Avery Dennison Announces Fourth Quarter and Full-Year 2012 Results

  Avery Dennison Announces Fourth Quarter and Full-Year 2012 Results

  *4Q12 Reported EPS (including discontinued operations) of $0.48

       *Adjusted EPS (non-GAAP, continuing operations) of $0.54

  *4Q12 Net sales grew approx. 5 percent to $1.53 billion

       *Net sales up approx. 7 percent on organic basis

  *FY12 Reported EPS (including discontinued operations) up approx. 17
    percent

       *Adjusted EPS (non-GAAP, continuing operations) up approx. 20 percent
         on 4 percent organic sales growth

  *Returned $346 million of cash to shareholders, with increased dividend and
    repurchase of approx. 7 percent of outstanding shares in FY12
  *Restructuring program on track to achieve more than $100 million in
    annualized savings by mid-2013
  *Expect 2013 growth in adjusted EPS (non-GAAP, continuing operations) of 15
    to 35 percent

Business Wire

PASADENA, Calif. -- January 30, 2013

Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited
fourth quarter and full-year 2012 results. All non-GAAP financial measures
referenced in this document are reconciled to GAAP in the attached tables.
Unless otherwise indicated, the discussion of the company’s results is focused
on its continuing operations, and comparisons are to the same period in the
prior year.

“Avery Dennison delivered strong earnings improvement in 2012,” said Dean
Scarborough, Avery Dennison chairman, president and CEO. “Both
Pressure-sensitive Materials and Retail Branding and Information Solutions
delivered solid sales growth and expanded margins, and we returned $346
million of cash to shareholders through share repurchases and an increased
dividend.

“We also took actions that position us well for significant profit growth in
2013, even in a soft economic environment,” Scarborough said. “We remain
committed to delivering on our long-term goals, including double-digit
earnings growth and higher returns.”

For more details on the company’s results, see the summary table accompanying
this news release, as well as the supplemental presentation materials, “Fourth
Quarter and Full-Year 2012 Financial Review and Analysis,” posted on the
company’s website at www.investors.averydennison.com, and furnished on Form
8-K with the SEC.

Fourth Quarter 2012 Results by Segment

All references to sales reflect comparisons on an organic basis, which exclude
the estimated impact of currency translation, acquisitions and divestitures.
Adjusted operating margin refers to earnings before interest expense and
taxes, excluding restructuring costs and other items, as a percentage of
sales.

Prior period amounts have been realigned to reflect the company’s new
operating structure, which includes a new corporate expense allocation
methodology.

Pressure-sensitive Materials (PSM)

The PSM segment now includes the Performance Tapes business, previously
reported in other specialty converting businesses.

  *PSM segment sales increased approximately 6 percent. Within the segment,
    Label and Packaging Materials sales increased mid-single digits, as did
    the combined sales for other product lines (Graphics, Reflective,
    Performance Tapes).
  *Operating margin improved 100 basis points to 7.8 percent as the benefit
    of higher volume and productivity initiatives more than offset the impact
    of changes in product mix and higher employee-related expenses. Adjusted
    operating margin improved 100 basis points.

Retail Branding and Information Solutions (RBIS)

The RBIS segment now includes all of the radio-frequency identification (RFID)
business, previously reported in other specialty converting businesses.

  *Sales increased approximately 10 percent compared to prior year driven by
    increased demand from U.S. and European retailers and brands, including
    accelerating RFID adoption.
  *Operating margin improved 120 basis points to 3.0 percent as the benefit
    of higher volume and productivity initiatives more than offset higher
    employee-related expenses and an impairment charge. Adjusted operating
    margin improved 270 basis points.

Other specialty converting businesses

As indicated above, other specialty converting businesses no longer include
the Performance Tapes and RFID businesses.

  *Sales increased approximately 15 percent due to higher volume.
  *Operating margin declined 70 basis points to 2.3 percent due to the impact
    of a prior year gain on sale of a product line, as well as current year
    costs associated with exiting product lines and restructuring, partially
    offset by the benefit of higher volume. Adjusted operating margin improved
    by more than 12 points to 6.4 percent.

Other

Share Repurchases

The company repurchased 7.9 million shares during 2012 at an aggregate cost of
$235 million (approximately 7 percent of shares outstanding).

Results of Discontinued Operations

Earnings from OCP and certain costs associated with its anticipated
divestiture are reported as income or loss from discontinued operations (net
of tax) in the consolidated income statement. Designed and Engineered
Solutions (DES) results are currently reported in Other specialty converting
businesses, but will be reclassified as discontinued operations as of the
first quarter of 2013.

Earnings per share from discontinued operations increased from $(0.06) to
$0.15. Adjusted earnings per share from discontinued operations increased from
$0.03 to $0.17, primarily due to an adjustment in the tax rate for
discontinued operations in the fourth quarter of 2011.

Income Taxes

The full-year adjusted tax rate was approximately 34 percent, in line with
expectations and comparable to 2011.

Cost Reduction Actions

In the first half of 2012, the company began a restructuring program to reduce
costs across all segments of the business. The company currently anticipates
more than $100 million in annualized savings from this program by mid-2013. To
implement these actions, the company incurred restructuring costs and other
items of approximately $56 million in 2012, and expects to incur $25 million
in 2013.

