Activities | ||||||||||||||||
Purchases of property, plant and equipment | (83.8 | ) | (63.9 | ) | (130.6 | ) | (91.7 | ) | ||||||||
Purchases of software and other deferred charges | (6.4 | ) | (11.0 | ) | (9.8 | ) | (13.8 | ) | ||||||||
Proceeds from sales of property, plant and equipment | 1.0 | .1 | 1.1 | .2 | ||||||||||||
Proceeds from insurance and sales (purchases) of investments, net | .4 | (.4 | ) | 1.2 | 5.2 | |||||||||||
Proceeds from sale of product line | 6.7 | — | 6.7 | — | ||||||||||||
Payments for acquisitions, net of cash acquired, and investments in businesses | (33.8 | ) | (252.8 | ) | (1,474.3 | ) | (262.8 | ) | ||||||||
Net cash used in investing activities | (115.9 | ) | (328.0 | ) | (1,605.7 | ) | (362.9 | ) | ||||||||
Financing Activities | ||||||||||||||||
Net increase (decrease) in borrowings with maturities of three months or less | (36.2 | ) | 92.5 | 332.0 | (57.1 | ) | ||||||||||
Additional borrowings under revolving credit facility | — | 500.0 | — | 500.0 | ||||||||||||
Repayments of revolving credit facility | — | (500.0 | ) | — | (500.0 | ) | ||||||||||
Additional long-term borrowings | — | 493.7 | 791.9 | 493.7 | ||||||||||||
Repayments of long-term debt and finance leases | (3.1 | ) | (267.6 | ) | (8.0 | ) | (268.9 | ) | ||||||||
Dividends paid | (108.0 | ) | (96.8 | ) | (164.3 | ) | (145.2 | ) | ||||||||
Share repurchases | (95.0 | ) | (45.2 | ) | (126.0 | ) | (52.2 | ) | ||||||||
Net (tax withholding) proceeds related to stock-based compensation | (25.3 | ) | (20.5 | ) | (25.5 | ) | (20.0 | ) | ||||||||
Net cash (used in) provided by financing activities | (267.6 | ) | 156.1 | |||||||||||||
Net cash provided by (used in) financing activities | 800.1 | (49.7 | ) | |||||||||||||
Effect of foreign currency translation on cash balances | (.8 | ) | (3.2 | ) | (2.3 | ) | 1.8 | |||||||||
Increase (decrease) in cash and cash equivalents | 92.5 | 8.9 | (45.1 | ) | 31.0 | |||||||||||
Cash and cash equivalents, beginning of year | 252.3 | 253.7 | 252.3 | 253.7 | ||||||||||||
Cash and cash equivalents, end of period | $ | 344.8 | $ | 262.6 | $ | 207.2 | $ | 284.7 |
(In millions) | ||||
Cash and cash equivalents | $ | 23.9 | ||
Trade accounts receivable | 100.1 | |||
Other current assets | 29.9 | |||
Property, plant and equipment | 61.2 | |||
Goodwill | 761.8 | |||
Other intangibles resulting from business acquisition | 727.0 | |||
Other assets | 20.9 | |||
Total assets | 1,724.8 | |||
C urrent liabilities | 52.0 | |||
Other liabilities | 16.1 | |||
Deferred tax liabilities | 192.6 | |||
Total liabilities | 260.7 | |||
Net assets acquired | $ | 1,464.1 |
(In millions) | Label and Graphic Materials | Retail Branding and Information Solutions | Industrial and Healthcare Materials | Total | Label and Graphic Materials | Retail Branding and Information Solutions | Industrial and Healthcare Materials | Total | ||||||||||||||||||||||||
Goodwill as of January 2, 2021 | $ | 480.9 | $ | 471.8 | $ | 183.7 | $ | 1,136.4 | $ | 480.9 | $ | 471.8 | $ | 183.7 | $ | 1,136.4 | ||||||||||||||||
Acquisitions (1) | — | 17.9 | 6.8 | 24.7 | — | 779.7 | 6.9 | 786.6 | ||||||||||||||||||||||||
Acquisition adjustment (2) | 1.2 | — | — | 1.2 | 1.2 | — | — | 1.2 | ||||||||||||||||||||||||
Translation adjustments | (12.0 | ) | (4.2 | ) | (1.1 | ) | (17.3 | ) | (19.2 | ) | (6.8 | ) | (1.5 | ) | (27.5 | ) | ||||||||||||||||
Goodwill as of July 3, 2021 | $ | 470.1 | $ | 485.5 | $ | 189.4 | $ | 1,145.0 | ||||||||||||||||||||||||
Goodwill as of October 2, 2021 | $ | 462.9 | $ | 1,244.7 | $ | 189.1 | $ | 1,896.7 |
(1) | Goodwill acquired related to the acquisitions of Vestcom, JDC and ZippyYum. We expect nearly all of the recognized goodwill related to the Vestcom and JDC not to be deductible for income tax purposes and the recognized goodwill related to the ZippyYum acquisition to be deductible for income tax purposes. |
(2) | Measurement period adjustment related to the finalization of the purchase price allocation for the acquisition of ACPO, Ltd. completed in December 2020. |
Amount (in millions) | Amortization period (in years) | |||||||
Customer relationships | $ | 492.0 | 12 | |||||
Patented and other developed technology | 100.4 | 7 | ||||||
Trade names and trademarks (1) | 134.6 | N/A |
(1) | Acquired trade names and trademarks associated with the Vestcom acquisition were not subject to amortization as they were classified as indefinite-lived intangible assets. |
(In millions) | Accrual at January 2, 2021 | Charges, Net of Reversals | Cash Payments | Non-cash Impairment | Foreign Currency Translation | Accrual at July 3, 2021 | Accrual at January 2, 2021 | Charges, Net of Reversals | Cash Payments | Non-cash Impairment | Foreign Currency Translation | Accrual at October 2, 2021 | ||||||||||||||||||||||||||||||||||||
2019/2020 Actions | ||||||||||||||||||||||||||||||||||||||||||||||||
Severance and related costs | $ | 28.3 | $ | 4.1 | $ | (18.2 | ) | $ | — | $ | (.5 | ) | $ | 13.7 | $ | 28.3 | $ | 4.9 | $ | (22.7 | ) | $ | 0 | $ | (.7 | ) | $ | 9.8 | ||||||||||||||||||||
Asset impairment | — | .4 | — | (.4 | ) | — | — | 0 | 1.6 | 0 | (1.6 | ) | 0 | 0 | ||||||||||||||||||||||||||||||||||
