Avery Dennison Announces Fourth Quarter and Full-Year 2013 Results

January 31, 2014

4Q13 Reported EPS (including discontinued operations) of $0.43
- Adjusted EPS (non-GAAP, continuing operations) of $0.69
4Q13 Net sales grew approximately 7 percent on reported and organic basis to $1.58 billion
FY13 Reported EPS (including discontinued operations) of $2.16
- Adjusted EPS (non-GAAP, continuing operations) of $2.68
FY13 Net sales grew approximately 5 percent on reported and organic basis to $6.14 billion
Expect 2014 growth in adjusted EPS (non-GAAP, continuing operations) of 8 to 19 percent

GLENDALE, Calif.--(BUSINESS WIRE)--Jan. 31, 2014-- Avery Dennison Corporation (NYSE:AVY) today announced preliminary, unaudited results for its fourth quarter and full year ended December 28, 2013. 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. Results reflect classification of Office and Consumer Products (OCP) and Designed and Engineered Solutions (DES) businesses as discontinued operations.

“I’m happy to report another year of excellent progress toward our long-term goals,” said Dean Scarborough, Avery Dennison chairman, president and CEO. “We delivered a solid finish to a strong year, with higher-than-expected top-line growth, a significant increase in earnings, and solid free cash flow.

“Both of our core businesses beat their sales targets through innovation and share gain,” Scarborough added. “At the same time, they delivered outstanding margin expansion, further strengthening their competitive positions. I thank all the members of our global team for their contributions to these results.

“We will continue to deliver on our long-term financial commitments through top-line growth, margin expansion, and disciplined capital management, while returning significant cash to shareholders through dividends and share repurchase,” Scarborough said.

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 2013 Financial Review and Analysis,” posted on the company’s website at www.investors.averydennison.com, and furnished to the SEC on Form 8-K.

Fourth Quarter 2013 Results by Segment

All references to sales reflect comparisons on an organic basis, which exclude the estimated impact of currency translation, product line exits, 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.

Pressure-sensitive Materials (PSM)

PSM segment sales increased approximately 8 percent. Within the segment, Label and Packaging Materials sales increased mid-single digits. Combined sales for Graphics, Reflective, and Performance Tapes increased low double digits.
Operating margin improved 180 basis points to 9.5 percent as the benefit of higher volume, lower restructuring costs, and productivity initiatives more than offset the impact of changes in product mix. Adjusted operating margin improved 100 basis points.

Retail Branding and Information Solutions (RBIS)

RBIS segment sales increased approximately 3 percent driven by increased demand from European retailers and brands.
Operating margin increased 460 basis points to 7.4 percent as the benefit of productivity initiatives and higher volume, as well as the impact of a prior year impairment and a gain on sale of assets, more than offset higher employee-related expenses. Adjusted operating margin improved 140 basis points.

Other

Share Repurchases

The company repurchased 6.6 million shares in 2013 at an aggregate cost of $283 million.

Discontinued Operations

On July 1, 2013, the company completed the sale of its OCP and DES businesses. Net loss per share from discontinued operations was $(0.02) in the quarter.

Income Taxes

The full-year tax rate was 33 percent, in line with expectations.

Cost Reduction Actions

In 2013, the company realized approximately $75 million in savings from the program initiated in the first half of 2012. The company incurred restructuring costs, net of gain on sale of assets, of approximately $23 million in 2013.

Outlook

In its supplemental presentation materials, “Fourth Quarter and Full Year 2013 Financial Review and Analysis,” the company provides a list of factors that it believes will contribute to its 2014 financial results. Based on the factors listed and other assumptions, the company expects 2014 earnings per share from continuing operations of $2.60 to $2.90. Excluding an estimated $0.30 per share for restructuring costs and other items, the company expects adjusted (non-GAAP) earnings per share from continuing operations of $2.90 to $3.20.