Outlook

In the company’s supplemental presentation materials, “Fourth Quarter and
Full-Year 2012 Financial Review and Analysis,” the company provides a list of
factors that it believes will contribute to its 2013 financial results. Based
on the factors listed and other assumptions, the company expects 2013 earnings
per share from continuing operations of $2.23 to $2.63. Excluding an estimated
$0.17 per share for restructuring costs and other items, the company expects
adjusted (non-GAAP) earnings per share from continuing operations of $2.40 to
$2.80. The company expects free cash flow from continuing operations in the
range of $275 million to $325 million. The company’s guidance includes
operating results from DES and excludes the impact of share repurchase using
net proceeds from divestitures.

Note: Throughout this release and the supplemental presentation materials,
amounts on a per share basis reflect fully diluted shares outstanding.

About Avery Dennison

Avery Dennison (NYSE:AVY) helps make brands more inspiring and the world more
intelligent. For more than 75 years the company has been a global leader in
pressure-sensitive technology and materials and retail branding and
information solutions. A FORTUNE 500 company with sales of $6 billion from
continuing operations in 2012, Avery Dennison is based in Pasadena,
California, and has employees in over 50 countries. For more information,
visit www.averydennison.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of
                                     1995

Certain statements contained in this document are "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements and financial or other business targets are subject to certain
risks and uncertainties. Actual results and trends may differ materially from
historical or anticipated results depending on a variety of factors, including
but not limited to risks and uncertainties relating to the following:
fluctuations in demand affecting sales to customers; the financial condition
and inventory strategies of customers; changes in customer order patterns;
worldwide and local economic conditions; fluctuations in cost and availability
of raw materials; ability of the company to generate sustained productivity
improvement; ability of the company to achieve and sustain targeted cost
reductions; impact of competitive products and pricing; loss of significant
contract(s) or customer(s); collection of receivables from customers; selling
prices; business mix shift; changes in tax laws and regulations, and
uncertainties associated with interpretations of such laws and regulations;
outcome of tax audits; timely development and market acceptance of new
products, including sustainable or sustainably-sourced products; investment in
development activities and new production facilities; fluctuations in foreign
currency exchange rates and other risks associated with foreign operations;
integration of acquisitions and completion of pending dispositions; amounts of
future dividends and share repurchases; customer and supplier concentrations;
successful implementation of new manufacturing technologies and installation
of manufacturing equipment; disruptions in information technology systems;
successful installation of new or upgraded information technology systems;
volatility of financial markets; impairment of capitalized assets, including
goodwill and other intangibles; credit risks; ability of the company to obtain
adequate financing arrangements and maintain access to capital; fluctuations
in interest and tax rates; fluctuations in pension, insurance and employee
benefit costs; impact of legal and regulatory proceedings, including with
respect to environmental, health and safety; changes in governmental laws and
regulations; changes in political conditions; impact of epidemiological events
on the economy and the company's customers and suppliers; acts of war,
terrorism, and natural disasters; and other factors.

The company believes that the most significant risk factors that could affect
its financial performance in the near-term include (1) the impact of economic
conditions on underlying demand for the company's products; (2) competitors'
actions, including pricing, expansion in key markets, and product offerings;
and (3) the degree to which higher costs can be offset with productivity
measures and/or passed on to customers through selling price increases,
without a significant loss of volume.

For a more detailed discussion of these and other factors, see “Risk Factors”
and “Management’s Discussion and Analysis of Results of Operations and
Financial Condition” in the company’s 2011 Form 10-K, filed on February 27,
2012 with the Securities and Exchange Commission, and subsequent quarterly
reports on Form 10-Q. The forward-looking statements included in this document
are made only as of the date of this document, and the company undertakes no
obligation to update these statements to reflect subsequent events or
circumstances.

For more information and to listen to a live broadcast or an audio replay of
the quarterly conference call with analysts, visit the Avery Dennison website
at www.investors.averydennison.com.

                                                                           
Fourth Quarter Financial Summary - Preliminary
(in millions, except per share amounts)
                                                          
                       4Q            4Q                % Change vs. P/Y
                           2012              2011              Reported         Organic
                                                                                (a)
Net sales, by
segment:
  Pressure-sensitive       $ 1,060.1         $ 1,024.1         4    %           6    %
  Materials
  Retail Branding
  and Information            406.6             370.5           10   %           10   %
  Solutions
  Other specialty
  converting                65.5         60.0            9    %           15   %
  businesses
Total net sales            $ 1,532.2         $ 1,454.6         5    %           7    %
                                                                                

                       As Reported (GAAP)                                          Adjusted Non-GAAP (b)
                           4Q          4Q          % Change   % of Sales           4Q          4Q          % Change   % of Sales
                           2012          2011          Fav(Unf)     2012    2011       2012          2011          Fav(Unf)     2012    2011
Operating income
before interest and
taxes, by segment:
  Pressure-sensitive       $ 82.7        $ 69.2                     7.8 %     6.8  %     $ 92.2        $ 79.0                     8.7 %     7.7  %
  Materials
  Retail Branding
  and Information            12.1          6.6                      3.0 %     1.8  %       25.3          12.9                     6.2 %     3.5  %
  Solutions
  Other specialty
  converting                 1.5           1.8                      2.3 %     3.0  %       4.2           (3.7  )                  6.4 %     -6.2 %
  businesses
  Corporate expense         (23.2 )    (22.6 )                                        (20.3 )    (17.3 )
Total operating
income before              $ 73.1        $ 55.0        33    %      4.8 %     3.8  %     $ 101.4       $ 70.9        43    %      6.6 %     4.9  %
interest and taxes /
operating margin
                                                                                                                                            
