Avery Dennison Looks at Layoffs

By: Tom Daniels
By: Tom Daniels

An Avery Dennison spokesperson says, worldwide, the corporation plans to layoff 500 workers in the fourth quarter of 2005.

Spokesman Charlie Coleman, contacted at corporate headquarters in Pasadena, California, said no decisions have been made yet regarding any possible layoffs at specific plants, including the one in Meridian, Miss.

Below is a news release posted to Avery Dennison's Internet site,

Avery Dennison Corporation (NYSE:AVY) reported (Tuesday) third quarter diluted earnings per share of $0.86 compared with $0.75 a year ago, a 15 percent increase. Profits increased due to improved pricing and product mix, as well as a reduction in operating expenses and the tax rate. The company also announced actions to increase operating efficiencies and improve its profitability, targeting $60 million to $70 million of annual savings when fully implemented in 2007.

Planned cost reduction actions could result in cumulative pre-tax, cash charges of approximately $20 million to $30 million, to be incurred primarily during the fourth quarter of 2005. These charges relate to estimated severance costs for a potential reduction in headcount of over 500 positions, with actions expected to impact most businesses and geographic regions.

Annual pre-tax savings associated with these and other cost reduction actions could total $40 million to $50 million in 2006, increasing to a total of $60 million to $70 million by 2007. Approximately half of the targeted savings is expected to be generated by actions taken to streamline corporate general and administrative activities, including the Company's shared services units.

In addition, the Company is considering a number of divestitures of non-strategic, low-margin businesses, which would reduce annual sales by approximately $70 million, with minimal impact to earnings from operations. Such divestitures, if completed, could result in pre-tax, non-cash charges in excess of $100 million, representing goodwill and other asset write-downs. These charges could be incurred as early as the fourth quarter of 2005.

Planned savings and cash generated from divestitures will be used in part to fund investments in ongoing Horizons initiatives and future growth opportunities, as well as actions to drive additional productivity gains.

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