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) is a global leader in labeling and packaging materials and solutions. The company’s applications and technologies are an integral part of products used in every major market and industry. With operations in more than 50 countries and 26,000 employees worldwide, Avery Dennison serves customers with insights and innovations that help make brands more inspiring and the world more intelligent. Headquartered in Glendale, California, the company reported sales from continuing operations of $6.1 billion in 2013. Learn more at 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; our ability to generate sustained productivity improvement; our ability to achieve and sustain targeted cost reductions; impact of competitive products and pricing; loss of significant contracts or customers; 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 currency exchange rates and other risks associated with foreign operations; integration of acquisitions and completion of potential 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; data security breaches; volatility of financial markets; impairment of capitalized assets, including goodwill and other intangibles; credit risks; our ability 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 our customers and suppliers; acts of war, terrorism, and natural disasters; and other factors.

We believe that the most significant risk factors that could affect our financial performance in the near-term include: (1) the impact of economic conditions on underlying demand for our 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 2012 Form 10-K, filed on February 27, 2013 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, other than as may be required by law.

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
		2013			2012		Reported		Organic (a)

Net sales, by segment:
Pressure-sensitive Materials	$	1,149.1		$	1,060.5		8	%	8	%
Retail Branding and Information Solutions		417.4			407.5		2	%	3	%
Other specialty converting businesses		17.4			15.1		15	%	7	%
Total net sales	$	1,583.9		$	1,483.1		7	%	7	%

	As Reported (GAAP)												Adjusted Non-GAAP (b)
	4Q			4Q					% of Sales				4Q			4Q					% of Sales
		2013			2012		% Change		2013		2012			2013			2012		% Change		2013		2012
Operating income (loss) before
interest and taxes, by segment:
Pressure-sensitive Materials	$	108.7		$	81.2				9.5	%	7.7	%	$	110.8		$	91.0				9.6	%	8.6	%
Retail Branding and Information Solutions		31.0			11.6				7.4	%	2.8	%		31.5			25.0				7.5	%	6.1	%
Other specialty converting businesses		(2.1	)		(4.5	)			-12.1	%	-29.8	%		(2.1	)		(2.5	)			-12.1	%	-16.6	%
Corporate expense		(23.9	)		(23.1	)								(22.8	)		(20.2	)
Total operating income before
interest and taxes / operating margin	$	113.7		$	65.2		74	%	7.2	%	4.4	%	$	117.4		$	93.3		26	%	7.4	%	6.3	%

Interest expense	$	16.0		$	18.0								$	16.0		$	18.0

Income from continuing operations before taxes	$	97.7		$	47.2		107	%	6.2	%	3.2	%	$	101.4		$	75.3		35	%	6.4	%	5.1	%

Provision for income taxes	$	53.0		$	19.2								$	33.3		$	26.3

Net income from continuing operations	$	44.7		$	28.0		60	%	2.8	%	1.9	%	$	68.1		$	49.0		39	%	4.3	%	3.3	%

(Loss) income from discontinued operations,
net of tax		($2.0	)	$	21.0		n/m		-0.1	%	1.4	%

Net income	$	42.7		$	49.0		-13	%	2.7	%	3.3	%

Net income (loss) per common share, assuming dilution:

Continuing operations	$	0.45		$	0.28		61	%					$	0.69		$	0.48		44	%

Discontinued operations		($0.02	)	$	0.20		n/m

Total Company	$	0.43		$	0.48		-10	%

(a)		Percentage change in sales excluding the estimated impact of currency translation, product line exits, acquisitions and divestitures.
(b)		Excludes restructuring costs and other items (see accompanying schedules A-2 to A-4 for reconciliation to GAAP financial measures).


Full Year Financial Summary - Preliminary
(in millions, except per share amounts)
	FY			FY			% Change vs. P/Y
		2013			2012		Reported		Organic (a)

Net sales, by segment:
Pressure-sensitive Materials	$	4,455.0		$	4,257.6		5	%	5	%
Retail Branding and Information Solutions		1,611.1			1,535.0		5	%	5	%
Other specialty converting businesses		73.9			70.9		4	%	8	%
Total net sales	$	6,140.0		$	5,863.5		5	%	5	%