Interest expense             17.9          17.9                                            17.9          17.9
                                                                                                                                            
Income from
operations before          $ 55.2        $ 37.1        49    %      3.6 %     2.6  %     $ 83.5        $ 53.0        58    %      5.4 %     3.6  %
taxes
                                                                                                                                            
Provision for income       $ 21.8        $ 8.1                                           $ 28.9        $ 14.9
taxes
                                                                                                                                            
Net income from
continuing                 $ 33.4        $ 29.0        15    %      2.2 %     2.0  %     $ 54.6        $ 38.1        43    %      3.6 %     2.6  %
operations
                                                                                                                                            
Income (loss) from
discontinued               $ 15.6        $ (6.8  )     n/m         1.0 %     -0.5 %     $ 16.8        $ 3.1         442   %      1.1 %     0.2  %
operations, net of
tax
                                                                                                                                            
Net income                 $ 49.0        $ 22.2        121   %      3.2 %     1.5  %     $ 71.4        $ 41.2        73    %      4.7 %     2.8  %
                                                                                                                                            
Net income (loss)
per common share,
assuming dilution:
                                                                                                                                            
Continuing                 $ 0.33        $ 0.27        22    %                           $ 0.54        $ 0.36        50    %
operations
                                                                                                                                            
Discontinued               $ 0.15        $ (0.06 )     n/m                               $ 0.17        $ 0.03        467   %
operations
                                                                                                                                            
Total Company              $ 0.48        $ 0.21        129   %                           $ 0.71        $ 0.39        82    %
                                                                                                                                            

(a)   Percentage change in sales excluding the estimated impact of foreign
        currency translation, acquisitions and divestitures.
(b)     Excludes restructuring costs and other items (see accompanying
        schedules A-2 and A-5 for reconciliation to GAAP financial measures).
        
        Previously reported segment results and corporate expense have been
        realigned to reflect new operating structure.
        
        

                                                                       
Full Year Financial Summary - Preliminary
(in millions, except per share amounts)
                                                                                
                       FY            FY                % Change vs. P/Y
                           2012              2011              Reported         Organic
                                                                                (a)
Net sales, by
segment:
  Pressure-sensitive       $ 4,255.5         $ 4,260.7         0    %           4   %
  Materials
  Retail Branding
  and Information            1,534.1           1,510.0         2    %           3   %
  Solutions
  Other specialty
  converting                246.0        255.6           -4   %           5   %
  businesses
Total net sales            $ 6,035.6         $ 6,026.3         0    %           4   %
                                                                                

                       As Reported (GAAP)                                          Adjusted Non-GAAP (b)
                           FY          FY          % Change   % of Sales           FY          FY          % Change   % of Sales
                           2012          2011          Fav(Unf)     2012     2011      2012          2011          Fav(Unf)     2012    2011
Operating income
before interest and
taxes, by segment:
  Pressure-sensitive       $ 362.9       $ 352.2                    8.5  %     8.3 %     $ 396.1       $ 372.1                    9.3 %     8.7  %
  Materials
  Retail Branding
  and Information            54.5          42.7                     3.6  %     2.8 %       79.1          60.4                     5.2 %     4.0  %
  Solutions
  Other specialty
  converting                 (2.9  )       3.4                      -1.2 %     1.3 %       3.0           (1.3  )                  1.2 %     -0.5 %
  businesses
  Corporate expense         (86.2 )    (94.4 )                                        (80.5 )    (80.7 )
Total operating
income before              $ 328.3       $ 303.9       8    %       5.4  %     5.0 %     $ 397.7       $ 350.5       13   %       6.6 %     5.8  %
interest and taxes /
operating margin
                                                                                                                                            
Interest expense             72.8          71.0                                            72.8          71.0
                                                                                                                                            
Income from
operations before          $ 255.5       $ 232.9       10   %       4.2  %     3.9 %     $ 324.9       $ 279.5       16   %       5.4 %     4.6  %
taxes
                                                                                                                                            
Provision for income       $ 86.4        $ 78.5                                          $ 109.8       $ 94.2
taxes
                                                                                                                                            
Net income from
continuing                 $ 169.1       $ 154.4       10   %       2.8  %     2.6 %     $ 215.1       $ 185.3       16   %       3.6 %     3.1  %
operations
                                                                                                                                            
Income from
discontinued               $ 46.3        $ 35.7        30   %       0.8  %     0.6 %     $ 58.2        $ 45.1        29   %       1.0 %     0.7  %
operations, net of
tax
                                                                                                                                            
Net income                 $ 215.4       $ 190.1       13   %       3.6  %     3.2 %     $ 273.3       $ 230.4       19   %       4.5 %     3.8  %
                                                                                                                                            
Net income per
common share,
assuming dilution:
                                                                                                                                            
Continuing                 $ 1.63        $ 1.45        12   %                            $ 2.08        $ 1.74        20   %
operations
                                                                                                                                            
