This document provides a summary of Daniel O'Bryant's presentation at the Bank of America Basic Industries Conference on May 4, 2006 on behalf of Avery Dennison. The summary highlights Avery Dennison's financial performance in 2005 and Q1 2006, including improved profitability and restructuring actions. Medium-term sales growth targets and margin expansion opportunities are also discussed.

1. Bank of America Basic Industries Conference – May 4, 2006
AVERY DENNISON
Bank of America
Basic Industries Conference
May 4, 2006
Daniel R. O’Bryant
Executive Vice President and Chief Financial Officer
Forward-Looking Statements
Certain information presented in this document may constitute “forward-looking” statements. These
statements 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 fluctuations in cost and availability of raw materials; ability of the Company to achieve and
sustain targeted cost reductions; foreign exchange rates; worldwide and local economic conditions;
selling prices; impact of legal proceedings, including the U.S. Department of Justice (“DOJ”) criminal
investigation, as well as the European Commission (“EC”), Canadian Department of Justice, and
Australian Competition and Consumer Commission investigations, into industry competitive practices
and any related proceedings or lawsuits pertaining to these investigations or to the subject matter
thereof (including purported class actions seeking treble damages for alleged unlawful competitive
practices, and purported class actions related to alleged disclosure violations pertaining to alleged
unlawful competitive practices, which were filed after the announcement of the DOJ investigation, as
well as a likely fine by the EC in respect of certain employee misconduct in Europe); impact of
potential violations of the U.S. Foreign Corrupt Practices Act based on issues in China; impact of
epidemiological events on the economy and the Company’s customers and suppliers; successful
integration of acquired companies, financial condition and inventory strategies of customers;
development, introduction and acceptance of new products; fluctuations in demand affecting sales to
customers; and other matters referred to in the Company’s SEC filings.
The Company believes that the most significant risk factors that could affect its ability to achieve its
stated financial expectations in the near-term include (1) potential adverse developments in legal
proceedings and/or investigations regarding competitive activities, including possible fines, penalties,
judgments or settlements; (2) the impact of economic conditions on underlying demand for the
Company's products; (3) the impact of competitors’ actions, including expansion in key markets,
product offerings and pricing; (4) the degree to which higher raw material costs can be passed on to
customers through selling price increases (and previously implemented selling price increases can
be sustained), without a significant loss of volume; and (5) the ability of the Company to achieve and
sustain targeted cost reductions.
The financial information related to the first quarter of 2006 presented in this document represents
preliminary, unaudited financial results. This document contains non-GAAP measures; a
reconciliation to the most comparable GAAP measures is provided at the Company’s website.
Slide 2
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2. Bank of America Basic Industries Conference – May 4, 2006
2005 At A Glance
• Improved underlying profitability during period of
rapid raw material inflation and sluggish demand
• Charted course to exit certain product lines that
lacked meaningful competitive advantage and growth
potential
• Undertook actions to drive significant improvement in
future profitability
• Achieved major development milestones for RFID
Slide 3
First Quarter 2006 At A Glance
• E.P.S. up 21%, primarily due to improved gross profit margin,
operating expense ratio, and tax rate
• Unit volume before product line divestitures and exited-private
label business grew roughly 2 points faster than Q4 (adjusted for
prior year comparison issues in the preceding quarter)
• The shortfall between Q1 results and the Company’s medium-term
organic sales growth target of 4% - 6% explained by price-related
share loss in North America
– Anticipate 2 to 3 points of improvement in underlying unit volume
over the next few quarters
• Selling prices were slightly behind inflation curve… expect to
cover higher costs over balance of year
• On track with implementation of previously announced
restructuring actions; expect these actions to yield annualized
savings of $80 to $90 mil. when completed
Slide 4
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3. Bank of America Basic Industries Conference – May 4, 2006
Recent Sales Trend (continuing operations)
Q1-05 Q2-05 Q3-05 Q4-05 Q1-06
2.2%
Core Volume 1.6%
.