Lease cancellation costs | 0 | .2 | (.2 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||
Total | $ | 28.3 | $ | 4.5 | $ | (18.2 | ) | $ | (.4 | ) | $ | (.5 | ) | $ | 13.7 | $ | 28.3 | $ | 6.7 | $ | (22.9 | ) | $ | (1.6 | ) | $ | (.7 | ) | $ | 9.8 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Restructuring charges, net of reversals, by reportable segment and Corporate | ||||||||||||||||||||||||||||||||
Label and Graphic Materials | $ | (.1 | ) | $ | 25.8 | $ | .6 | $ | 26.2 | $ | .8 | $ | 1.4 | $ | 1.4 | $ | 27.6 | |||||||||||||||
Retail Branding and Information Solutions | 1.4 | 12.2 | 3.0 | 13.7 | .8 | 2.9 | 3.8 | 16.6 | ||||||||||||||||||||||||
Industrial and Healthcare Materials | .5 | 1.5 | .5 | 2.0 | .3 | 6.6 | .8 | 8.6 | ||||||||||||||||||||||||
Corporate | (.1 | ) | (.2 | ) | .5 | (.2 | ) | .5 | 0 | 1.0 | (.2 | ) | ||||||||||||||||||||
Total | $ | 1.7 | $ | 39.3 | $ | 4.6 | $ | 41.7 | $ | 2.4 | $ | 10.9 | $ | 7.0 | $ | 52.6 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(Dollars in millions) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Income before taxes | $ | 255.3 | $ | 103.3 | $ | 524.2 | $ | 284.2 | $ | 224.4 | $ | 197.8 | $ | 748.6 | $ | 482.0 | ||||||||||||||||
Provision for (benefit from) income taxes | 70.4 | 22.2 | 128.5 | 68.5 | 59.2 | 46.3 | 187.7 | 114.8 | ||||||||||||||||||||||||
Effective tax rate | 27.6 | % | 21.5 | % | 24.5 | % | 24.1 | % | 26.4 | % | 23.4 | % | 25.1 | % | 23.8 | % |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions, except per share amounts) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
(A) Net income | $ | 183.8 | $ | 79.7 | $ | 393.3 | $ | 213.9 | $ | 164.1 | $ | 150.5 | $ | 557.4 | $ | 364.4 | ||||||||||||||||
(B) Weighted average number of common shares outstanding | 83.0 | 83.4 | 83.0 | 83.4 | 82.9 | 83.5 | 83.0 | 83.4 | ||||||||||||||||||||||||
Dilutive shares (additional common shares issuable under stock-based awards) | .8 | .4 | .9 | .5 | .8 | .5 | .9 | .6 | ||||||||||||||||||||||||
(C) Weighted average number of common shares outstanding, assuming dilution | 83.8 | 83.8 | 83.9 | 83.9 | 83.7 | 84.0 | 83.9 | 84.0 | ||||||||||||||||||||||||
Net income per common share: (A) ÷ (B) | $ | 2.21 | $ | .96 | $ | 4.74 | $ | 2.56 | $ | 1.98 | $ | 1.80 | $ | 6.72 | $ | 4.37 | ||||||||||||||||
Net income per common share, assuming dilution: (A) ÷ (C) | $ | 2.19 | $ | .95 | $ | 4.69 | $ | 2.55 | $ | 1.96 | $ | 1.79 | $ | 6.64 | $ | 4.34 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Common stock issued, $1 par value per share | $ | 124.1 | $ | 124.1 | $ | 124.1 | $ | 124.1 | $ | 124.1 | $ | 124.1 | $ | 124.1 | $ | 124.1 | ||||||||||||||||
Capital in excess of par value | ||||||||||||||||||||||||||||||||
Beginning balance | $ | 845.8 | $ | 852.5 | $ | 862.1 | $ | 874.0 | $ | 846.5 | $ | 840.0 | $ | 862.1 | $ | 874.0 | ||||||||||||||||
Issuance of shares under stock-based compensation plans (1) | .7 | (12.5 | ) | (15.6 | ) | (34.0 | ) | 8.3 | 10.3 | (7.3 | ) | (23.7 | ) | |||||||||||||||||||
Ending balance | $ | 846.5 | $ | 840.0 | $ | 846.5 | $ | 840.0 | $ | 854.8 | $ | 850.3 | $ | 854.8 | $ | 850.3 | ||||||||||||||||
Retained earnings | ||||||||||||||||||||||||||||||||
Beginning balance | $ | 3,504.4 | $ | 3,064.8 | $ | 3,349.3 | $ | 2,979.1 | $ | 3,637.3 | $ | 3,100.2 | $ | 3,349.3 | $ | 2,979.1 | ||||||||||||||||
Net income | 183.8 | 79.7 | 393.3 | 213.9 | 164.1 | 150.5 | 557.4 | 364.4 | ||||||||||||||||||||||||
Issuance of shares under stock-based compensation plans (1) | .6 | .9 | (7.1 | ) | (3.3 | ) | 0 | 0 | (7.1 | ) | (3.3 | ) | ||||||||||||||||||||
Contribution of shares to 401(k) Plan (1) | 4.9 | 3.2 | 9.8 | 7.3 | 4.6 | 3.2 | 14.4 | 10.5 | ||||||||||||||||||||||||
Dividends | (56.4 | ) | (48.4 | ) | (108.0 | ) | (96.8 | ) | (56.3 | ) | (48.4 | ) | (164.3 | ) | (145.2 | ) | ||||||||||||||||
Ending balance | $ | 3,637.3 | $ | 3,100.2 | $ | 3,637.3 | $ | 3,100.2 | $ | 3,749.7 | $ | 3,205.5 | $ | 3,749.7 | $ | 3,205.5 | ||||||||||||||||
Treasury stock at cost | ||||||||||||||||||||||||||||||||
Beginning balance | $ | (2,546.3 | ) | $ | (2,456.0 | ) | $ | (2,501.0 | ) | $ | (2,425.1 | ) | $ | (2,576.7 | ) | $ | (2,447.2 | ) | $ | (2,501.0 | ) | $ | (2,425.1 | ) | ||||||||
Repurchase of shares for treasury | (39.4 | ) | — | (95.0 | ) | (45.2 | ) | (31.0 | ) | (7.0 | ) | (126.0 | ) | (52.2 | ) | |||||||||||||||||
Issuance of shares under stock-based compensation plans (1) | 7.6 | 6.6 | 16.2 | 18.6 | .1 | .9 | 16.3 | 19.5 | ||||||||||||||||||||||||
Contribution of shares to 401(k) Plan (1) | 1.4 | 2.2 | 3.1 | 4.5 | 1.2 | 1.9 | 4.3 | 6.4 | ||||||||||||||||||||||||
Ending balance | $ | (2,576.7 | ) | $ | (2,447.2 | ) | $ | (2,576.7 | ) | $ | (2,447.2 | ) | $ | (2,606.4 | ) | $ | (2,451.4 | ) | $ | (2,606.4 | ) | $ | (2,451.4 | ) | ||||||||
Accumulated other comprehensive loss | ||||||||||||||||||||||||||||||||
Beginning balance | $ | (346.1 | ) | $ | (412.0 | ) | $ | (349.6 | ) | $ | (348.1 | ) | $ | (327.6 | ) | $ | (403.2 | ) | $ | (349.6 | ) | $ | (348.1 | ) | ||||||||
Other comprehensive income (loss), net of tax | 18.5 | 8.8 | 22.0 | (55.1 | ) | 4.6 | 9.3 | 26.6 | (45.8 | ) | ||||||||||||||||||||||