Discontinued               $ 0.45        $ 0.33        36   %                            $ 0.56        $ 0.42        33   %
operations
                                                                                                                                            
Total Company              $ 2.08        $ 1.78        17   %                            $ 2.64        $ 2.16        22   %
                                                                                                                                            
                                                                                         2012          2011
Estimated Free Cash Flow from Continuing Operations (c)                                  $ 312.2         n/a
Free Cash Flow (including discontinued operations) (c)                                   $ 352.6       $ 292.0
                                                                                                                                            

(a)   Percentage change in sales excluding the estimated impact of foreign
        currency translation, acquisitions and divestitures.
(b)     Excludes restructuring costs and other items (see accompanying
        schedules A-2 and A-5 for reconciliation to GAAP financial measures).
        Free cash flow refers to cash flow from operations, less net payments
        for property, plant, and equipment, software and other deferred
        charges, plus (minus) net proceeds from sales (purchases) of
(c)     investments, plus discretionary contributions to pension plan
        utilizing proceeds from divestitures. Free cash flow excludes uses of
        cash that do not directly or immediately support the underlying
        business (such as discretionary debt reductions, dividends, share
        repurchases, and certain effects of acquisitions and divestitures).
        
        Previously reported segment results and corporate expense have been
        realigned to reflect new operating structure.
        
        

                                                               A-1
AVERY DENNISON
PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
 
                         (UNAUDITED)
                                                                           
                         Three Months Ended            Twelve Months Ended
                         Dec.            Dec. 31,          Dec.            Dec.
                  29,         2011          29,         31,
                         2012                              2012            2011
                                                                           
Net sales              $ 1,532.2       $ 1,454.6         $ 6,035.6       $ 6,026.3
                                                                           
Cost of products         1,134.5         1,096.0           4,458.5         4,504.9
sold
                                                     
                                                                           
Gross profit             397.7           358.6             1,577.1         1,521.4
                                                                           
Marketing,
general &                296.3           287.7             1,179.4         1,170.9
administrative
expense
                                                                           
Interest expense         17.9            17.9              72.8            71.0
                                                                           
Other expense,           28.3            15.9              69.4            46.6
net^(1)
                                                     
                                                                           
Income from
continuing               55.2            37.1              255.5           232.9
operations
before taxes
                                                                           
Provision for            21.8            8.1               86.4            78.5
income taxes
                                                     
                                                                           
Income from
continuing               33.4            29.0              169.1           154.4
operations
                                                                           
Income (loss)
from
discontinued             15.6            (6.8    )         46.3            35.7
operations, net
of tax
                                                     
                                                                           
Net income             $ 49.0          $ 22.2            $ 215.4         $ 190.1
                                                     
                                                                           
Per share
amounts:
                                                                           
Net income
(loss) per
common share,
assuming
dilution
                                                                           
    Continuing         $ 0.33          $ 0.27            $ 1.63          $ 1.45
    operations
                                                                           
    Discontinued         0.15            (0.06   )         0.45            0.33
    operations
                                                     
                                                                           
Net income per
common share,          $ 0.48          $ 0.21            $ 2.08          $ 1.78
assuming
dilution
                                                     
                                                                           
Average common
shares
outstanding,         101.2       106.8        103.5       106.8
assuming
dilution
                                                                           

         "Other expense, net" for the fourth quarter of 2012 includes
         severance and related costs of $16.4, asset impairment and lease
^(1)   cancellation charges of $3.1, indefinite-lived intangible asset
         impairment charges of $7, and costs associated with exiting product
         lines of $1.8.
         
         "Other expense, net" for the fourth quarter of 2011 includes
         severance and related costs of $11, asset impairment and lease
         cancellation charges of $5.3, certain transaction costs of $4.5, and
         loss on debt extinguishments of $.7, partially offset by gain on sale
         of product line of $5.6.
         
         "Other expense, net" for fiscal year 2012 includes severance and
         related costs of $49.6, asset impairment and lease cancellation
         charges of $6.8, indefinite-lived intangible asset impairment charges
         of $7, costs associated with exiting product lines of $3.9, and
         certain transaction costs of $2.7, partially offset by gain on sale
         of product line of $.6.
         
         "Other expense, net" for fiscal year 2011 includes severance and
         related costs of $35.5, asset impairment and lease cancellation
         charges of $9, certain transaction costs of $8.2, and loss on debt
         extinguishments of $.7, partially offset by gain on sale of product
         line of $5.6, and legal settlement of $1.2.
         
         


A-2

Reconciliation of Non-GAAP Financial Measures in Accordance with SEC
Regulations G and S-K

Avery Dennison reports financial results in conformity with accounting
principles generally accepted in the United States of America, or GAAP, and
herein provides some non-GAAP financial measures. These non-GAAP financial
measures are not in accordance with, nor are they a substitute for or superior
to, the comparable GAAP financial measures. These non-GAAP financial measures
are intended to supplement the company's presentation of its financial results
that are prepared in accordance with GAAP. Based upon feedback from investors
and financial analysts, the company believes that supplemental non-GAAP
financial measures provide information that is useful to the assessment of the
company’s performance and operating trends, as well as liquidity.