Growth (estimate) Adj. Volume
1.0%
(1)
Growth = 0%
-1.1%
Acquisitions, Net of
Divestitures 0.4% 0.6% 0.3% 0.0% (0.3)%
Price/Mix + 2% + 2% + 2% + 1% + 1%
Currency 2.9% 3.2% 0.8% (0.6)% (2.7)%
Reported Growth 8.0% 7.1% 2.0% (4.5)% (0.4)%
Adj. Organic Growth(2) 5.3% 3.5% 0.9% 0.7% 3.0%
(1)
Actual unit volumes down 4.6% vs. prior year, due to extra week of sales, pre-buy activities, and timing of holidays;
graph demonstrates trend adjusted for these year-on-year comparison issues.
(2)
Sales growth excluding impact of foreign currency translation, acquisition and divestitures, and year-on-year
comparison issues (e.g., extra week of sales, pre-buy activities, decision to exit certain private label business).
Slide 5
Medium-term top-line growth target in line
with historical average
Organic Sales Growth*
7.4%
4% to 6%
4.9%
4.7%
2.5%
1.2%
2000 2001 2002 2003 2004 2005 Target
-1.8%
* Excluding currency, acquisitions, and divestitures
Slide 6
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4. Bank of America Basic Industries Conference – May 4, 2006
Operating margins have improved…
quot;Corequot; Operating Margin*
Margin
(% of sales) impact of
11.0 option
expense
10.5
Guidance
10.0 Range
9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- Q3- Q4- 2006
03 03 03 03 04 04 04 04 05 05 05 05 est.
* Excludes restructuring charges and RFID spending
Slide 7
… and we expect substantial margin
expansion ahead
Sources of Change in Operating Margin
2008 vs. Today
? 11.0%
9.6%
2005 Productivity Price/Raw Capacity RFID Segment Mix Other 2008
TARGET
Materials Utilization Business
Slide 8
Realities
4

5. Bank of America Basic Industries Conference – May 4, 2006
Overview of Today’s Portfolio
2005 Segment Mix
3-5 Yr Sales Operating
Sales Op Profit Growth Drivers Growth Target* Margin Target
Pressure- • Emerging markets 5-7% 10-12%
sensitive
• Increased penetration of PS
Materials
label technology for product
ID (food & beverage)
• Share gain in durables
• RFID adoption driving carton
labeling penetration
Office & • Increased penetration of down 18-20%
Consumer core products modestly
Products • New category innovation;
existing product upgrades
Retail Info • Global consolidation 6-8% 10-12%
Services • New products and services
• Emerging markets
Other Specialty 10%+ > 10%
Converting • New products, niche applications
* Excluding acquisitions and divestitures Slide 9
International operations growing faster-than-
average… and profitability is expanding
2005 Revenue 2005 Operating Margin**,
by Region International Operations
(before intergeographic
eliminations)
10.0%
Latin Other*
America
9.0%
Asia
8.0%
U.S.
Eastern 7.0%
Europe
6.0%
5.0%
Western
2003 2004 2005
Europe
* “Other” includes Canada, Australia, and South Africa
** Excluding restructuring charges
Slide 10
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6. Bank of America Basic Industries Conference – May 4, 2006
We’ve increased our participation in the rapidly
growing emerging markets…
Emerging Markets Share of Total Sales
2000 2005 2010
Contribution
to Overall 0.2 pts. 2.4 pts. 3.5 pts.
Growth:
Emerging Markets
Local Management Leveraging Global Capabilities
Slide 11
… and these markets are contributing
significantly to our profit growth and returns
Operating Profit from Emerging Markets*
($ millions)
> 200
~ 115
~ 40
2000 2005 2010
* Figures are approximate. Estimates do not include allocation of expenses incurred in North America
and Europe for direct support of businesses in emerging markets (particularly significant for RIS).
Largest single growth platform today Slide 12
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7. Bank of America Basic Industries Conference – May 4, 2006
Key Growth Priorities By Business
• Grow materials businesses through expansion in
emerging markets, increased service leadership, and
innovation in new applications
• Invest in new marketing programs to accelerate
growth of Avery-brand printable media products
• Accelerate growth of RIS business with new products
and continued geographic expansion
• Expand new RFID business through share gain of
rapidly expanding carton label market and innovation
in new applications for selected markets
Slide 13
RFID milestones over past 12 months
• Began volume production on industry’s first and only
high-speed inlay manufacturing process
• Joined Intermec’s Rapid Start Licensing program to
address an IP barrier for customers
• Significantly lowered price of world’s first high-volume
Gen 2 tag to enable widespread adoption
• Chosen as inlay supplier by major end users
• Wal-Mart / Target announce mid-2006 “sunset” for use of
Gen 1 tags
Slide 14
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8. Bank of America Basic Industries Conference – May 4, 2006
Margin expansion is key near-term
priority for the Company
• Maintain our pricing rigor
• Targeting $80 to $90 million of annual savings from
restructuring actions currently underway
• Planning continues for additional savings through
organizational redesign
• Productivity improvement initiatives across all businesses
• Enterprise Lean Sigma to drive continuous improvement
Slide 15
Capital model provides significant flexibility for
funding requirements over the next two years
Capital Allocation
2006 to 2007
CAPEX/Software
~ $400 mil.
