Avery Dennison Provides an Update on Long-Term Business Plans and Near-Term Outlook

Business Wire, March 4, 2008

NEW YORK -- Avery Dennison Corporation (NYSE: AVY) provided an update on its long-term business priorities at a meeting of securities analysts and institutional investors today in New York. Management detailed its strategy for achieving targets for improved earnings, return on total capital and cash flow.

"We have unique and strong competitive advantages in our markets," said Dean A. Scarborough, president and chief executive officer. "Innovative products and services, a global footprint, and proprietary capabilities to manage customer data create exciting opportunities to add value for customers. This value differentiates our products in the marketplace and cements our relationships with our customers."

"With the acquisition of Paxar, our Retail Information Services group became the second largest business in our portfolio," he added. "We expect this business, which consists of products and services serving retail apparel markets, to grow more than five percent over the medium-to-long term. This growth will be driven by share gain in a highly fragmented global market, driven by our industry-leading product innovation and service capabilities."

Scarborough also discussed the impact of economic conditions on the Company's businesses. "The weak business conditions we saw in the fourth quarter have generally continued," he said. "While volume for the North American roll materials business has improved, margins will remain lower until we realize the benefit of our late first quarter price increases. We have also seen weakening in some of our more economically sensitive businesses. We now expect the first quarter to represent less than 20 percent of our earnings for the year, as the benefit of price increases and many of our cost reduction actions are weighted toward the back half of the year."

"The key variables for the balance of the year include economic conditions and their impact on apparel orders and the office products' back-to-school season; our ability to realize price increases; and the price of raw materials," he added. "We have upside on both the tax rate and interest expense relative to our guidance, so we do remain committed to delivering earnings and free cash flow within our guidance range for the year."

Scarborough was joined in the presentation by Daniel R. O'Bryant, executive vice president, Finance, and chief financial officer, and Terrence L. Hemmelgarn, group vice president, Retail Information Services. In the presentation, they outlined the Company's top priorities, including:

* Capturing the synergies from the Paxar integration and delivering on the growth potential of Retail Information Services

* Accelerating productivity and driving growth for pressure-sensitive materials through emerging market expansion and new application development

* Renovating core products in the Office and Consumer segment

* Accelerating Enterprise Lean Sigma (ELS) to drive operational excellence

* Delivering significantly higher cash flow.

"We expect our initiatives for sales and productivity improvement to drive double-digit earnings growth and significant increases in free cash flow, which should result in above-average value creation for our shareholders," Scarborough said.

Avery Dennison is a global leader in pressure-sensitive labeling materials, retail tag, ticketing and branding systems, and office products. Based in Pasadena, Calif., Avery Dennison is a FORTUNE 500 Company with 2007 sales of $6.3 billion. Avery Dennison employs more than 30,000 individuals in over 60 countries, who develop, manufacture and market a wide range of products for both consumer and industrial markets. Products offered by Avery Dennison include: Fasson-brand self-adhesive materials; Avery Dennison brand products for the retail and apparel industries; Avery-brand office products and graphics imaging media; specialty tapes, peel-and-stick postage stamps, and labels for a wide variety of automotive, industrial and durable goods applications.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Certain statements contained in this document are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements and financial or other business targets are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or expected results depending on a variety of factors, including but not limited to risks and uncertainties relating to investment in development activities and new production facilities; fluctuations in cost and availability of raw materials; ability of the Company to achieve and sustain targeted cost reductions, including synergies expected from the integration of the Paxar business in the time and at the cost anticipated; ability of the Company to generate sustained productivity improvement; successful integration of acquisitions; successful implementation of new manufacturing technologies and installation of manufacturing equipment; the financial condition and inventory strategies of customers; customer and supplier concentrations; changes in customer order patterns; loss of significant contract(s) or customer(s); timely development and market acceptance of new products; fluctuations in demand affecting sales to customers; impact of competitive products and pricing; selling prices; business mix shift; credit risks; ability of the Company to obtain adequate financing arrangements; fluctuations in interest rates; fluctuations in pension, insurance and employee benefit costs; impact of legal proceedings, including the Australian Competition and Consumer Commission investigation into industry competitive practices, and any related proceedings or lawsuits pertaining to this investigation or to the subject matter thereof or of the concluded investigations by the U.S. Department of Justice ("DOJ"), the European Commission, and the Canadian Department of Justice (including purported class actions seeking treble damages for alleged unlawful competitive practices, which were filed after the announcement of the DOJ investigation), as well as the impact of potential violations of the U.S. Foreign Corrupt Practices Act based on issues in China; changes in governmental regulations; changes in political conditions; fluctuations in foreign currency exchange rates and other risks associated with foreign operations; worldwide and local economic conditions; impact of epidemiological events on the economy and the Company's customers and suppliers; acts of war, terrorism, natural disasters; and other factors.