The company’s non-GAAP financial measures exclude the impact of certain
events, activities or strategic decisions. The accounting effects of these
events, activities or decisions, which are included in the GAAP financial
measures, may make it difficult to assess the underlying performance of the
company in a single period. By excluding certain accounting effects, both
positive and negative, of certain items (e.g., restructuring costs, asset
impairments, legal settlements, certain effects of strategic transactions and
related costs, loss from debt extinguishments, loss from curtailment and
settlement of pension obligations, gains or losses on sale of certain assets
and other items), the company believes that it is providing meaningful
supplemental information to facilitate an understanding of the company’s core
operating results and liquidity measures. These non-GAAP financial measures
are used internally to evaluate trends in the company’s underlying business,
as well as to facilitate comparison to the results of competitors for a single
period. While some of the items excluded from GAAP financial measures may
recur, they tend to be disparate in amount, frequency, and timing.

The company uses the following non-GAAP financial measures in the accompanying
news release and presentation:

Organic sales change refers to the increase or decrease in sales excluding the
estimated impact of currency translation, acquisitions and divestitures;

Adjusted EBITDA refers to earnings before interest expense, taxes,
depreciation, and amortization, excluding restructuring cots and other items;

Adjusted operating margin refers to earnings before interest expense and
taxes, excluding restructuring costs and other items, as a percentage of
sales;

Adjusted tax rate refers to the anticipated full year GAAP tax rate adjusted
for certain discrete events;

Adjusted net income refers to reported net income adjusted for the
tax-effected restructuring costs and other items;

Adjusted EPS refers to as reported net income per common share, assuming
dilution, adjusted for the tax-effected restructuring costs and other items;
and

Free cash flow refers to cash flow from operations, less net payments for
property, plant, and equipment, software and other deferred charges, plus
(minus) net proceeds from sales (purchases) of investments, plus discretionary
contributions to pension plan utilizing proceeds from divestitures. Free cash
flow excludes uses of cash that do not directly or immediately support the
underlying business (such as discretionary debt reductions, dividends, share
repurchases, and certain effects of acquisitions and divestitures).

The reconciliation set forth below and in the accompanying presentation is
provided in accordance with Regulations G and S-K and reconciles the non-GAAP
financial measures with the most directly comparable GAAP financial measures.



                                                                   A-3
                                                                                
AVERY DENNISON
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except % and per share amounts)

                        (UNAUDITED)
                                                                                
                        Three Months Ended               Twelve Months Ended
                  Dec. 29,      Dec. 31,       Dec. 29,      Dec. 31,
                        2012              2011                2012              2011
                                                                                
Reconciliation
of Operating
Margins:
                                                                                
Net sales             $ 1,532.2         $ 1,454.6           $ 6,035.6         $ 6,026.3
                                                                
                                                                                
Income from
continuing            $ 55.2            $ 37.1              $ 255.5           $ 232.9
operations
before taxes
                                                          
                                                                                
Income from
continuing
operations              3.6     %         2.6     %           4.2     %         3.9     %
before taxes as
a percentage of
sales
                                                          
                                                                                
  Adjustment:
  Interest            $ 17.9            $ 17.9              $ 72.8            $ 71.0
  expense
                                                                
                                                                                
Operating
income from
continuing
operations            $ 73.1            $ 55.0              $ 328.3           $ 303.9
before interest
expense and
taxes
                                                          
                                                                                
Operating               4.8     %         3.8     %           5.4     %         5.0     %
Margins
                                                          
                                                                                
                                                                                
Income from
continuing            $ 55.2            $ 37.1              $ 255.5           $ 232.9
operations
before taxes
                                                                                
  Adjustments:
                                                                                
  Restructuring
  costs:
                                                                                
  Severance and         16.4              11.0                49.6              35.5
  related costs
                                                                                
  Asset
  impairment
  and lease             3.1               5.3                 6.8               9.0
  cancellation
  charges
                                                                                
  Other                 8.8               (0.4    )           13.0              2.1
  items^(1)
                                                              ---
  Interest              17.9              17.9                72.8              71.0
  expense
                                                                
                                                                                
Adjusted
operating
income from
continuing
operations            $ 101.4           $ 70.9              $ 397.7           $ 350.5
before interest
expense and
taxes
(non-GAAP)
                                                          
                                                                                
Adjusted
Operating               6.6     %         4.9     %           6.6     %         5.8     %
Margins
(non-GAAP)
                                                          
                                                                                
                                                                                
                                                                                
Reconciliation
of GAAP to
Non-GAAP Net
Income from
Continuing
Operations:
                                                                                
As reported net
income from           $ 33.4            $ 29.0              $ 169.1           $ 154.4
continuing
operations
                                                                                
  Non-GAAP
  adjustments,
  net of tax:
                                                                                
  Restructuring
  costs and             21.2              9.1                 46.0              30.9
  other
  items^(2)
                                                          
                                                                                
Adjusted
Non-GAAP Net
Income from           $ 54.6            $ 38.1              $ 215.1           $ 185.3
Continuing
Operations
                                                          
                                                                                
                                                                                
                                                                                
Reconciliation
of GAAP to
Non-GAAP Net
Income from
Discontinued
Operations:
                                                                                
As reported net
income (loss)
from                  $ 15.6            $ (6.8    )         $ 46.3            $ 35.7
discontinued
operations
                                                                                