Ending balance | $ | (327.6 | ) | $ | (403.2 | ) | $ | (327.6 | ) | $ | (403.2 | ) | $ | (323.0 | ) | $ | (393.9 | ) | $ | (323.0 | ) | $ | (393.9 | ) |
(1) | We fund a portion of our employee-related expenses using shares of our common stock held in treasury. We reduce capital in excess of par value based on the grant date fair value of the awards vested and record net gains or losses associated with using treasury shares to retained earnings. |
Three Months Ended | Six Months Ended | |||||||||||||||
July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | |||||||||||||
Dividends per common shar e | $ | .68 | $ | .58 | $ | 1.30 | $ | 1.16 |
Three Months Ended | Nine Months Ended | |||||||||||||||
October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | |||||||||||||
Dividends per common share | $ | .68 | $ | .58 | $ | 1.98 | $ | 1.74 |
(In millions) | Foreign Currency Translation | Pension and Other Postretirement Benefits | Cash Flow Hedges | Total | Foreign Currency Translation | Pension and Other Postretirement Benefits | Cash Flow Hedges | Total | ||||||||||||||||||||||||
Balance as of January 2, 2021 | $ | (248.1 | ) | $ | (92.7 | ) | $ | (8.8 | ) | $ | (349.6 | ) | $ | (248.1 | ) | $ | (92.7 | ) | $ | (8.8 | ) | $ | (349.6 | ) | ||||||||
Other comprehensive income (loss) before reclassifications, net of tax | 17.7 | — | 3.5 | 21.2 | 19.1 | — | 4.4 | 23.5 | ||||||||||||||||||||||||
Reclassifications to net income, net of tax | — | 2.0 | (1.2 | ) | .8 | — | 3.3 | (.2 | ) | 3.1 | ||||||||||||||||||||||
Other comprehensive income (loss), net of tax | 17.7 | 2.0 | 2.3 | 22.0 | 19.1 | 3.3 | 4.2 | 26.6 | ||||||||||||||||||||||||
Balance as of July 3, 2021 | $ | (230.4 | ) | $ | (90.7 | ) | $ | (6.5 | ) | $ | (327.6 | ) | ||||||||||||||||||||
Balance as of October 2, 2021 | $ | (229.0 | ) | $ | (89.4 | ) | $ | (4.6 | ) | $ | (323.0 | ) |
(In millions) | Foreign Currency Translation | Pension and Other Postretirement Benefits | Cash Flow Hedges | Total | Foreign Currency Translation | Pension and Other Postretirement Benefits | Cash Flow Hedges | Total | ||||||||||||||||||||||||
Balance as of December 28, 2019 | $ | (245.1 | ) | $ | (101.8 | ) | $ | (1.2 | ) | $ | (348.1 | ) | $ | (245.1 | ) | $ | (101.8 | ) | $ | (1.2 | ) | $ | (348.1 | ) | ||||||||
Other comprehensive income (loss) before reclassifications, net of tax | (55.0 | ) | — | (1.5 | ) | (56.5 | ) | (45.5 | ) | — | (2.3 | ) | (47.8 | ) | ||||||||||||||||||
Reclassifications to net income, net of tax | — | 1.3 | .1 | 1.4 | — | 1.9 | .1 | 2.0 | ||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | (55.0 | ) | 1.3 | (1.4 | ) | (55.1 | ) | (45.5 | ) | 1.9 | (2.2 | ) | (45.8 | ) | ||||||||||||||||||
Balance as of June 27, 2020 | $ | (300.1 | ) | $ | (100.5 | ) | $ | (2.6 | ) | $ | (403.2 | ) | ||||||||||||||||||||
Balance as of September 26, 2020 | $ | (290.6 | ) | $ | (99.9 | ) | $ | (3.4 | ) | $ | (393.9 | ) |
Fair Value Measurements Using | Fair Value Measurements Using | |||||||||||||||||||||||||||||||
(In millions) | Total | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | Total | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Investments | $ | 33.9 | $ | 27.0 | $ | 6.9 | $ | — | $ | 33.9 | $ | 27.0 | $ | 6.9 | $ | — | ||||||||||||||||
Derivative assets | 9.3 | .6 | 8.7 | — | 13.7 | 1.7 | 12.0 | — | ||||||||||||||||||||||||
Bank drafts | 12.4 | 12.4 | — | — | 13.6 | 13.6 | — | — | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Cross-currency swap | $ | 25.2 | $ | — | $ | 25.2 | $ | — | $ | 18.9 | $ | — | $ | 18.9 | $ | — | ||||||||||||||||
Derivative liabilities | 5.8 | 0 | 5.8 | — | 7.3 | — | 7.3 | — | ||||||||||||||||||||||||
Contingent consideration liabilities | 10.4 | — | — | 10.4 | 10.4 | — | — | 10.4 |
Fair Value Measurements Using | ||||||||||||||||
(In millions) | Total | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||
Assets | ||||||||||||||||
Investments | $ | 33.6 | $ | 27.4 | $ | 6.2 | $ | — | ||||||||
Derivative assets | 5.2 | .1 | 5.1 | — | ||||||||||||
Bank drafts | 12.8 | 12.8 | — | — | ||||||||||||
Liabilities | ||||||||||||||||
Cross-currency swap | $ | 36.7 | $ | — | $ | 36.7 | $ | — | ||||||||
Derivative liabilities | 9.5 | .3 | 9.2 | — |
(In millions) | ||||||||
Acquisition | $ | 11.6 | $ | 11.6 | ||||
Payments | (1.2 | ) | (1.2 | ) | ||||
Balance at July 3, 2021 | $ | 10.4 | ||||||
Balance at October 2, 2021 | $ | 10.4 |
(In millions) | ||||||||
Balance at January 2, 2021 | $ | 21.1 | $ | 21.1 | ||||
Charges, net of reversals | .9 | 1.3 | ||||||
Payments | (1.2 | ) | (1.6 | ) | ||||
Balance at July 3, 2021 | $ | 20.8 | ||||||
Balance at October 2, 2021 | $ | 20.8 |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Net sales to unaffiliated customers | ||||||||||||||||||||||||||||||||
Label and Graphic Materials: | ||||||||||||||||||||||||||||||||
U.S. | $ | 357.7 | $ | 315.1 | $ | 722.6 | $ | 643.2 | $ | 372.1 | $ | 320.7 | $ | 1,094.7 | $ | 963.9 | ||||||||||||||||
Europe, Middle East and North Africa | 535.9 | 422.3 | 1,051.5 | 867.6 | 499.3 | 404.6 | 1,550.8 | 1,272.2 | ||||||||||||||||||||||||
Asia | 297.9 | 230.7 | 621.0 | 472.0 | 289.4 | 264.4 | 910.4 | 736.4 | ||||||||||||||||||||||||
