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Avery Dennison to Sell European Package Label Operations to CCL

Press release from the issuing company

PASADENA, Calif.--July 22, 2003-- Avery Dennison Corporation today announced that it has signed an agreement to sell its package label converting business in Europe to CCL Industries Inc., a label and packaging solutions company based in Toronto, Ontario. Cash proceeds from the sale are expected to be approximately $60 million. In addition, the deal includes a long-term, global supply agreement for Avery Dennison to provide pressure-sensitive base materials to CCL Industries. This supply contract is expected to generate revenue for the Company in 2004 that will partially offset the decrease in sales resulting from the divestiture. The transaction is expected to be finalized during the third quarter of 2003, subject to meeting customary closing conditions, including regulatory approvals. The Company said that it expects the transaction to have a negligible impact on sales and earnings in the third quarter of 2003, and that it estimates it will reduce net reported sales and fully diluted earnings in the fourth quarter of 2003 by $10 million to $15 million and approximately $0.02 per share, respectively, depending on the actual date of closing. The Company expects to recognize a gain associated with the sale of $25 million to $30 million, which would impact third quarter 2003 results if the deal is finalized on or before September 27, 2003. The Company will announce revised earnings and sales expectations for the second half of 2003 when it reports second quarter earnings later today at 8:00 A.M. Pacific time. "Divesting these package label converting operations in Europe is an important part of our strategy to focus on our key global businesses in pressure-sensitive adhesive materials, office products and retail information services," said Philip M. Neal, chairman and chief executive officer of Avery Dennison. "We will continue to invest in growing our existing operations in Europe, particularly in developing Eastern European markets." The transaction involves the sale of two Avery Dennison package label converting facilities in Denmark, located in the cities of Brondby and Randers, as well as a package label converting plant in Chilly-Mazarin, France. The business serves European customers in the pharmaceutical, health and beauty aids, food and industrial markets with customized, self-adhesive labels for product packaging. The approximately 325 Avery Dennison employees at the three operations will become employees of CCL Industries, and the transition is expected to be seamless for customers of these operations.

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