2. Forward-Looking Statements
Certain information presented in this document may constitute “forward-looking” statements. These 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 fluctuations
in cost and availability of raw materials; ability of the Company to achieve and sustain targeted cost reductions;
foreign currency exchange rates; worldwide and local economic conditions; impact of competitive products and
pricing; selling prices; impact of legal proceedings, including the Canadian Department of Justice and the 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 or of the recently concluded
investigations by the U.S. Department of Justice (“DOJ”) and the European Commission (including purported class
actions seeking treble damages for alleged unlawful competitive practices, and a purported class action related to
alleged disclosure and fiduciary duty violations pertaining to 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; impact of epidemiological events on the economy and the
Company’s customers and suppliers; successful integration of acquisitions; financial condition and inventory
strategies of customers; timely development and market 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) the impact of economic conditions on underlying demand for the
Company’s products; (2) the impact of competitors’ actions, including expansion in key markets, product offerings
and pricing; (3) the degree to which higher raw material and energy-related 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; (4) potential adverse developments in legal proceedings and/or investigations regarding
competitive activities, including possible fines, penalties, judgments or settlements; and (5) the ability of the
Company to achieve and sustain targeted cost reductions.
Use of Non-GAAP Financial Measures
This presentation contains certain non-GAAP measures as defined by SEC rules. As required by these rules, we
have provided a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, included in
the Appendix section of this presentation.
3. Balanced strategy for sustained value creation
• Significant investments to drive both top line growth and
productivity improvement
– Acquisitions in 2002
– Portfolio rationalization (divestitures; strategic product
pruning)
– Major restructuring program initiated late 2005
• Two major growth platforms continue to draw heavy
share of investment today
– Emerging markets
– RFID
• Core businesses generating solid free cash flow to
support sustained value creation ahead
5. Three operating segments…and “other specialty”
2006 Net Sales = $5.6 billion
Other Specialty
Converting
Retail Information
Services
Pressure-
sensitive
Materials
Office and
Consumer
Products
6. Pressure-sensitive Materials
Adj. Organic Sales Growth(1) Operating Margin(2)
2006 2005 2004 2006 2005
2006 Sales 2004
$3.2 B + 3.6% + 3.1% + 9.6% 9.6% 9.0% 8.6%
Excluding currency, acquisitions, and divestitures – see Appendix for detail
(1)
Excluding restructuring charges and other items – see Appendix for detail
(2)
7. Office and Consumer Products
Adj. Organic Sales Growth(1) Operating Margin(2)
2006 2005 2004 2006 2005
2006 Sales 2004
$1.1 B - 0.4% - 0.6% - 5.1% 16.5% 16.9% 15.9%
Excluding currency, acquisitions, and divestitures – see Appendix for detail
(1)
Excluding restructuring charges and other items – see Appendix for detail
(2)
8. Retail Information Services
Adj. Organic Sales Growth(1) Operating Margin(2)
2006 2005 2004 2006 2005
2006 Sales 2004
$0.7 B + 4.8% + 3.1% + 9.8% 8.4% 7.2% 7.4%
Excluding currency, acquisitions, and divestitures – see Appendix for detail
(1)
Excluding restructuring charges and other items – see Appendix for detail
(2)
9. Other Specialty Converting Businesses
Adj. Organic Sales Growth(1) Operating Margin(2)
2006 2005 2004 2006 2005
2006 Sales 2004
$0.6 B + 2.3% + 4.9% + 8.2% 3.5% 3.4% 7.0%
Excluding currency, acquisitions, and divestitures – see Appendix for detail
(1)
Excluding restructuring charges and other items – see Appendix for detail
(2)
10. Full Year 2006 Highlights
• Modest growth in sales on adjusted organic basis
(3%)
– Continued strength in emerging markets
– Good progress against share gain objectives for Roll
Materials business in North America and Europe
during second half of the year
– Early signs of improvement in growth trajectory for
Office Products branded printable media
– Solid growth in Retail Information Services from
continued global share gain
– Mixed results for Graphics and Reflective – solid
performance internationally, partially offset by decline
in North America, with reduced profitability overall
11. Full Year 2006 Highlights (continued)
• Gross profit and EBIT margin (before restructuring
charges) up 40 basis points and 30 basis points,
respectively
• U.S. DOJ and European Union investigations closed
with no action
• Board raised authorization for share repurchase to
7.4 mil. shares in late October
12. Overview of Today’s Portfolio
Long-Term
Operating
3-5 Yr Sales
Margin Target
Growth Drivers Growth 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
• Increased penetration of
Office & ~ flat 18-20%
printable media products
Consumer (with improved
Products product mix)
• New category innovation;
existing product upgrades
• Global consolidation
Retail Info 6-8% 10-12%
Services • New products and services
• Emerging markets
Other Specialty 10%+ > 10%
Converting • New products, niche applications
* Excluding acquisitions and divestitures
13. Margin expansion is key near-term priority
• Maintain our pricing rigor
• $90 to $100 million of annual savings from restructuring
actions completed in 2006
• Productivity improvement initiatives across all businesses
• Enterprise Lean Sigma to drive continuous improvement
• RFID still costing ~ $25 to $30 mil. pre-tax; losses will
decline as revenue ramps up
14. International operations growing faster-than-
average… and profitability is expanding
2006 Revenue Operating Margin**,
by Region International Operations
(before intergeographic
eliminations)
11.0%
Latin Other*
America
10.0%
Asia 9.0%
U.S.