Latin America | 100.9 | 70.9 | 196.4 | 161.1 | 103.6 | 84.1 | 300.0 | 245.2 | ||||||||||||||||||||||||
Other international | 83.8 | 62.5 | 161.7 | 131.1 | 81.4 | 71.6 | 243.1 | 202.7 | ||||||||||||||||||||||||
Total Label and Graphic Materials | 1,376.2 | 1,101.5 | 2,753.2 | 2,275.0 | 1,345.8 | 1,145.4 | 4,099.0 | 3,420.4 | ||||||||||||||||||||||||
Retail Branding and Information Solutions: | ||||||||||||||||||||||||||||||||
Apparel | 469.6 | 255.0 | 898.0 | 613.6 | 436.5 | 371.5 | 1,334.5 | 985.1 | ||||||||||||||||||||||||
Printer Solutions | 59.7 | 39.9 | 114.0 | 83.2 | ||||||||||||||||||||||||||||
Identification Solutions (1) | 94.2 | 54.6 | 208.2 | 137.8 | ||||||||||||||||||||||||||||
Total Retail Branding and Information Solutions | 529.3 | 294.9 | 1,012.0 | 696.8 | 530.7 | 426.1 | 1,542.7 | 1,122.9 | ||||||||||||||||||||||||
Industrial and Healthcare Materials | 196.5 | 132.1 | 388.1 | 279.7 | 195.3 | 157.6 | 583.4 | 437.3 | ||||||||||||||||||||||||
Net sales to unaffiliated customers | $ | 2,102.0 | $ | 1,528.5 | $ | 4,153.3 | $ | 3,251.5 | $ | 2,071.8 | $ | 1,729.1 | $ | 6,225.1 | $ | 4,980.6 |
(1) | Previously referred to as Printer Solutions |
Three Months Ended | Six Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||||||||||||||
Intersegment sales | ||||||||||||||||||||||||||||||||
Label and Graphic Materials | $ | 24.7 | $ | 12.9 | $ | 46.3 | $ | 35.3 | $ | 24.8 | $ | 19.8 | $ | 71.1 | $ | 55.1 | ||||||||||||||||
Retail Branding and Information Solutions | 9.4 | 5.6 | 17.7 | 12.1 | 10.4 | 7.3 | 28.1 | 19.4 | ||||||||||||||||||||||||
Industrial and Healthcare Materials | 2.2 | 1.2 | 4.3 | 2.8 | 3.7 | 2.0 | 8.0 | 4.8 | ||||||||||||||||||||||||
Intersegment sales | $ | 36.3 | $ | 19.7 | $ | 68.3 | $ | 50.2 | $ | 38.9 | $ | 29.1 | $ | 107.2 | $ | 79.3 | ||||||||||||||||
Income before taxes | ||||||||||||||||||||||||||||||||
Label and Graphic Materials | $ | 228.1 | $ | 137.5 | $ | 454.3 | $ | 310.0 | $ | 184.9 | $ | 173.1 | $ | 639.2 | $ | 483.1 | ||||||||||||||||
Retail Branding and Information Solutions | 42.1 | (10.7 | ) | 102.1 | 20.2 | 58.5 | 47.0 | 160.6 | 67.2 | |||||||||||||||||||||||
Industrial and Healthcare Materials | 22.5 | 7.5 | 46.0 | 22.4 | 18.7 | 12.5 | 64.7 | 34.9 | ||||||||||||||||||||||||
Corporate expense | (22.8 | ) | (10.8 | ) | (48.7 | ) | (29.9 | ) | (20.6 | ) | (19.1 | ) | (69.3 | ) | (49.0 | ) | ||||||||||||||||
Interest expense | (16.0 | ) | (20.0 | ) | (32.2 | ) | (38.8 | ) | (18.0 | ) | (15.6 | ) | (50.2 | ) | (54.4 | ) | ||||||||||||||||
Other non-operating expense (income), net | 1.4 | (.2 | ) | 2.7 | .3 | .9 | (.1 | ) | 3.6 | .2 | ||||||||||||||||||||||
Income before taxes | $ | 255.3 | $ | 103.3 | $ | 524.2 | $ | 284.2 | $ | 224.4 | $ | 197.8 | $ | 748.6 | $ | 482.0 | ||||||||||||||||
Other expense (income), net, by reportable segment and Corporate | ||||||||||||||||||||||||||||||||
Label and Graphic Materials | $ | (28.5 | ) | $ | 25.8 | $ | (30.4 | ) | $ | 26.9 | $ | .2 | $ | 1.4 | $ | (30.2 | ) | $ | 28.3 | |||||||||||||
Retail Branding and Information Solutions | 27.5 | 12.9 | 29.6 | 16.2 | 14.6 | 4.4 | 44.2 | 20.6 | ||||||||||||||||||||||||
Industrial and Healthcare Materials | .5 | 1.5 | .6 | 2.0 | .7 | 6.6 | 1.3 | 8.6 | ||||||||||||||||||||||||
Corporate | (.1 | ) | (.2 | ) | .5 | (.2 | ) | .5 | 0 | 1.0 | (.2 | ) | ||||||||||||||||||||
Other expense (income), net | $ | (.6 | ) | $ | 40.0 | $ | .3 | $ | 44.9 | $ | 16.0 | $ | 12.4 | $ | 16.3 | $ | 57.3 | |||||||||||||||
Other expense (income), net, by type | ||||||||||||||||||||||||||||||||
Restructuring charges: | ||||||||||||||||||||||||||||||||
Severance and related costs | $ | 1.6 | $ | 37.5 | $ | 4.0 | $ | 39.9 | $ | 1.1 | $ | 6.5 | $ | 5.1 | $ | 46.4 | ||||||||||||||||
Asset impairment charges and lease cancellation costs | .1 | 1.8 | .6 | 1.8 | 1.3 | 4.4 | 1.9 | 6.2 | ||||||||||||||||||||||||
Other items: | ||||||||||||||||||||||||||||||||
Transaction and related costs | 19.4 | 0 | 20.1 | 3.2 | ||||||||||||||||||||||||||||
Loss on sale of assets, net | .2 | 0 | .2 | 0 | 0 | 0 | .2 | 0 | ||||||||||||||||||||||||
Transaction and related costs | 0 | .7 | .7 | 3.2 | ||||||||||||||||||||||||||||
(Gain) loss on investments | (4.9 | ) | 1.5 | (4.9 | ) | 1.5 | ||||||||||||||||||||||||||
Gain on sale of product line | 0 | 0 | (4.8 | ) | 0 | (.9 | ) | 0 | (5.7 | ) | 0 | |||||||||||||||||||||
Outcomes of legal proceedings, net (1) | (2.5 | ) | 0 | (.4 | ) | 0 | 0 | 0 | (.4 | ) | 0 | |||||||||||||||||||||
Other expense (income), net | $ | (.6 | ) | $ | 40.0 | $ | .3 | $ | 44.9 | $ | 16.0 | $ | 12.4 | $ | 16.3 | $ | 57.3 |
(1) | of $29.1 million, partially offset by a contingent liability related to a $26.6 million. Refer to Note 12, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements for more information related to the patent infringement lawsuit. |
(In millions) | July 3, 2021 | January 2, 2021 | October 2, 2021 | January 2, 2021 | ||||||||||||
Raw materials | $ | 330.8 | $ | 268.6 | $ | 367.3 | $ | 268.6 | ||||||||
Work-in-progress | 231.1 | 210.3 | 228.9 | 210.3 | ||||||||||||
Finished goods | 262.9 | 238.3 | 282.9 | 238.3 | ||||||||||||
Inventories, net | $ | 824.8 | $ | 717.2 | $ | 879.1 | $ | 717.2 |
