Avery Dennison 8K Fourth Quarter and Full-year 2011 Results | AVY 31 Jan 12

Fourth Quarter and Full-Year 2011

Financial Review and Analysis

(preliminary, unaudited)

Supplemental Presentation Materials

January 31, 2012

Unless otherwise indicated, the discussion of the Company’s results is focused on its continuing operations

Exhibit 99.2

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. These 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 anticipated results depending on a variety of

factors, including but not limited to risks and uncertainties relating to the following: fluctuations in demand affecting sales to customers; the

financial condition and inventory strategies of customers; changes in customer order patterns; worldwide and local economic conditions;

fluctuations in cost and availability of raw materials; ability of the company to generate sustained productivity improvement; ability of the

company to achieve and sustain targeted cost reductions; impact of competitive products and pricing; loss of significant contract(s) or

customer(s); collection of receivables from customers; selling prices; business mix shift; changes in tax laws and regulations, and uncertainties

associated with interpretations of such laws and regulations; outcome of tax audits; timely development and market acceptance of new products

including sustainable or sustainably-sourced products; investment in development activities and new production facilities; fluctuations in foreign

currency exchange rates and other risks associated with foreign operations; integration of acquisitions and completion of pending dispositions;

amounts of future dividends and share repurchases; customer and supplier concentrations; successful implementation of new manufacturing

technologies and installation of manufacturing equipment; disruptions in information technology systems; successful installation of new or

upgraded information technology systems; volatility of financial markets; impairment of capitalized assets, including goodwill and other

intangibles; credit risks; ability of the company to obtain adequate financing arrangements and maintain access to capital; fluctuations in interest

and tax rates; fluctuations in pension, insurance and employee benefit costs; impact of legal and regulatory proceedings, including with respect

to environmental, health and safety; changes in governmental laws and regulations; changes in political conditions; impact of epidemiological

events on the economy and the company's customers and suppliers; acts of war, terrorism, and natural disasters; and other factors.

The Company believes that the most significant risk factors that could affect its financial performance in the near-term include (1) economic

conditions on underlying demand for the Company's products; (2) the degree to which higher costs can be offset with productivity measures

and/or passed on to customers through selling price increases, without a significant loss of volume; and (3) competitors' actions, including

pricing, expansion in key markets, and product offerings.

For a more detailed discussion of these and other factors, see “Risk Factors” and “Management’s Discussion and Analysis of Results of

Operations and Financial Condition” in the Company’s 2010 Form 10-K, filed on February 28, 2011 with the Securities and Exchange Commission

(“SEC”), and subsequent quarterly reports on Form 10-Q. The forward-looking statements included in this document are made only as of the

date of this document, and the Company undertakes no obligation to update these statements to reflect subsequent events or circumstances.

Use of Non-GAAP Financial Measures

This presentation contains certain non-GAAP financial measures as defined by SEC rules. Reconciliations

of non-GAAP financial measures to

the most directly comparable GAAP financial measures, including limitations associated with these non-GAAP financial measures, are

provided in the financial schedules accompanying the earnings news release for the quarter, along with certain supplemental analysis

provided in this document. (See Attachments A-2 through A-5 to news release dated January 31, 2012.)

The Company’s non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of

these events, activities or decisions, which are included in the

GAAP financial measures, may make it difficult to assess the underlying

performance of the Company in a single period. By excluding certain accounting effects, both positive and negative, of certain items (e.g.

restructuring costs, asset impairments, legal settlements, certain effects of strategic transactions and related costs, loss from debt

extinguishments, loss from curtailment and settlement of pension

obligations, gains or losses on sale of certain assets and other items), the

Company believes that it is providing meaningful supplemental information to facilitate an understanding of the Company’s core operating

results and liquidity measures. These non-GAAP financial measures are used internally to evaluate trends in the Company’s underlying

businesses, as well as to facilitate comparison to the results of competitors for a single period. While some of the items excluded from GAAP

financial measures may recur, they tend to be disparate in amount, frequency, and timing.