	As Reported (GAAP)												Adjusted Non-GAAP (b)
	FY			FY					% of Sales				FY			FY					% of Sales
		2013			2012		% Change		2013		2012			2013			2012		% Change		2013		2012
Operating income (loss) before
interest and taxes, by segment:
Pressure-sensitive Materials	$	442.8		$	359.7				9.9	%	8.4	%	$	453.6		$	393.2				10.2	%	9.2	%
Retail Branding and Information Solutions		81.7			53.3				5.1	%	3.5	%		101.7			78.1				6.3	%	5.1	%
Other specialty converting businesses		(8.3	)		(16.2	)			-11.2	%	-22.8	%		(8.2	)		(11.4	)			-11.1	%	-16.1	%
Corporate expense		(94.1	)		(86.3	)								(88.4	)		(80.6	)
Total operating income before
interest and taxes / operating margin	$	422.1		$	310.5		36	%	6.9	%	5.3	%	$	458.7		$	379.3		21	%	7.5	%	6.5	%

Interest expense	$	59.0		$	72.9								$	59.0		$	72.9

Income from continuing operations before taxes	$	363.1		$	237.6		53	%	5.9	%	4.1	%	$	399.7		$	306.4		30	%	6.5	%	5.2	%

Provision for income taxes	$	118.8		$	80.0								$	131.1		$	103.8

Net income from continuing operations	$	244.3		$	157.6		55	%	4.0	%	2.7	%	$	268.6		$	202.6		33	%	4.4	%	3.5	%

(Loss) income from discontinued operations,
net of tax		($28.5	)	$	57.8		n/m		-0.5	%	1.0	%

Net income	$	215.8		$	215.4		0	%	3.5	%	3.7	%

Net income (loss) per common share, assuming dilution:

Continuing operations	$	2.44		$	1.52		61	%					$	2.68		$	1.96		37	%

Discontinued operations		($0.28	)	$	0.56		n/m

Total Company	$	2.16		$	2.08		4	%

														2013			2012
Estimated Free Cash Flow from Continuing Operations (c)														330.3			302.9

(a)		Percentage change in sales excluding the estimated impact of currency translation, product line exits, acquisitions and divestitures.
(b)		Excludes restructuring costs and other items (see accompanying schedules A-2 to A-5 for reconciliation to GAAP financial measures).
(c)		Free cash flow refers to cash flow from operations, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from sale of property, plant and equipment, plus (minus) net proceeds from sales (purchases) of investments, plus discretionary contributions to pension plans and charitable contribution to Avery Dennison Foundation 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 (e.g., cash flow from discontinued operations, taxes, transaction costs).

								A-1
AVERY DENNISON
PRELIMINARY CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)

	(UNAUDITED)

		Three Months Ended				Twelve Months Ended

		Dec. 28, 2013		Dec. 29, 2012		Dec. 28, 2013		Dec. 29, 2012


Net sales	$	1,583.9	$	1,483.1	$	6,140.0	$	5,863.5

Cost of products sold		1,167.6		1,101.1		4,502.3		4,335.3


Gross profit		416.3		382.0		1,637.7		1,528.2

Marketing, general & administrative expense		298.9		288.7		1,179.0		1,148.9

Interest expense		16.0		18.0		59.0		72.9

Other expense, net ⁽¹⁾		3.7		28.1		36.6		68.8


Income from continuing operations before taxes		97.7		47.2		363.1		237.6

Provision for income taxes		53.0		19.2		118.8		80.0


Income from continuing operations		44.7		28.0		244.3		157.6

(Loss) income from discontinued operations, net of tax
(including gain before taxes on disposal of $49.4 and provision for taxes of $65.4)		(2.0)		21.0		(28.5)		57.8


Net income	$	42.7	$	49.0	$	215.8	$	215.4


Per share amounts:

Net income (loss) per common share, assuming dilution

Continuing operations	$	0.45	$	0.28	$	2.44	$	1.52

Discontinued operations		(0.02)		0.20		(0.28)		0.56


Net income per common share, assuming dilution	$	0.43	$	0.48	$	2.16	$	2.08


Average common shares outstanding, assuming dilution		98.5		101.2		100.1		103.5

⁽¹⁾		"Other expense, net" for the fourth quarter of 2013 includes severance and related costs of $6.3, asset impairment, lease and other contract cancellation charges of $1.4, and certain transaction costs of $1.1, partially offset by gain on sale of assets of $5.1.