(In millions) | July 3, 2021 | January 2, 2021 | ||||||
Property, plant and equipment | $ | 3,490.8 | $ | 3,476.3 | ||||
Accumulated depreciation | (2,146.0 | ) | (2,132.6 | ) | ||||
Property, plant and equipment, net | $ | 1,344.8 | $ | 1,343.7 |
(In millions) | October 2, 2021 | January 2, 2021 | ||||||
Property, plant and equipment | $ | 3,536.4 | $ | 3,476.3 | ||||
Accumulated depreciation | (2,130.9 | ) | (2,132.6 | ) | ||||
Property, plant and equipment, net | $ | 1,405.5 | $ | 1,343.7 |
The activity related to our allowance for credit losses is shown below. | ||||||||||||||||
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Beginning balance | $ | 44.6 | $ | 27.1 | $ | 44.6 | $ | 27.1 | ||||||||
(Reversal of) provision for credit losses (1) | (2.7 | ) | 20.6 | (4.8 | ) | 20.0 | ||||||||||
Amounts written off | (2.5 | ) | (1.4 | ) | (3.1 | ) | (2.3 | ) | ||||||||
Other, including foreign currency translation | — | .1 | .3 | 1.0 | ||||||||||||
Ending balance | $ | 39.4 | $ | 46.4 | $ | 37.0 | $ | 45.8 |
(1) | For the COVID-19. |
● | Sales change ex. currency |
● | Organic sales change |
● | Free cash flow |
● | Operational working capital as a percentage of annualized current quarter net sales held-for-sale day-to-day |
Three Months Ended July 3, 2021 | Six Months Ended July 3, 2021 | Three Months Ended October 2, 2021 | Nine Months Ended October 2, 2021 | |||||||||||||
Reported sales change | 38 | % | 28 | % | 20 | % | 25 | % | ||||||||
Foreign currency translation Extra week impact | | (8 — | ) | | (6 (2 | ) ) | | (3 — | ) | | (5 (1 | ) ) | ||||
Sales change ex. currency (1) | 29 | 19 | 17 | 19 | ||||||||||||
Acquisitions and product line exit | (1 | ) | (2 | ) | ||||||||||||
Acquisitions and product line divestitures | (3 | ) | (2 | ) | ||||||||||||
Organic sales change (1) | 28 | % | 18 | % | 14 | % | 17 | % |
(1) | Totals may not sum due to rounding |
● | Higher volume/mix |
● | Favorable currency translation |
● | Benefits from productivity initiatives, including savings from restructuring actions, net of transition costs |
● | Benefit from the Brazil indirect tax credit |
● |
Lower allowances for credit losses |
● | Higher employee-related costs |
● | The impact of |
● | Higher tax provision |
● | Net impact of |
● | Contingent liability related to patent infringement |
● | Higher transaction and related costs |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net cash provided by operating activities | $ | 476.8 | $ | 184.0 | $ | 762.8 | $ | 441.8 | ||||||||
Purchases of property, plant and equipment | (83.8 | ) | (63.9 | ) | (130.6 | ) | (91.7 | ) | ||||||||
Purchases of software and other deferred charges | (6.4 | ) | (11.0 | ) | (9.8 | ) | (13.8 | ) | ||||||||
Proceeds from sales of property, plant and equipment | 1.0 | .1 | 1.1 | .2 | ||||||||||||
Proceeds from insurance and sales (purchases) of investments, net | .4 | (.4 | ) | 1.2 | 5.2 | |||||||||||
Payments for certain acquisition-related transaction costs | 14.5 | — | ||||||||||||||
Free cash flow | $ | 388.0 | $ | 108.8 | $ | 639.2 | $ | 341.7 |
● | We expect net sales to increase by approximately |
● | We expect closed acquisitions to |
● | Based on recent exchange rates, we expect foreign currency translation to increase our operating income by approximately |
● | We expect incremental savings from restructuring actions, net of transition costs, |
● | We expect the pace of our investments in our businesses to accelerate throughout the year. |
● | We expect our full year effective tax rate to be in the mid-twenty percent range. |
● | We expect net cash provided by operating activities and free cash flow to increase. |
Three Months Ended | ||||||||
(In millions, except percentages) | October 2, 2021 | September 26, 2020 | ||||||
Net sales | $ | 2,071.8 | $ | 1,729.1 | ||||
Cost of products sold | 1,517.4 | 1,244.9 | ||||||
Gross profit | 554.4 | 484.2 | ||||||
Marketing, general and administrative expense | 296.9 | 258.3 | ||||||
Other expense (income), net | 16.0 | 12.4 | ||||||
Interest expense | 18.0 | 15.6 | ||||||
Other non-operating expense (income), net | (.9 | ) | .1 | |||||
Income before taxes | $ | 224.4 | $ | 197.8 | ||||
Gross profit margin | 26.8 | % | 28.0 | % |
Three Months Ended | ||||||||
(In millions, except percentages) | July 3, 2021 | June 27, 2020 | ||||||
Net sales | $ | 2,102.0 | $ | 1,528.5 | ||||
Cost of products sold | 1,525.7 | 1,145.6 | ||||||
Gross profit | 576.3 | 382.9 | ||||||
Marketing, general and administrative expense | 307.0 | 219.4 | ||||||
Other expense (income), net | (.6 | ) | 40.0 | |||||
Interest expense | 16.0 | 20.0 | ||||||
Other non-operating expense (income), net | (1.4 | ) | .2 | |||||
Income before taxes | $ | 255.3 | $ | 103.3 | ||||
Gross profit margin | 27.4 | % | 25.1 | % |
Three Months Ended | Three Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Other expense (income), net, by type | ||||||||||||||||
Restructuring charges: | ||||||||||||||||
Severance and related costs | $ | 1.6 | $ | 37.5 | $ | 1.1 | $ | 6.5 | ||||||||
Asset impairment charges and lease cancellation costs | .1 | 1.8 | 1.3 | 4.4 | ||||||||||||
Other items: | ||||||||||||||||
Loss on sale of assets, net | .2 | — | ||||||||||||||
