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Avery Dennison announces solid Q1 results

Press release from the issuing company

Pasadena, Calif. - Avery Dennison Corporation today announced preliminary, unaudited first quarter 2011 results. All non-GAAP financial measures are reconciled to GAAP in the attached tables.

"Avery Dennison delivered solid sales growth in the first quarter, with strong performances by Pressure-sensitive Materials and Retail Branding and Information Solutions," said Dean A. Scarborough, Avery Dennison chairman, president and CEO.

"Pricing actions and productivity initiatives mitigated the impact on margins of increased raw material costs," Scarborough said. "We will continue to aggressively manage the impact of inflation.

"As we expected, Office and Consumer Products had an extremely soft first quarter. We are confident that our investments in new products and demand creation will change the trajectory of this business," Scarborough said.

"For the full year, we expect Avery Dennison to deliver solid growth, margin expansion and strong free cash flow that will support share repurchases later in the year," Scarborough said. "We are well positioned for long-term profitable growth and increased returns."

For more details on the Company's results, see the Company's supplemental presentation materials, "First Quarter 2011 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 2011 Results by Segment

All references to sales reflect comparisons on an organic basis, which exclude the impact of foreign currency translation. All references to operating margin exclude the impact of restructuring charges and other items.

Pressure-sensitive Materials (PSM)

Label and Packaging Materials (formerly Roll Materials) sales grew at a low double-digit rate reflecting both solid volume growth and pricing actions. Sales grew at a high single-digit rate in Graphics and Reflective Solutions.

Operating margin declined as the benefits of pricing actions, increased volume, and productivity initiatives were more than offset by raw material inflation.

Operating margin improved sequentially as the gap between raw material costs and pricing narrowed.

Retail Branding and Information Solutions (RBIS) (formerly Retail Information Services)

Sales growth reflected increased demand from retailers and brands in the U.S. and Europe.

Operating margin increased due to increased volume and productivity initiatives, partially offset by higher employee costs. Operating margin decreased sequentially due to lower volume, reflecting this segment's normal seasonal trend.

Office and Consumer Products (OCP)

More than half of the decline in sales was due to anticipated customer inventory reductions following a build in the fourth quarter of 2010. The balance of the decline was related to weak end market demand and last year's distribution losses with one customer.

Operating margin declined due primarily to lower volume and raw material inflation.

Other specialty converting businesses

Sales growth primarily reflected increased demand for products for automotive and other specialty applications.

Operating margin declined primarily due to expenses related to a warehouse fire in Brazil. The benefits from increased volume, pricing actions, and productivity initiatives more than offset the impact of raw material inflation. Excluding the impact of the fire, operating profit would have been positive.


The first quarter effective GAAP tax rate was 34 percent. The adjusted tax rate for the first quarter increased from 22 to 25 percent, reflecting reduced benefits from discrete tax events this year.


In the Company's supplemental presentation materials, "First Quarter 2011 Financial Review and Analysis," the Company provides a list of factors that it believes will contribute to its 2011 financial results. Based on the factors listed and other assumptions, the Company continues to expect adjusted (non-GAAP) earnings per share of $3.00 to $3.30 and free cash flow of $325 to $350 million in 2011.

Note: Throughout this release and the supplemental presentation materials, all calculations of amounts on a per share basis reflect fully diluted shares outstanding.


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