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Avery Dennison reports strong first quarter

Wednesday, April 28, 2010

Press release from the issuing company

Pasadena, Calif. - Avery Dennison Corporation  today announced preliminary, unaudited first quarter 2010 results.

"We are off to an encouraging start in 2010," said Dean A. Scarborough, chairman, president and CEO of Avery Dennison. "First-quarter volumes increased and organic sales growth was solid in all regions, particularly emerging markets. We're especially pleased with the increased demand benefiting our Pressure-sensitive Materials and Retail Information Services segments. Increased operating leverage has driven gross profit margin well above pre-recession levels despite lower volumes."

"Going forward, we're more confident about a modest economic recovery," Scarborough said. "We expect raw material inflation to be a challenge throughout the year and we are taking pricing actions accordingly. We are playing aggressive offense, increasing investment in marketing and business development, while continuing to deliver productivity improvements to help fund long-term, profitable growth."

For more details on the Company's results, see the Company's supplemental presentation materials, "First Quarter 2010 Financial Review and Analysis," posted at the Company's Web site at www.investors.averydennison.com, and furnished under Form 8-K with the SEC.

First Quarter 2010 Results by Segment
All references to sales reflect comparisons on an organic basis, which exclude the impact of acquisitions, foreign currency translation, and the impact of an extra week in the first quarter of 2009. All references to operating margin exclude the impact of restructuring, asset impairment charges, and other items.

Pressure-sensitive Materials (PSM)
- Roll Materials sales growth was led by strength in emerging markets, and mid single-digit growth in Europe and North America. Sales grew low double-digits in the Graphics and Reflective Products division.
- Operating margin increased due to higher volume and the benefits from restructuring and o'ther initiatives to drive productivity.

Retail Information Services (RIS)
- Sales growth reflected increased demand, due in part to significant inventory destocking that occurred among apparel retailers in the first half of 2009.
- Operating margin expanded due to increased volume and the benefit of restructuring and other productivity initiatives.
- RIS continues to introduce new products and value-added services to increase its share of this large market, while reducing fixed costs and streamlining its operations.

Office and Consumer Products (OCP)
- The decline in sales reflected weak end-market demand and changes in customer programs, partially offset by the impact of inventory destocking in the first quarter of 2010 compared to that in the first quarter of 2009.
- Operating margin declined due to increased spending related to customer programs, as well as higher investment in consumer promotions and marketing.

Other specialty converting businesses
- Sales growth primarily reflected increased demand for products for automotive applications, which was down sharply in the first quarter of 2009.
- The improvement in operating margin reflected increased volume and the benefit of restructuring and productivity actions.

Consolidated Items and Actions
- In the fourth quarter of 2008, the Company began a restructuring program to reduce costs across all segments of the business. The Company is on track to achieve its goal of $180 million in annualized savings by mid-2010. In the first quarter of 2010, the Company delivered approximately $25 million in incremental savings from these actions, net of transition costs.
- The adjusted tax rate in the first quarter was approximately 22 percent, representing the high end of the expected range for the full-year rate.

2010 Outlook
In the Company's supplemental presentation materials, "First Quarter 2010 Financial Review and Analysis," the Company provides a list of factors that it believes will contribute to its 2010 financial results. Based on the factors listed and other assumptions, the Company expects reported revenue growth of 5 to 7 percent, and Adjusted (non-GAAP) Earnings Per Share of $2.50 to $2.80. The Company estimates Free Cash Flow in 2010 of $300 to $350 million.




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