  Non-GAAP
  adjustments,
  net of tax:
                                                                                
  Restructuring
  costs and             1.2               9.9                 11.9              9.4
  other
  items^(2)
                                                          
                                                                                
Adjusted
Non-GAAP Net
Income from           $ 16.8            $ 3.1               $ 58.2            $ 45.1
Discontinued
Operations
                                                          
                                                                                
                                                                                
Reconciliation
of GAAP to
Non-GAAP Net
Income:
                                                                                
As reported net       $ 49.0            $ 22.2              $ 215.4           $ 190.1
income
                                                                                
  Non-GAAP
  adjustments,
  net of tax:
                                                                                
  Restructuring
  costs and             22.4              19.0                57.9              40.3
  other
  items^(2)
                                                          
                                                                                
Adjusted
Non-GAAP Net          $ 71.4            $ 41.2              $ 273.3           $ 230.4
Income
                                                               
                                                                                        

                           A-3
                     
                           (continued)
                                                             
AVERY DENNISON
PRELIMINARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except % and per share amounts)

                           (UNAUDITED)
                                                                         
                           Three Months Ended          Twelve Months Ended
                           Dec.          Dec. 31,          Dec.          Dec.
                     29,       2011          29,       31,
                           2012                            2012          2011
                                                                         
Reconciliation of
GAAP to Non-GAAP
Net Income per
Common Share from
Continuing
Operations:
                                                                         
As reported net
income per common
share from               $ 0.33        $ 0.27            $ 1.63        $ 1.45
continuing
operations,
assuming dilution
                                                                         
   Non-GAAP
   adjustments per
   common share,
   net of tax:
                                                                         
   Restructuring
   costs and other         0.21          0.09              0.45          0.29
   items^(2)
                                                    
                                                                         
Adjusted Non-GAAP
Net Income per
Common Share from        $ 0.54        $ 0.36            $ 2.08        $ 1.74
Continuing
Operations,
assuming dilution
                                                    
                                                                         
                                                                         
                                                                         
Reconciliation of
GAAP to Non-GAAP
Net Income per
Common Share from
Discontinued
Operations:
                                                                         
As reported net
income (loss) per
common share from        $ 0.15        $ (0.06  )        $ 0.45        $ 0.33
discontinued
operations,
assuming dilution
                                                                         
   Non-GAAP
   adjustments per
   common share,
   net of tax:
                                                                         
   Restructuring
   costs and other         0.02          0.09              0.11          0.09
   items ^(2)
                                                    
                                                                         
Adjusted Non-GAAP
Net Income per
Common Share from        $ 0.17        $ 0.03            $ 0.56        $ 0.42
Discontinued
Operations,
assuming dilution
                                                    
                                                                         
                                                                         
                                                                         
Reconciliation of
GAAP to Non-GAAP
Net Income per
Common Share:
                                                                         
As reported net
income per common        $ 0.48        $ 0.21            $ 2.08        $ 1.78
share, assuming
dilution
                                                                         
   Non-GAAP
   adjustments per
   common share,
   net of tax:
                                                                         
   Restructuring
   costs and other         0.23          0.18              0.56          0.38
   items ^(2)
                                                    
                                                                         
Adjusted Non-GAAP
Net Income per           $ 0.71        $ 0.39            $ 2.64        $ 2.16
Common Share,
assuming dilution
                                                    
                                                                         

         Includes indefinite-lived intangible asset impairment charges, costs
^(1)   associated with exiting product lines, certain transaction costs,
         loss on debt extinguishments, gain on sale of product line, and legal
         settlement.
^(2)     Reflects the full year estimated tax effect of restructuring costs
         and other items.
         

                                 (UNAUDITED)
                                                           
                                       Twelve Months Ended
                               Dec. 29, 2012         Dec. 31,
                                                                    2011
                                                                    
Reconciliation of GAAP to
Non-GAAP Free Cash Flow:
                                                                    
Net cash provided by operating       $ 513.4                      $ 422.7
activities
                                                                    
Purchases of property, plant           (95.0      )                 (105.0  )
and equipment, net
                                                                    
Purchases of software and              (59.1      )                 (26.0   )
other deferred charges
                                                                    
(Purchases of) proceeds from           (6.7       )                 0.3
sales of investments, net
                                                    
                                                                    
Free Cash Flow                    $ 352.6               $ 292.0   
                                                                    
                                                                    
                                                                    
Estimated free cash flow from        $ 312.2
continuing operations
                                                                    
Estimated free cash flow from          40.4
discontinued operations
                               
                                                                    
Free Cash Flow                    $ 352.6      
                                                                    
                                                                    
                                       (UNAUDITED)
                                                                    
                                       Twelve Months
                                       Ended
                               Dec. 29, 2012
                                                                    
Reconciliation Non-GAAP Net
Debt to Adjusted EBITDA
(Non-GAAP):
                                                                    
      Adjusted operating
      income from continuing
      operations before              $ 397.7
      interest expense and
      taxes (Non-GAAP)
      Adjustments:
            Depreciation               150.1
            Amortization               70.5
                               
                                                                    
Adjusted EBITDA (Non-GAAP)           $ 618.3
                               
                                                                    
      Total Debt as of Dec.          $ 1,222.4
      29, 2012
      Less: Cash and cash
      equivalents as of Dec.           (235.4     )
      29, 2012
                                                                    
