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Avery Dennison Provides Update on Growth and Profit Improvement Strategies

Press release from the issuing company

NEW YORK, N.Y.--March 14, 2005-- Avery Dennison Corporation today provided an overview of its worldwide operations and long-term growth opportunities at an annual meeting of security analysts and investors which was broadcast live over the Internet. "We are optimistic about our prospects for 2005, as we look forward to continued sales growth and improved profitability," said Dean A. Scarborough, who is currently president and chief operating officer of Avery Dennison and will become chief executive officer on May 1, 2005. "Although sales growth has modestly slowed since January when we provided earnings guidance for the first quarter, we remain comfortable with the earnings-per-share range we provided." Scarborough noted that the pressure-sensitive materials business and the retail information services business are expected to contribute strong sales growth and margin expansion over the next three to five years, while the consumer and office products business is expected to achieve modest growth through new products and applications in the printable media category. Scarborough outlined the Company's four global priorities, citing improvement in operating margins and return on total capital, expansion of Avery Dennison's market leadership position in emerging markets, top-line growth through superior service and product innovation, and establishment of a leadership position in the developing radio frequency identification (RFID) market. Scarborough emphasized the breadth of the Company's geographic presence, highlighted by strong sales growth in the emerging markets of Asia, Latin America and Eastern Europe. These emerging markets now generate approximately 20 percent of Avery Dennison's total revenue. Demonstrating continued plans for growth in emerging markets, Scarborough said that more than 30 percent of the Company's capital spending in 2005 will be in Asia. The Company provided an update on Avery Dennison's RFID business, announcing that it was recently selected as a vendor by the U.S. Department of Defense to supply a portion of a total of 50 million RFID tags that will be required for its upcoming program launch. Scarborough said that the Company's new high-speed manufacturing line for RFID inlays is expected to be operational by the end of March. Scarborough detailed the Company's strategies across its businesses to achieve its high-priority goal of improving operating margins. Included in the actions designed to expand operating margins are recently implemented price increases and ongoing productivity improvement efforts including Six Sigma and Lean Manufacturing. The Company outlined its long-term financial goals, including annual organic sales growth in the range of 5 percent to 9 percent and annual earnings-per-share growth exceeding 10 percent. "We are positioned to benefit from our significant investments in growth over the past several years," said Scarborough. "We have proven programs in place to grow sales, increase productivity and expand operating margins. Our fundamentals remain solid and the growth drivers for our businesses are strong." Avery Dennison is a global leader in pressure-sensitive labeling materials, office products and retail tag, ticketing and branding systems. Based in Pasadena, Calif., Avery Dennison is a FORTUNE 500 company with 2004 sales of $5.3 billion. Avery Dennison employs approximately 21,400 individuals in 47 countries worldwide who apply the Company's technologies to develop, manufacture and market a wide range of products for both consumer and industrial markets. Products offered by Avery Dennison include Avery-brand office products and graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, reflective highway safety products, labels for a wide variety of automotive, industrial and durable goods applications, brand identification and supply chain management products for the retail and apparel industries, and specialty tapes and polymers.