Outcomes of legal proceedings, net | (2.5 | ) | — | |||||||||||||
Transaction and related costs | — | .7 | 19.4 | — | ||||||||||||
(Gain) loss on investments | (4.9 | ) | 1.5 | |||||||||||||
Gain on sale of product line | — | — | (.9 | ) | — | |||||||||||
Other expense (income), net | $ | (.6 | ) | $ | 40.0 | $ | 16.0 | $ | 12.4 |
Three Months Ended | Three Months Ended | |||||||||||||||
(In millions, except per share amounts and percentages) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Income before taxes | $ | 255.3 | $ | 103.3 | $ | 224.4 | $ | 197.8 | ||||||||
Provision for (benefit from) income taxes | 70.4 | 22.2 | 59.2 | 46.3 | ||||||||||||
Equity method investment (losses) gains | (1.1 | ) | (1.4 | ) | (1.1 | ) | (1.0 | ) | ||||||||
Net income | $ | 183.8 | $ | 79.7 | $ | 164.1 | $ | 150.5 | ||||||||
Per share amounts: | ||||||||||||||||
Net income per common share | $ | 2.21 | $ | .96 | $ | 1.98 | $ | 1.80 | ||||||||
Net income per common share, assuming dilution | 2.19 | .95 | 1.96 | 1.79 | ||||||||||||
Effective tax rate | 27.6 | % | 21.5 | % | 26.4 | % | 23.4 | % |
Three Months Ended | Three Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net sales including intersegment sales | $ | 1,400.9 | $ | 1,114.4 | $ | 1,370.6 | $ | 1,165.2 | ||||||||
Less intersegment sales | (24.7 | ) | (12.9 | ) | (24.8 | ) | (19.8 | ) | ||||||||
Net sales | $ | 1,376.2 | $ | 1,101.5 | $ | 1,345.8 | $ | 1,145.4 | ||||||||
Operating income (1) | 228.1 | 137.5 | 184.9 | 173.1 | ||||||||||||
(1) Included charges associated with restructuring actions in both years and outcomes of legal proceedings in 2021. | $ | (28.5 | ) | $ | 25.8 | |||||||||||
(1) Included charges associated with restructuring actions in both years, transaction and related costs and gain on sale of product line in 2021. | $ | .2 | $ | 1.4 |
Three Months Ended October 2, 2021 | ||||
Reported sales change | % | |||
Foreign currency translation | ( | ) | ||
Sales change ex. currency (1) | ||||
Acquisitions and product line | (1 | ) | ||
Organic sales change (1) | % |
Three Months Ended | Three Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net sales including intersegment sales | $ | 538.7 | $ | 300.5 | $ | 541.1 | $ | 433.4 | ||||||||
Less intersegment sales | (9.4 | ) | (5.6 | ) | (10.4 | ) | (7.3 | ) | ||||||||
Net sales | $ | 529.3 | $ | 294.9 | $ | 530.7 | $ | 426.1 | ||||||||
Operating income (loss) (1) | 42.1 | (10.7) | ||||||||||||||
(1) Included charges associated with restructuring actions in both years, loss on sale of asset and outcomes of legal proceedings in 2021, and transaction and related costs in 2020. | $ | 27.5 | $ | 12.9 | ||||||||||||
Operating income (1) | 58.5 | 47.0 | ||||||||||||||
(1) Included charges associated with restructuring actions and gain on investments and transaction and related costs in 2021, and loss on investments in 2020. | $ | 14.6 | $ | 4.4 |
Three Months Ended | ||||
Reported sales change | % | |||
Foreign currency translation | ( | ) | ||
Sales change ex. currency (1) | ||||
Acquisitions | ) | |||
Organic sales change (1) | % |
(1) | Totals may not sum due to rounding |
Three Months Ended | Three Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net sales including intersegment sales | $ | 198.7 | $ | 133.3 | $ | 199.0 | $ | 159.6 | ||||||||
Less intersegment sales | (2.2 | ) | (1.2 | ) | (3.7 | ) | (2.0 | ) | ||||||||
Net sales | $ | 196.5 | $ | 132.1 | $ | 195.3 | $ | 157.6 | ||||||||
Operating income (1) | 22.5 | 7.5 | 18.7 | 12.5 | ||||||||||||
(1) Included charges associated with restructuring actions in both years. | $ | .5 | $ | 1.5 | ||||||||||||
(1) Included charges associated with restructuring actions in both years and transaction and related costs in 2021. | $ | .7 | $ | 6.6 |
Three Months Ended October 2, 2021 | ||||
Reported sales change | % | |||
Foreign currency translation | ( | ) | ||
Sales change ex. currency (1) | ||||
Acquisitions | ( | ) | ||
Organic sales change (1) | % |
Nine Months Ended | ||||||||
(In millions, except percentages) | October 2, 2021 | September 26, 2020 | ||||||
Net sales | $ | 6,225.1 | $ | 4,980.6 | ||||
Cost of products sold | 4,497.4 | 3,628.4 | ||||||
Gross profit | 1,727.7 | 1,352.2 | ||||||
Marketing, general and administrative expense | 916.2 | 758.7 | ||||||
Other expense (income), net | 16.3 | 57.3 | ||||||
Interest expense | 50.2 | 54.4 | ||||||
Other non-operating expense (income), net | (3.6 | ) | (.2 | ) | ||||
Income before taxes | $ | 748.6 | $ | 482.0 | ||||
Gross profit margin | 27.8 | % | 27.1 | % |
Six Months Ended | ||||||||
(In millions, except percentages) | July 3, 2021 | June 27, 2020 | ||||||
Net sales | $ | 4,153.3 | $ | 3,251.5 | ||||
Cost of products sold | 2,980.0 | 2,383.5 | ||||||
Gross profit | 1,173.3 | 868.0 | ||||||
Marketing, general and administrative expense | 619.3 | 500.4 | ||||||
Other expense (income), net | .3 | 44.9 | ||||||
Interest expense | 32.2 | 38.8 | ||||||
Other non-operating expense (income), net | (2.7 | ) | (.3 | ) | ||||
Income before taxes | $ | 524.2 | $ | 284.2 | ||||
Gross profit margin | 28.2 | % | 26.7 | % |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Other expense (income), net, by type | ||||||||||||||||