Net Debt                             $ 987.0
                                                                    
Net Debt to Adjusted EBITDA        1.6        
(Non-GAAP)
                                                                    
                                                                    

                                                                                   A-4
                                                                                                     
AVERY DENNISON
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions)
(UNAUDITED)
                                                                                                     
                         Fourth Quarter Ended
                         NET SALES                       OPERATING INCOME                OPERATING MARGINS
                         2012         2011            2012^(1)     2011^(2)        2012     2011
                                                                                                     
Pressure-sensitive       $ 1,060.1       $ 1,024.1       $ 82.7          $ 69.2          7.8 %       6.8 %
Materials
Retail Branding
and Information            406.6           370.5           12.1            6.6           3.0 %       1.8 %
Solutions
Other specialty
converting                 65.5            60.0            1.5             1.8           2.3 %       3.0 %
businesses
Corporate Expense         N/A         N/A            (23.2 )     (22.6 )       N/A     N/A 
TOTAL FROM
CONTINUING               $ 1,532.2    $ 1,454.6       $ 73.1      $ 55.0         4.8 %    3.8 %
OPERATIONS
                                                                                                     

        Operating income for the fourth quarter of 2012 includes severance and
        related costs of $16.4, asset impairment and lease cancellation
        charges of $3.1, indefinite-lived intangible asset impairment charges
(1)   of $7, and costs associated with exiting product lines of $1.8. Of the
        total $28.3, the Pressure-sensitive Materials segment recorded $9.5,
        the Retail Branding and Information Solutions segment recorded $13.2,
        the other specialty converting businesses recorded $2.7, and Corporate
        recorded $2.9.
        
        Operating income for the fourth quarter of 2011 includes severance and
        related costs of $11, asset impairment and lease cancellation charges
        of $5.3, certain transaction costs of $4.5, and loss on debt
(2)     extinguishments of $.7, partially offset by gain on sale of product
        line of $5.6. Of the total $15.9, the Pressure-sensitive Materials
        segment recorded $9.8, the Retail Branding and Information Solutions
        segment recorded $6.3, the other specialty converting businesses
        recorded $(5.5), and Corporate recorded $5.3.
        
        Previously reported segment results and corporate expense have been
        reclassified to reflect new operating structure.
        

RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY INFORMATION
                                                        
                           Fourth Quarter Ended
                           OPERATING INCOME                OPERATING MARGINS
                           2012      2011               2012     2011
Pressure-sensitive
Materials
Operating income and       $ 82.7       $ 69.2             7.8 %       6.8  %
margins, as reported
Adjustments:
Restructuring costs:
Severance and                8.6          4.4              0.8 %       0.4  %
related costs
Asset impairment and
lease cancellation          0.9      5.4             0.1 %    0.5  %
charges
Adjusted operating
income and margins         $ 92.2    $ 79.0            8.7 %    7.7  %
(non-GAAP)
                                                                       
Retail Branding and
Information
Solutions
Operating income and       $ 12.1       $ 6.6              3.0 %       1.8  %
margins, as reported
Adjustments:
Restructuring costs:
Severance and                4.3          6.3              1.0 %       1.7  %
related costs
Asset impairment and
lease cancellation           1.9          ---              0.5 %       ---
charges
Indefinite-lived
intangible asset            7.0      ---             1.7 %    ---  
impairment charges
Adjusted operating
income and margins         $ 25.3    $ 12.9            6.2 %    3.5  %
(non-GAAP)
                                                                       
Other specialty
converting
businesses
Operating income and       $ 1.5        $ 1.8              2.3 %       3.0  %
margins, as reported
Adjustments:
Restructuring costs:
Severance and                0.9          0.1              1.4 %       0.1  %
related costs
Gain on sale of              ---          (5.6 )           ---         (9.3 )%
product line
Costs associated
with exiting product        1.8      ---             2.7 %    ---  
lines
Adjusted operating
income (loss) and          $ 4.2     $ (3.7 )           6.4 %    (6.2 )%
margins (non-GAAP)
                                                                       
                                                                       

                                                                                     A-5
                                                                                                       
AVERY DENNISON
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions)
(UNAUDITED)
                                                                                                       
                         Twelve Months Year-to-Date
                         NET SALES                       OPERATING INCOME                OPERATING MARGINS
                         2012         2011            2012^(1)     2011^(2)        2012       2011
                                                                                                       
Pressure-sensitive       $ 4,255.5       $ 4,260.7       $ 362.9         $ 352.2         8.5  %        8.3 %
Materials
Retail Branding
and Information            1,534.1         1,510.0         54.5            42.7          3.6  %        2.8 %
Solutions
Other specialty
converting                 246.0           255.6           (2.9  )         3.4           (1.2 )%       1.3 %
businesses
Corporate Expense         N/A         N/A            (86.2 )     (94.4 )       N/A       N/A 
                                                                                                       
TOTAL FROM
CONTINUING               $ 6,035.6    $ 6,026.3       $ 328.3     $ 303.9        5.4  %     5.0 %
OPERATIONS
                                                                                                       

        Operating income for fiscal year 2012 includes severance and related
        costs of $49.6, asset impairment and lease cancellation charges of
        $6.8, indefinite-lived intangible asset impairment charges of $7,
        costs associated with exiting product lines of $3.9, and certain
(1)   transaction costs of $2.7, partially offset by gain on sale of product
        line of $.6. Of the total $69.4, the Pressure-sensitive Materials
        segment recorded $33.2, the Retail Branding and Information Solutions
        segment recorded $24.6, the other specialty converting businesses
        recorded $5.9, and Corporate recorded $5.7.
        
