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Avery Dennison Outlines Long-Term Growth Opportunities at Analyst Meeting

Wednesday, March 17, 2004

Press release from the issuing company

NEW YORK--March 16, 2004-- Avery Dennison Corporation today provided an overview of its operations and strategies for long-term growth at an annual New York meeting of security analysts and investors hosted by the Company. Avery Dennison also reaffirmed its first quarter and full-year 2004 earnings guidance provided earlier this year. "We have positioned ourselves for solid, sustainable improvement in 2004 and beyond," said Philip M. Neal, chairman and chief executive officer of Avery Dennison, following a summary of several challenges the Company faced in 2003. "We continue to build on our substantial competitive advantages in each of our key businesses and we are successfully executing our new top-line growth initiatives." Neal discussed the initial results of the Company's new Horizons growth process, which was implemented throughout Avery Dennison's global operations during the past year and has provided a full pipeline of new growth opportunities that include new products, applications and services. More than 500 projects were launched by the end of 2003, generating annualized incremental sales of approximately $50 million. "The Horizons program at Avery Dennison has changed our mindset and our expectations for growth," said Neal. "We are proving that our people thrive on tough challenges, their creativity flourishes when there are few boundaries, and change happens fast when they are committed to a tight deadline." Avery Dennison's strong and growing presence in the emerging markets of Asia, Latin America and Eastern Europe was cited as a key growth driver for the Company. "Sales of our products and services in these developing markets have consistently grown at rates in excess of 20 percent annually, and there is no slowdown in sight," said Neal. According to Neal, productivity improvement is a core competency at Avery Dennison, and the Company expects to achieve substantial margin expansion in the near term as a result of several productivity improvement programs. Contributing to the expected productivity improvement at the Company will be the completion of the Jackstadt integration, which is expected to occur by mid-2004, the implementation of a productivity acceleration program primarily in the office products business and ongoing benefits from Six Sigma activities. Neal described the anticipated adoption of radio frequency identification (RFID) technology by numerous industries in a wide variety of applications as Avery Dennison's single largest long-term growth opportunity. Predicting that 10 to 15 years in the future, electronic labels containing RFID microprocessor chips will be as common as printed barcodes on labels today, Neal stated that Avery Dennison "expects to be a leading supplier of electronic labels in the future, just as we are now a leading supplier of printed labels and label material. "RFID fits right into the core of our business as both a materials supplier and a high-volume converter of a wide assortment of highly specialized label constructions," said Neal. "We have the capabilities to provide virtually every component of the RFID tag, except for the microprocessor chip, making us uniquely positioned to capture a meaningful share of this potentially large, new market." Avery Dennison is currently producing tags and labels that feature RFID technology for several pilot programs at leading technology and merchandising companies in the U.S. and Europe. The Company plans to double its investment in developing its RFID business in 2004, and it expects to start generating revenue on RFID products by the end of the year, with significant growth anticipated in 2005 and beyond as production capacity and demand increase. The Company raised the lower end of its previously announced earnings expectation from $0.60 to $0.63 per share for the first quarter of 2004. Revised guidance for the first quarter is $0.63 to $0.67 per share. The Company reiterated its guidance of $2.75 to $3.10 per share for the full year, before final restructuring charges associated with the Jackstadt integration, which are expected to total $30 million to $35 million before taxes. "We are confident in our strategies to achieve our goals for solid growth in the short and long term," said Neal. "After several years of relatively heavy acquisition and divestiture activity, we now have the right portfolio of businesses to drive long-term value creation, we have the right assets in place globally to maintain our competitive advantage in our businesses, we have the proven tools in our Horizons and Six Sigma programs to execute our growth and productivity improvement strategies and we have the right people to make it all happen."




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