		"Other expense, net" for the fourth quarter of 2012 includes severance and related costs of $16.2, asset impairment and lease 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 fiscal year 2013 includes severance and related costs of $27.2, asset impairment, lease and other contract cancellation charges of $13.1, charitable contribution to Avery Dennison Foundation of $10, certain transaction costs of $3.2, and legal settlement of $2.5, partially offset by gain on sale of assets of $17.8, and gain from curtailment of pension obligation of $1.6.

		"Other expense, net" for fiscal year 2012 includes severance and related costs of $49.3, asset impairment and lease cancellation charges of $6.5, 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.

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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, product line exits, 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.

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

Adjusted tax rate refers to the anticipated full year GAAP tax rate adjusted for certain 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.

Free cash flow refers to cash flow from operations, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from sale of property, plant and equipment, plus (minus) net proceeds from sales (purchases) of investments, plus discretionary contributions to pension plans and charitable contribution to Avery Dennison Foundation 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 (e.g., cash flow from discontinued operations, taxes, transaction costs).

Net debt to adjusted EBITDA ratio refers to total debt less cash and cash equivalents, divided by adjusted EBITDA.

The reconciliations 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.

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								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. 28, 2013		Dec. 29, 2012		Dec. 28, 2013		Dec. 29, 2012


Reconciliation of Operating Margins:

Net sales	$	1,583.9	$	1,483.1	$	6,140.0	$	5,863.5


Income from continuing operations before taxes	$	97.7	$	47.2	$	363.1	$	237.6


Income from continuing operations before taxes as a percentage of sales		6.2%		3.2%		5.9%		4.1%


Adjustment:
Interest expense	$	16.0	$	18.0	$	59.0	$	72.9


Operating income from continuing operations before interest expense and taxes	$	113.7	$	65.2	$	422.1	$	310.5


Operating Margins		7.2%		4.4%		6.9%		5.3%



Income from continuing operations before taxes	$	97.7	$	47.2	$	363.1	$	237.6

Adjustments:

Restructuring costs:

Severance and related costs		6.3		16.2		27.2		49.3

Asset impairment, lease and other contract cancellation charges		1.4		3.1		13.1		6.5

Other items ⁽¹⁾		(4.0)		8.8		(3.7)		13.0

Interest expense		16.0		18.0		59.0		72.9


Adjusted operating income from continuing operations before interest expense and taxes (non-GAAP)	$	117.4	$	93.3	$	458.7	$	379.3


Adjusted Operating Margins (non-GAAP)		7.4%		6.3%		7.5%		6.5%




Reconciliation of GAAP to Non-GAAP Net Income from Continuing Operations:

As reported net income from continuing operations	$	44.7	$	28.0	$	244.3	$	157.6

Non-GAAP adjustments, net of tax:

Restructuring costs and other items ⁽²⁾		23.4		21.0		24.3		45.0


Adjusted Non-GAAP Net Income from Continuing Operations	$	68.1	$	49.0	$	268.6	$	202.6


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								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. 28, 2013		Dec. 29, 2012		Dec. 28, 2013		Dec. 29, 2012


Reconciliation of GAAP to Non-GAAP Net Income per Common Share from Continuing Operations:

As reported net income per common share from continuing operations, assuming dilution	$	0.45	$	0.28	$	2.44	$	1.52

Non-GAAP adjustments per common share, net of tax:

Restructuring costs and other items ⁽²⁾		0.24		0.20		0.24		0.44


Adjusted Non-GAAP Net Income per Common Share from Continuing Operations,
assuming dilution	$	0.69	$	0.48	$	2.68	$	1.96



Average common shares outstanding,
assuming dilution		98.5		101.2		100.1		103.5

⁽¹⁾Includes charitable contribution to Avery Dennison Foundation, indefinite-lived intangible asset impairment charges, certain transaction costs, legal settlement, costs associated with exiting product lines, gain on sale of assets and product line, and gain from curtailment of pension obligation.
⁽²⁾Reflects the full year estimated tax effect of restructuring costs and other items.