Cash Flow
Dividends
from
~ $315 mil.
Operations
~ $1.1 bil.
Available
+ Pension Plans
Cash ~ $50 mil.
~ $2 bil.
Debt
Capacity Share Repurchase
~ $900 mil.
Acquisitions / Other
Over $1 bil. in “unallocated” cash over two years
Slide 16
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9. Bank of America Basic Industries Conference – May 4, 2006
Capital spending…
continued shift towards emerging markets
Total Capital Spending & Capital Efficiency
2.3 $206 mil.
$201 mil.
$175 - $200 mil.
$162 mil.
2.2
$150 mil.
Capital $133 mil.
Turnover
(Ratio of Sales 2.0
to Average
Invested
Capital)
1.9
1.7
2001 2002 2003 2004 2005 2006e
Emerging Markets
Slide 17
Expect continued modest increase to dividend
$1.80
30 consecutive years of dividend increase…
~ 13% compound annual growth
$1.60
$1.40
Dividends per share
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
'75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05
Slide 18
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10. Bank of America Basic Industries Conference – May 4, 2006
BACK-UP
Q1-06 Margin Analysis (continuing operations)
Q1-06 Q1-05 Q4-05
Gross Profit Margin (Total Company) 26.6% 26.2% 27.8%
Operating Margin*:
Pressure-Sensitive Materials 8.9% 9.0% 8.6%
Office and Consumer Products 15.3% 12.6% 22.4%
Retail Information Services 6.8% 3.7% 8.0%
Other Specialty Converting 3.3% 2.6% 1.7%
Total Company 8.3% 7.3% 9.4%
Impact of RFID on reported margin: (0.6)% (0.5)% (0.7)%
Total Company Excluding RFID 8.9% 7.8% 10.1%
* Earnings before interest and taxes, excluding restructuring and asset impairment charges and other
items detailed in Attachments A-3 and A-4 of financial tables.
Slide 20
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11. Bank of America Basic Industries Conference – May 4, 2006
Key Factors Impacting Q1 Margin
• Gross profit margin increased 40 basis points compared with prior
year to 26.6%
– Improvement from productivity gains, as well as inventory write-offs
in prior period (over 200 b.p. combined), were offset by:
» Material cost and energy-related inflation in excess of
associated selling price increases (est. 120 b.p. impact)
» Margin compression effect associated with selling price pass-
through of raw material inflation
– Sequential decline (120 b.p.) reflects unfavorable segment mix (80
b.p.), higher energy costs (20 b.p.), and reduced fixed cost leverage
• Marketing, general and administrative (MG&A) expense ratio
improved 60 basis points compared with prior year to 18.3%
– Absolute MG&A spending decreased by $10 mil. vs. prior year
» Currency translation accounts for half of decline
» Balance reflects productivity improvements and tight spending
controls which more than offset $13 mil.+ of higher cost related
to stock options and other employee-related expenses, as well
as increased IT spending
– Sequentially, MG&A expense ratio was unchanged
Slide 21
Raw Material Update
• Paper-based commodities represent largest category of raw
materials, representing approx. 45-50% of total spend
• Large share of raw material purchases tied to oil based
commodities:
– Plastic films and resins – polypropylene, polyethylene, polyester,
and vinyls, among others – represent approx. 25% of total spend
– Chemicals represent approx. 15% of total spend
• Anticipate raw material inflation of approximately 2% in 2006 ($50
to $60 million), slightly higher than previous forecast
– Assumes moderation of current inflation impacting oil-based
commodities
• Recently implemented and anticipated price increases are
expected to cover higher costs
Slide 22
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12. Bank of America Basic Industries Conference – May 4, 2006
Restructuring Summary
(Continuing Operations)
Pressure Office & Retail Other
Sensitive Consumer Information Specialty Corporate/
TOTAL Materials Products Services Converting Other
($ in millions, except as noted)
Headcount reductions (approx. # of FTEs) 800 335 145 190 45 85
~ 35