8.0%
Eastern 7.0%
Europe
6.0%
5.0%
Western 2003 2004 2005 2006
Europe
* “Other” includes Canada, Australia, and South Africa
** Excluding restructuring charges
15. We’ve increased our participation in the
rapidly growing emerging markets
Emerging Markets Share of Total Sales
2001 2006 2011
Contribution
to Overall
2.7 pts. 2.9 pts. 3.9 pts.
Growth:
Emerging Markets
Local Management Leveraging Global Capabilities
16. 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
17. Pressure-Sensitive Materials
Market leader
Global scale advantages…
technology development, raw
material sourcing, global
customers
Regional scale advantages…
superior service (Exact, Next
Day Delivery, Fasson Optimum
Performance), lower cost asset
configuration and utilization
Opportunities Challenges
Emerging markets Slower domestic market
growth
Beverage market conversion
Optimizing volume / price / mix
Durables share gain
equation in more competitive
RFID adoption driving carton market
labeling penetration
19. Office and Consumer Products
Branded Printable Media –
innovator of highly
differentiated, proprietary
products
Manage for Growth
Filing and Other – low cost
provider
Manage for Margin
Opportunities Challenges
New sources of growth for Key growth drivers have
Branded Media slowed
Expansion of under-penetrated Customer concentration
categories
Private label growth eroding
Cost reduction for Filing share
business
20. Retail Information Services
One of two global providers
Complex supply chain
Labels and tags low cost/high
value to retail/apparel
companies
Customers demand:
• Global quality, data
integrity, color consistency
• Fast, reliable sampling and
order fulfillment
Opportunities Challenges
Industry consolidation driving
Increased vendor power
share gain
Retailer consolidation
Rapid growth in Asia (China,
India, other countries in region)
Achieving scale in Latin
Leveraging full portfolio of America and Europe
products and services
22. Where We Play In RFID Value Chain
Converting/
Printing Partners
Avery Dennison - Retail
Information Services
Avery Dennison
RFID, RF IDentics
Chip Chip Antenna Antenna Inlay Label Distribution
End user
Design Manufacture Design Manufacture Assembly Conversion & Service
Sales through value-adding converters
Partnerships with all major chip suppliers
aggregates volume, facilitates
better customer service
23. RFID… fundamental improvement in
competitive position vs. a year ago
• Manufacturing speeds, yields beating internal targets
• Customers, other partners recognize our technical
capabilities
• Continue to target significant share gain for carton
labeling applications (market share objective of
30%+)
• Sufficient progress to begin broadening reach:
– Develop and commercialize HF products
– Increase pharmaceutical, apparel, other item level
engagements
– Expand activities in Europe / Asia
24. 2007 Earnings Guidance
Pro-forma earnings per share, fully diluted*
$4.00 - $4.35
$3.77
$3.44
$3.04
$2.82
$2.70
2002 2003 2004 2005 2006 2007
Guidance
* Excludes restructuring charges, gains on sale of assets, and other items – see Appendix for detail.
25. Capital model provides significant
flexibility for funding requirements
2007 Capital Allocation
CAPEX/Software
~ $210-$225 mil.
Cash Flow from
Operations
Acquisitions
~ $550 mil. +
Available
+ Cash
> $1 bil.
Dividends
~ $165 mil.
Debt Capacity
$500+ mil.
Share Repurchase
Over $600 mil. in “unallocated” cash
26. Capital spending…
continued shift towards emerging markets
Total Capital Spending & Capital Efficiency
2.3
$206 mil.
$162 mil. $160 - $165 mil.
$162 mil.
$201 mil.
2.1
Capital
$150 mil.
Turnover
(Ratio of Sales
to Average
Invested
2.0
Capital)
1.8
2002 2003 2004 2005 2006 2007e
Emerging Markets
28. Key Takeaways
• Solid progress against near-term goals… balanced strategy for
growth and margin expansion
• Net restructuring savings of ~ $50 mil. in ’06, incremental $40-
$50 mil. in ’07… near-term earnings growth achievable through
actions largely within our control
• Gaining share in the important N.A. market for roll materials
• Emerging markets represent an increasing share of the
portfolio… consistent source of profitable growth
• Return on capital is strong and improving
• Significant free cash flow potential, to fund acquisitions and/or
share repurchase, as appropriate