		(UNAUDITED)

		Twelve Months Ended

		Dec. 28, 2013		Dec. 29, 2012

Reconciliation of GAAP to Non-GAAP Free Cash Flow:

Net cash provided by operating activities	$	320.1	$	513.4

Purchases of property, plant and equipment		(129.2)		(99.2)

Purchases of software and other deferred charges		(52.2)		(59.1)

Proceeds from sale of property, plant and equipment		38.7		4.2

Sale (purchases) of investments, net		0.1		(6.7)

Plus: charitable contribution to Avery Dennison Foundation utilizing proceeds from divestitures		10.0		---

Discretionary pension contributions utilizing proceeds from divestitures		50.1		---

Plus (minus): estimated net divestiture-related payments and free cash outflow (inflow) from discontinued operations		92.7		(49.7)


Estimated Free Cash Flow - Continuing Operations	$	330.3	$	302.9



	(UNAUDITED)
	Twelve Months Ended
	Dec. 28, 2013
Proceeds from Sale of Businesses:

Proceeds from sale of businesses, net of cash provided	$	481.2

Estimated net divestiture-related payments and free cash outflow from discontinued operations		(92.7)



Net proceeds from sale of businesses		388.5


Charitable contribution to Avery Dennison Foundation utilizing proceeds from divestitures		(10.0)
Discretionary pension contributions utilizing proceeds from divestitures		(50.1)


Net proceeds from sale of businesses less discretionary contributions	$	328.4

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													A-4
AVERY DENNISON
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions)
(UNAUDITED)

	Fourth Quarter Ended

	NET SALES				OPERATING INCOME						OPERATING MARGINS
		2013		2012		2013 ⁽¹⁾			2012 ⁽²⁾		2013		2012

Pressure-sensitive Materials	$	1,149.1	$	1,060.5	$	108.7		$	81.2		9.5	%	7.7	%
Retail Branding and Information Solutions		417.4		407.5		31.0			11.6		7.4	%	2.8	%
Other specialty converting businesses		17.4		15.1		(2.1	)		(4.5	)	(12.1	%)	(29.8	%)
Corporate Expense		N/A		N/A		(23.9	)		(23.1	)	N/A		N/A

TOTAL FROM CONTINUING OPERATIONS	$	1,583.9	$	1,483.1	$	113.7		$	65.2		7.2	%	4.4	%

(1) Operating income for the fourth quarter of 2013 includes severance and related costs of $6.3, asset impairment, lease and other contract cancellation charges of $1.4, and certain transaction costs of $1.1, partially offset by gain on sale of assets of $5.1. Of the total $3.7, the Pressure-sensitive Materials segment recorded $2.1, the Retail Branding and Information Solutions segment recorded $.5, and Corporate recorded $1.1.

(2) Operating income for the fourth quarter of 2012 includes severance and related costs of $16.2, asset impairment and lease cancellation charges of $3.1, indefinite-lived intangible asset impairment charges of $7, and costs associated with exiting product lines of $1.8. Of the total $28.1, the Pressure-sensitive Materials segment recorded $9.8, the Retail Branding and Information Solutions segment recorded $13.4, the other specialty converting businesses recorded $2, and Corporate recorded $2.9.

RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY INFORMATION

					Fourth Quarter Ended
					OPERATING INCOME						OPERATING MARGINS

						2013			2012		2013		2012
Pressure-sensitive Materials
Operating income and margins, as reported					$	108.7		$	81.2		9.5	%	7.7	%
Adjustments:
Restructuring costs:
Severance and related costs						1.6			8.9		0.1	%	0.8	%
Asset impairment and lease cancellation charges						0.5			0.9		---		0.1	%
Adjusted operating income and margins (non-GAAP)					$	110.8		$	91.0		9.6	%	8.6	%

Retail Branding and Information Solutions
Operating income and margins, as reported					$	31.0		$	11.6		7.4	%	2.8	%
Adjustments:
Restructuring costs:
Severance and related costs						4.7			4.5		1.1	%	1.1	%
Asset impairment, lease and other contract cancellation charges						0.9			1.9		0.2	%	0.5	%
Indefinite-lived intangible asset impairment charges						---			7.0		---		1.7	%
Gain from sale of assets						(5.1	)		---		(1.2	%)	---
Adjusted operating income and margins (non-GAAP)					$	31.5		$	25.0		7.5	%	6.1	%