Est. Annualized Savings from Actions Taken 70 - 78 19 - 22 5-6 7 - 10 3-5
2006 estimated transition costs 15 - 20 9 - 12 5-6 1-2
Estimated 2006 Realized Savings 50 - 60
Estimated 2006 Savings, Net Of Transition Costs 35 - 40
Total Annualized Savings When Complete 80 - 90
Q4-05/Q1-06 Restructuring Charges*
Severance 31.8 17.7 2.4 7.6 1.2 2.9
Asset impairment 15.0 3.2 3.7 1.8 1.2 5.1
Other 0.7 0.3 0.4
Total, Restructuring Charges 47.5 21.2 6.1 9.8 2.4 8.0
Q4-05/Q1-06 Divestiture-Related Charges 15.2 12.3 2.9
Total 62.7 21.2 18.4 9.8 5.3 8.0
* Anticipate an additional $5 to $10 mil. in charges to be incurred during 2006 to achieve targeted savings, subject to upward revision as plans are finalized.
Approx. 70% of total costs represent cash charges.
Slide 23
2006 Earnings Guidance: Key Considerations
• Factors contributing to earnings growth:
– Improvement in underlying growth rate… projecting reported revenue growth
(continuing operations) of 2-3%
» Volume up 2-3%, net of 2 points loss from product line divestitures and
other offsets
» Price/mix expected to add 1%
» Currency translation at current rates will reduce growth by 1%
– Estimated $35 to $40 mil. in pre-tax restructuring savings, net of transition
costs
– Reduction in pre-tax loss from development of RFID business of $2 - $7 mil.
• Offsetting factors:
– After-tax stock option expense of $0.12 per share
– Incremental after-tax pension expense (related to discount rate) of $0.04 per
share
– Reinvestment of portion of restructuring savings (e.g., incremental marketing
spend of $10 to $15 mil. to support growth of Printable Media products)
– Higher effective tax rate
Slide 24
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13. Bank of America Basic Industries Conference – May 4, 2006
2006 Earnings Guidance
• Key Assumptions:
– Reported revenue up 2% to 3%, including -1% impact from currency
– Raw material inflation of approximately 2% in 2006 ($50 to $60
million)
– Operating margin (incl. RFID and stock option expense) of 9% to
10%
– Interest expense of $55 to $60 million
– Tax rate in the range of 20% to 23%
• Earnings per share before restructuring charges: $3.55 to $3.80
(updated April 25, 2006)
– Current estimate for full year restructuring charges: $0.09 to $0.13
per share (subject to upward revision as planning continues)
Slide 25
RFID remains #1 single growth opportunity
Slide 26
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14. Bank of America Basic Industries Conference – May 4, 2006
We’re developing multiple sources of competitive
advantage that leverage our strengths
• Outstanding product
performance and testing
capabilities
• Good linkages to all points
in value chain
• Superior roll-to-roll
manufacturing capability
• Superior commercial
approach
• Corporate credibility /
financial strength
Slide 27
Fundamental improvement in competitive
position vs. a year ago
• Manufacturing speeds, yields beating internal targets
• Customers, other partners recognize our technical
capabilities
• On track to achieve share goal for retail carton
applications
• Sufficient progress to begin broadening reach:
– Develop and commercialize HF products
– Increase pharmaceutical, apparel, other item level
engagements
– Expand activities in Europe / Asia
Slide 28
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15. Bank of America Basic Industries Conference – May 4, 2006
Modest revenue projection for 2006
reflects reality of market ramp
• Market adoption progressing… meeting reasonable
expectations
– Users waiting for Gen 2
– Implementations at minimum to meet customer
requirements
– Retailers remain committed… Wal-Mart and
Target announced mid-2006 sunset for Gen 1
• Key unknowns continue to affect timing
– Infrastructure costs still high
– Real implementation experience / expertise not
widely available
– Item tagging getting more attention… but HF/UHF
question yet to be answered
Slide 29
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