        Operating income for fiscal year 2011 includes severance and related
        costs of $35.5, asset impairment and lease cancellation charges of $9,
        and certain transaction costs of $8.2, and loss on debt
        extinguishments of $.7, partially offset by gain on sale of product
(2)     line of $5.6, and legal settlement of $1.2. Of the total $46.6, the
        Pressure-sensitive Materials segment recorded $19.9, the Retail
        Branding and Information Solutions segment recorded $17.7, the other
        specialty converting businesses recorded $(4.7), and Corporate
        recorded $13.7.
        
        Previously reported segment results and corporate expense have been
        reclassified to reflect new operating structure.
        

RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY INFORMATION
                                                            
                         Twelve Months Year-to-Date
                         OPERATING INCOME                   OPERATING MARGINS
                         2012         2011                2012       2011
Pressure-sensitive
Materials
Operating income
and margins, as          $ 362.9         $ 352.2             8.5  %        8.3  %
reported
Adjustments:
Restructuring
costs:
Severance and              31.2            11.9              0.7  %        0.3  %
related costs
Asset impairment
and lease                  2.6             7.6               0.1  %        0.1  %
cancellation
charges
Gain on sale of            (0.6  )         ---               0.0  %        ---
product line
Legal settlement          ---        0.4              ---       ---  
Adjusted operating
income and margins       $ 396.1     $ 372.1            9.3  %     8.7  %
(non-GAAP)
                                                                           
Retail Branding
and Information
Solutions
Operating income
and margins, as          $ 54.5          $ 42.7              3.6  %        2.8  %
reported
Adjustments:
Restructuring
costs:
Severance and              14.2            18.0              0.9  %        1.2  %
related costs
Asset impairment
and lease                  3.4             1.3               0.2  %        0.1  %
cancellation
charges
Indefinite-lived
intangible asset           7.0             ---               0.5  %        ---
impairment charges
Legal settlement          ---        (1.6  )           ---       (0.1 )%
Adjusted operating
income and margins       $ 79.1      $ 60.4             5.2  %     4.0  %
(non-GAAP)
                                                                           
Other specialty
converting
businesses
Operating (loss)
income and               $ (2.9  )       $ 3.4               (1.2 )%       1.3  %
margins, as
reported
Adjustments:
Restructuring
costs:
Severance and              1.5             0.8               0.6  %        0.3  %
related costs
Asset impairment           0.5             0.1               0.2  %        ---
charges
Gain on sale of            ---             (5.6  )           ---           (2.1 )%
product line
Costs associated
with exiting              3.9        ---              1.6  %     ---  
product lines
Adjusted operating
income (loss) and        $ 3.0       $ (1.3  )           1.2  %     (0.5 )%
margins (non-GAAP)
                                                                           
                                                                           

                                                      A-6
                                                                    
AVERY DENNISON
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
                                                                    
                              (UNAUDITED)
                                                                    
ASSETS                        Dec. 29,                           Dec. 31,
                                2012                                2011
                                                  
                                                                    
Current assets:
   Cash and cash              $ 235.4                             $ 178.0
   equivalents
   Trade accounts               972.8                               877.1
   receivable, net
   Inventories, net             473.3                               475.1
   Assets held for sale         472.2                               454.9
   Other current assets         258.0                               233.7
                                                  
                                                                    
          Total current         2,411.7                             2,218.8
          assets
                                                                    
Property, plant and             1,015.5                             1,079.4
equipment, net
Goodwill                        764.4                               759.3
Other intangibles
resulting from business         125.0                               161.2
acquisitions, net
Non-current deferred            331.6                               322.3
income taxes
Other assets                    457.1                               431.7
                                                  
                                                                    
                              $ 5,105.3                           $ 4,972.7
                                                  
                                                                    
                                                                    
                                                                    
LIABILITIES AND
SHAREHOLDERS' EQUITY
                                                  
                                                                    
Current liabilities:
   Short-term and
   current portion of         $ 520.2                             $ 227.1
   long-term debt
   Accounts payable             804.3                               736.5
   Liabilities held for         160.5                               154.5
   sale
   Other current                589.5                               529.0
   liabilities
                                                  
                                                                    
          Total current         2,074.5                             1,647.1
          liabilities
                                                                    
Long-term debt                  702.2                               954.2
Other long-term                 747.7                               712.9
liabilities
Shareholders' equity:
   Common stock                 124.1                               124.1
   Capital in excess of         801.8                               778.6
   par value
   Retained earnings            1,910.8                             1,810.5
   Accumulated other            (278.0   )                          (263.2   )
   comprehensive loss
   Treasury stock at            (977.8   )                          (791.5   )
   cost
                                                                    
                                                  
                                                                    
          Total
          shareholders'         1,580.9                             1,658.5
          equity
                                                    *Story
                                       too
                                                    large*

[TRUNCATED]