Other specialty converting businesses
Operating loss and margins, as reported					$	(2.1	)	$	(4.5	)	(12.1	%)	(29.8	%)
Adjustments:
Restructuring costs:
Severance and related costs						---			0.2		---		1.3	%
Product line exits						---			1.8		---		11.9	%
Adjusted operating loss and margins (non-GAAP)					$	(2.1	)	$	(2.5	)	(12.1	%)	(16.6	%)

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													A-5
AVERY DENNISON
PRELIMINARY SUPPLEMENTARY INFORMATION
(In millions)
(UNAUDITED)

	Twelve Months Year-to-Date

	NET SALES				OPERATING INCOME						OPERATING MARGINS
		2013		2012		2013 ⁽¹⁾			2012 ⁽²⁾		2013		2012

Pressure-sensitive Materials	$	4,455.0	$	4,257.6	$	442.8		$	359.7		9.9	%	8.4	%
Retail Branding and Information Solutions		1,611.1		1,535.0		81.7			53.3		5.1	%	3.5	%
Other specialty converting businesses		73.9		70.9		(8.3	)		(16.2	)	(11.2	%)	(22.8	%)
Corporate Expense		N/A		N/A		(94.1	)		(86.3	)	N/A		N/A

TOTAL FROM CONTINUING OPERATIONS	$	6,140.0	$	5,863.5	$	422.1		$	310.5		6.9	%	5.3	%

(1) Operating income for fiscal year 2013 includes severance and related costs of $27.2, asset impairment, lease and other contract cancellation charges of $13.1, charitable contribution to Avery Dennison Foundation of $10, certain transaction costs of $3.2, and legal settlement of $2.5, partially offset by gain on sale of assets of $17.8, and gain from curtailment of pension obligation of $1.6. Of the total $36.6, the Pressure-sensitive Materials segment recorded $10.8, the Retail Branding and Information Solutions segment recorded $20, the other specialty converting businesses recorded $.1, and Corporate recorded $5.7.

(2) Operating income for fiscal year 2012 includes severance and related costs of $49.3, asset impairment and lease cancellation charges of $6.5, 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. Of the total $68.8, the Pressure-sensitive Materials segment recorded $33.5, the Retail Branding and Information Solutions segment recorded $24.8, the other specialty converting businesses recorded $4.8, and Corporate recorded $5.7.


RECONCILIATION OF GAAP TO NON-GAAP SUPPLEMENTARY INFORMATION

					Twelve Months Year-to-Date
					OPERATING INCOME						OPERATING MARGINS

						2013			2012		2013		2012
Pressure-sensitive Materials
Operating income and margins, as reported					$	442.8		$	359.7		9.9	%	8.4	%
Adjustments:
Restructuring costs:
Severance and related costs						7.0			31.5		0.2	%	0.7	%
Asset impairment, lease and other contract cancellation charges						3.8			2.6		0.1	%	0.1	%
Gain on sale of product line						---			(0.6	)	---		---
Adjusted operating income and margins (non-GAAP)					$	453.6		$	393.2		10.2	%	9.2	%

Retail Branding and Information Solutions
Operating income and margins, as reported					$	81.7		$	53.3		5.1	%	3.5	%
Adjustments:
Restructuring costs:
Severance and related costs						19.9			14.4		1.2	%	0.9	%
Asset impairment, lease and other contract cancellation charges						8.6			3.4		0.5	%	0.2	%
Indefinite-lived intangible asset impairment charges						---			7.0		---		0.5	%
Gain from curtailment of pension obligation						(1.6	)		---		(0.1	%)	---
Gain on sale of assets						(6.9	)		---		(0.4	%)	---
Adjusted operating income and margins (non-GAAP)					$	101.7		$	78.1		6.3	%	5.1	%

Other specialty converting businesses
Operating loss and margins, as reported					$	(8.3	)	$	(16.2	)	(11.2	%)	(22.8	%)
Adjustments:
Restructuring costs:
Severance and related costs						---			0.7		---		1.0	%
Asset impairment charges						0.1			0.2		0.1	%	0.2	%
Product line exits						---			3.9		---		5.5	%
Adjusted operating loss and margins (non-GAAP)					$	(8.2	)	$	(11.4	)	(11.1	%)	(16.1	%)