Restructuring charges: | ||||||||||||||||
Severance and related costs | $ | 4.0 | $ | 39.9 | $ | 5.1 | $ | 46.4 | ||||||||
Asset impairment charges and lease cancellation costs | .6 | 1.8 | 1.9 | 6.2 | ||||||||||||
Other items: | ||||||||||||||||
Transaction and related costs | 20.1 | 3.2 | ||||||||||||||
Loss on sale of assets, net | .2 | — | .2 | — | ||||||||||||
Transaction and related costs | .7 | 3.2 | ||||||||||||||
(Gain) loss on investment | (4.9 | ) | 1.5 | |||||||||||||
Gain on sale of product line | (4.8 | ) | — | (5.7 | ) | — | ||||||||||
Outcomes of legal proceedings, net | (.4 | ) | — | (.4 | ) | — | ||||||||||
Other expense (income), net | $ | .3 | $ | 44.9 | $ | 16.3 | $ | 57.3 |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions, except per share amounts and percentages) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Income before taxes | $ | 524.2 | $ | 284.2 | $ | 748.6 | $ | 482.0 | ||||||||
Provision for (benefit from) income taxes | 128.5 | 68.5 | 187.7 | 114.8 | ||||||||||||
Equity method investment (losses) gains | (2.4 | ) | (1.8 | ) | (3.5 | ) | (2.8 | ) | ||||||||
Net income | $ | 393.3 | $ | 213.9 | $ | 557.4 | $ | 364.4 | ||||||||
Per share amounts: | ||||||||||||||||
Net income per common share | $ | 4.74 | $ | 2.56 | $ | 6.72 | $ | 4.37 | ||||||||
Net income per common share, assuming dilution | 4.69 | 2.55 | 6.64 | 4.34 | ||||||||||||
Effective tax rate | 24.5 | % | 24.1 | % | 25.1 | % | 23.8 | % |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net sales including intersegment sales | $ | 2,799.5 | $ | 2,310.3 | $ | 4,170.1 | $ | 3,475.5 | ||||||||
Less intersegment sales | (46.3 | ) | (35.3 | ) | (71.1 | ) | (55.1 | ) | ||||||||
Net sales | $ | 2,753.2 | $ | 2,275.0 | $ | 4,099.0 | $ | 3,420.4 | ||||||||
Operating income (1) | 454.3 | 310.0 | 639.2 | 483.1 | ||||||||||||
(1) Included charges associated with restructuring actions and transaction and related costs in both years, and outcomes of legal proceedings and gain on sale of product line in 2021. | $ | (30.4 | ) | $ | 26.9 | $ | (30.2 | ) | $ | 28.3 |
Nine Months Ended October 2, 2021 | ||||
Reported sales change | 20 | % | ||
Foreign currency translation Extra week impact | | (5 (1 | ) ) | |
Sales change ex. currency (1) | 13 | |||
Acquisitions and product line divestitures | (1 | ) | ||
Organic sales change (1) | 12 | % |
Nine Months Ended | ||||||||
(In millions) | October 2, 2021 | September 26, 2020 | ||||||
Net sales including intersegment sales | $ | 1,570.8 | $ | 1,142.3 | ||||
Less intersegment sales | (28.1 | ) | (19.4 | ) | ||||
Net sales | $ | 1,542.7 | $ | 1,122.9 | ||||
Operating income (1) | 160.6 | 67.2 | ||||||
(1) Included charges associated with restructuring actions and transaction and related costs in both years, outcome of legal proceedings, loss on sale of asset and gain on investments in 2021, and loss on investments in 2020. | $ | 44.2 | $ | 20.6 |
Reported sales change | % | |||
Foreign currency translation | (3 | ) | ||
Extra week impact | | ( | ) | |
Sales change ex. currency (1) | ||||
Acquisitions | ( | ) | ||
Organic sales change (1) | % |
Six Months Ended | ||||||||
(In millions) | July 3, 2021 | June 27, 2020 | ||||||
Net sales including intersegment sales | $ | 1,029.7 | $ | 708.9 | ||||
Less intersegment sales | (17.7 | ) | (12.1 | ) | ||||
Net sales | $ | 1,012.0 | $ | 696.8 | ||||
Operating income (1) | 102.1 | 20.2 | ||||||
(1) Included charges associated with restructuring actions and transaction and related costs in both years, outcomes of legal proceedings and loss on sale of asset in 2021. | $ | 29.6 | $ | 16.2 |
July 3, 2021 | ||||
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net sales including intersegment sales | $ | 392.4 | $ | 282.5 | $ | 591.4 | $ | 442.1 | ||||||||
Less intersegment sales | (4.3 | ) | (2.8 | ) | (8.0 | ) | (4.8 | ) | ||||||||
Net sales | $ | 388.1 | $ | 279.7 | $ | 583.4 | $ | 437.3 | ||||||||
Operating income (1) | 46.0 | 22.4 | 64.7 | 34.9 | ||||||||||||
(1) Included charges associated with restructuring actions and transaction related costs in both years and gain on sale of assets in 2021. | $ | .6 | $ | 2.0 | ||||||||||||
(1) Included charges associated with restructuring actions in both years and transaction and related costs and gain on sale of assets in 2021. | $ | 1.3 | $ | 8.6 |
Reported sales change | % | |||
Foreign currency translation | ( | ) | ||
Extra week impact | ( | ) | ||
Sales change ex. currency (1) | ||||
Acquisitions | ( | ) | ||
Organic sales change (1) | % |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net income | $ | 393.3 | $ | 213.9 | $ | 557.4 | $ | 364.4 | ||||||||
Depreciation | 80.8 | 74.6 | 122.9 | 113.7 | ||||||||||||
Amortization | 28.8 | 23.2 | 48.6 | 36.1 | ||||||||||||
Provision for credit losses and sales returns | 17.5 | 38.8 | 26.1 | 50.4 | ||||||||||||
Stock-based compensation | 18.5 | 1.4 | 27.1 | 12.1 | ||||||||||||
Pension plan settlement loss | .4 | — | 1.0 | — | ||||||||||||
Deferred taxes and other non-cash taxes | 10.6 | 16.4 | (1.5 | ) | 17.1 | |||||||||||
Other non-cash expense and loss (income and gain), net | 13.8 | 16.7 | 17.7 | 35.3 | ||||||||||||
Changes in assets and liabilities and other adjustments | (86.9 | ) | (201.0 | ) | (36.5 | ) | (187.3 | ) | ||||||||
Net cash provided by operating activities | $ | 476.8 | $ | 184.0 | $ | 762.8 | $ | 441.8 |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Purchases of property, plant and equipment | $ | (83.8 | ) | $ | (63.9 | ) | $ | (130.6 | ) | $ | (91.7 | ) | ||||
Purchases of software and other deferred charges | (6.4 | ) | (11.0 | ) | (9.8 | ) | (13.8 | ) | ||||||||
Proceeds from sales of property, plant and equipment | 1.0 | .1 | 1.1 | .2 | ||||||||||||
Proceeds from insurance and sales (purchases) of investments, net | .4 | (.4 | ) | 1.2 | 5.2 | |||||||||||
Proceeds from sale of product line | 6.7 | — | 6.7 | — | ||||||||||||
Payments for acquisitions, net of cash acquired, and investments in businesses | (33.8 | ) | (252.8 | ) | (1,474.3 | ) | (262.8 | ) | ||||||||
Net cash used in investing activities | $ | (115.9 | ) | $ | (328.0 | ) | $ | (1,605.7 | ) | $ | (362.9 | ) |
Six Months Ended | Nine Months Ended | |||||||||||||||
(In millions) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
Net increase (decrease) in borrowings with maturities of three months or less | $ | (36.2 | ) | $ | 92.5 | $ | 332.0 | $ | (57.1 | ) | ||||||
Additional borrowings under revolving credit facility | — | 500.0 | — | 500.0 | ||||||||||||
Repayments of revolving credit facility | — | (500.0 | ) | — | (500.0 | ) | ||||||||||
Additional long-term borrowings | — | 493.7 | 791.9 | 493.7 | ||||||||||||
Repayments of long-term debt and finance leases | (3.1 | ) | (267.6 | ) | (8.0 | ) | (268.9 | ) | ||||||||
Dividends paid | (108.0 | ) | (96.8 | ) | (164.3 | ) | (145.2 | ) | ||||||||
Share repurchases | (95.0 | ) | (45.2 | ) | (126.0 | ) | (52.2 | ) | ||||||||
Net (tax withholding) proceeds related to stock-based compensation | (25.3 | ) | (20.5 | ) | (25.5 | ) | (20.0 | ) | ||||||||
Net cash (used in) provided by financing activities | $ | (267.6 | ) | $ | 156.1 | $ | 800.1 | $ | (49.7 | ) |
(In millions) | Six Months Ended July 3, 2021 | Nine Months Ended October 2, 2021 | ||||||
Change in net sales | $ | 159 | $ | 169 |
(In millions, except percentages) | July 3, 2021 | June 27, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
( | $ | 659.1 | $ | 415.1 | $ | 169.1 | $ | 558.5 | ||||||||
Reconciling items: | ||||||||||||||||
Cash and cash equivalents | (344.8 | ) | (262.6 | ) | (207.2 | ) | (284.7 | ) | ||||||||
Other current assets | (233.1 | ) | (220.8 | ) | (251.0 | ) | (214.5 | ) | ||||||||
Short-term borrowings and current portion of long-term debt and finance leases | 33.6 | 268.6 | 398.8 | 124.1 | ||||||||||||
Accrued payroll and employee benefits and other current liabilities | 822.4 | 684.4 | 942.4 | 759.1 | ||||||||||||
( | $ | 937.2 | $ | 884.7 | $ | 1,052.1 | $ | 942.5 | ||||||||
( | $ | 8,408.0 | $ | 6,114.0 | ||||||||||||
( (1) | $ | 8,523.4 | $ | 6,916.4 | ||||||||||||
Operational working capital, as a percentage of annualized current-quarter net sales: (B) ÷ (C) | 11.1 | % | 14.5 | % | 12.3 | % | 13.6 | % |
(a) | Not Applicable |
(b) | Not Applicable |
(c) | Repurchases of Equity Securities by Issuer |
Period (1) | Total number of shares purchased (2) | Average price paid per share | Total number of shares purchased as part of publicly announced plans (2)(3) | Approximate dollar value of shares that may yet be purchased under the plans (4) | ||||||||||||
April 4, 2021 – May 1, 2021 | 59.4 | $ | 193.66 | 59.4 | $ | 473.4 | ||||||||||
May 2, 2021 – May 29, 2021 | 51.0 | 217.46 | 51.0 | 462.3 | ||||||||||||
May 30, 2021 – July 3, 2021 | 79.0 | 213.65 | 79.0 | 445.4 | ||||||||||||
Total | 189.4 | $ | 208.40 | 189.4 | $ | 445.4 |
Period (1) | Total number of shares purchased (2) | Average price paid per share | Total number of shares purchased as part of publicly announced plans (2)(3) | Approximate dollar value of shares that may yet be purchased under the plans (4) | ||||||||||||
July 4, 2021 – July 31, 2021 | 75.1 | $ | 206.08 | 75.1 | $ | 429.9 | ||||||||||
August 1, 2021 – August 28, 2021 | 61.9 | 215.37 | 61.9 | 416.6 | ||||||||||||
August 29, 2021 – October 2, 2021 | 9.8 | 215.29 | 9.8 | 414.5 | ||||||||||||
Total | 146.8 | $ | 210.62 | 146.8 | $ | 414.5 |
(1) | The periods shown are our fiscal periods during the thirteen-week quarter ended |
(2) | Shares in thousands. |
(3) | In April 2019, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $650 million, exclusive of any fees, commissions or other expenses related to such purchases. This Board authorization will remain in effect until shares in the amount authorized thereunder have been repurchased. |
(4) | Dollars in millions. |
* | Filed herewith. |
** | Furnished herewith. |
*** | Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act and otherwise are not subject to liability under those sections. |
AVERY DENNISON CORPORATION |
(Registrant) |
/s/ Gregory S. Lovins |
Gregory S. Lovins |
Senior Vice President and Chief Financial Officer |
(Principal Financial Officer) |
/s/ Lori J. Bondar |
Lori J. Bondar |
Vice President, Controller, Treasurer, and Chief Accounting Officer |
(Principal Accounting Officer) |