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				A-6
AVERY DENNISON
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)



		(UNAUDITED)

ASSETS		Dec. 28, 2013	Dec. 29, 2012


Current assets:
Cash and cash equivalents	$	351.6	$	235.4
Trade accounts receivable, net		1,016.5		972.8
Inventories, net		494.1		473.3
Assets held for sale		1.3		472.2
Other current assets		228.3		258.0


Total current assets		2,091.8		2,411.7

Property, plant and equipment, net		922.5		1,015.5
Goodwill		751.1		764.4
Other intangibles resulting from business acquisitions, net		96.0		125.0
Non-current deferred income taxes		263.4		331.6
Other assets		485.8		457.1


	$	4,610.6	$	5,105.3




LIABILITIES AND SHAREHOLDERS' EQUITY


Current liabilities:
Short-term borrowings and current portion of long-term debt and capital leases	$	76.9	$	520.2
Accounts payable		889.5		804.3
Liabilities held for sale		---		160.5
Other current liabilities		587.7		589.5


Total current liabilities		1,554.1		2,074.5

Long-term debt and capital leases		950.6		702.2
Other long-term liabilities		613.7		747.7
Shareholders' equity:
Common stock		124.1		124.1
Capital in excess of par value		812.3		801.8
Retained earnings		2,009.1		1,910.8
Accumulated other comprehensive loss		(281.1)		(278.0)
Treasury stock at cost		(1,172.2)		(977.8)



Total shareholders' equity		1,492.2		1,580.9


	$	4,610.6	$	5,105.3


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				A-7
AVERY DENNISON
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

	(UNAUDITED)

	Twelve Months Ended

		Dec. 28, 2013		Dec. 29, 2012


Operating Activities:

Net income	$	215.8	$	215.4

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation		135.6		150.1

Amortization		69.0		70.5

Provision for doubtful accounts and sales returns		16.3		19.5

Gain on sale of businesses		(49.3)		---

Indefinite-lived intangible asset impairment charge		---		7.0

Asset impairment and net (gain) loss on sale/disposal of assets		(5.8)		11.7

Stock-based compensation		34.0		38.9

Other non-cash expense and loss		49.3		41.8

Other non-cash income and gain		(11.8)		---

Changes in assets and liabilities and other adjustments		(133.0)		(41.5)


Net cash provided by operating activities		320.1		513.4


Investing Activities:

Purchases of property, plant and equipment		(129.2)		(99.2)

Purchases of software and other deferred charges		(52.2)		(59.1)

Proceeds from sale of product line		---		0.8

Proceeds from sale of property, plant and equipment		38.7		4.2

Sale (purchases) of investments, net		0.1		(6.7)

Proceeds from sale of businesses, net of cash provided		481.2		---

Other		0.8		---


Net cash provided by (used in) investing activities		339.4		(160.0)


Financing Activities:

Net (decrease) increase in borrowings (maturities of 90 days or less)		(435.3)		42.3

Additional borrowings (maturities longer than 90 days)		250.0		---

Payments of debt (maturities longer than 90 days)		(1.9)		(1.8)

Dividends paid		(112.0)		(110.4)

Share repurchases		(283.5)		(235.2)

Proceeds from exercise of stock options, net		44.8		10.2

Other		(8.3)		(2.7)


Net cash used in financing activities		(546.2)		(297.6)


Effect of foreign currency translation on cash balances		2.9		1.6


Increase in cash and cash equivalents		116.2		57.4

Cash and cash equivalents, beginning of year		235.4		178.0


Cash and cash equivalents, end of year	$	351.6	$	235.4

Source: Avery Dennison Corporation

Avery Dennison
Media Relations:
David Frail, 626-304-2014
David.Frail@averydennison.com
or
Investor Relations:
Eric M. Leeds, 626-304-2029
investorcom@averydennison.com

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Avery Dennison Announces Fourth Quarter and Full-Year 2013 Results

Avery Dennison Announces Fourth Quarter and Full-Year 2013 Results

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