The Company uses the following non-GAAP financial measures in this presentation:

•

Organic sales change

refers to the increase or decrease in sales excluding the estimated impact of currency translation, acquisitions and

divestitures;

•

Operating margin

refers to earnings before interest expense and taxes as a percentage of sales;

•

Adjusted operating margin

refers to earnings before interest expense and taxes, excluding

restructuring costs and

other items, as a percentage of sales;

•

Adjusted EPS

refers to as reported net income per common share, assuming dilution, adjusted for the full year

estimated tax effect of restructuring costs and other items; and

•

Free cash flow

refers to cash flow from operations, less net payments for property, plant, and equipment, software and other

deferred charges, plus net proceeds from sale (purchase) of investments. Free cash flow excludes mandatory debt service

requirements and other uses of cash that do not directly or immediately support the underlying business (such as discretionary

debt reductions, dividends, share repurchases, and certain effects of acquisitions and divestitures).

The Company excludes the full year estimated tax effect of restructuring costs and other items from the estimated tax rate to determine its

adjusted tax rate to derive non-GAAP net income.

This document has been furnished (not filed) on Form 8-K with the SEC and may be found on the Company’s website at

www.investors.averydennison.com.

Fourth quarter results in line with recent guidance

Overview (continued)

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

•

Sales grew slightly on organic basis as pricing offset modest volume decline

•

Operating margin declined 80 basis points to 3.8% as

increased raw material costs,

the impact of lower volume, and increased costs associated with restructuring were

partially offset by

pricing actions and productivity initiatives. Excluding costs

associated with restructuring, operating margin was roughly flat.

2012 Outlook

•

Earnings improvement and solid free cash flow on modest organic sales growth

driven largely by emerging markets

•

Maintain strong balance sheet (net debt/EBITDA <2.0x)

•

Increased return of cash to shareholders

–

Quarterly dividend increased in 1Q12

•

Net sales increased 0.7% on organic basis

•

Operating margin declined 80 basis points compared to prior year

–

Excluding costs associated with restructuring and other items, operating margin was roughly

flat

•

Interest expense down slightly compared to prior year

•

Effective tax rate of 22%

–

Full-year tax rate on continuing operations increased from -1% to 34%, reflecting a significant

discrete tax event in 4Q10, geographic income mix, and other discrete items

–

Fourth quarter results from continuing and discontinued operations included a negative

$0.12 per share tax settlement primarily related to OCP (discontinued operations)

•

Reported EPS (including discontinued operations) of $0.21

•

Adjusted (non-GAAP, continuing operations) EPS of $0.36 ($0.51 from continuing

and

discontinued operations excluding the tax settlement)

Fourth Quarter P&L Summary

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

Fourth Quarter Segment Overview

PRESSURE-SENSITIVE MATERIALS

•

Reported sales of $961 mil., up 2% compared to prior year

–

Sales up approx. 3% on organic basis

•

Label and Packaging Materials sales up low single digits on organic basis driven by

pricing actions

•

Graphics and Reflective Solutions sales up mid single digits on organic basis due to

higher volume

•

Operating margin declined 40 basis points to 6.9% as increased raw material costs

and costs associated with restructuring were largely offset by the benefit of pricing

actions and productivity initiatives. Excluding costs associated

with restructuring,

operating margin was roughly flat.

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

RETAIL BRANDING AND INFORMATION SOLUTIONS

•

Reported sales of $368 mil., down approx. 5% compared to prior year

–

Sales down approx. 4% on organic basis

•

Operating margin declined 180 basis points to 2.7% as lower volume and increased

costs associated with restructuring were partially offset by the

benefit of

productivity initiatives. Excluding costs associated with restructuring, operating

margin was roughly flat.

OTHER SPECIALTY CONVERTING BUSINESSES

•

Reported sales of $126 mil., down approx. 6% compared to prior year

–

Sales down approx. 3% excluding currency and divestiture of a product line

•

Operating margin declined 150 basis points to negative 5.2% as lower volume and

increased costs associated with restructuring were partially offset by a gain on the

sale of a product line. Excluding costs associated with restructuring and the gain on

the sale, operating margin declined.

Fourth Quarter Segment Overview (continued)

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

Organic sales growth of 1% to 4%

•

Currency translation (at January rates, represents approx. 3% headwind to reported

sales growth; approx. $18 mil. negative impact to EBIT vs. 2011)

•

Tax rate in low to mid-thirty percent range; cash tax rate in upper-twenty percent

range

•

Restructuring costs and other items of ~$25 mil.

•

Capital expenditures (including IT) of ~$150 mil.

•

Pension contributions of at least $75 mil.

•

Estimated net proceeds and free cash flow from OCP of approx. $400 mil.

•

Average shares outstanding (assuming dilution) of 103 mil.

Contributing Factors to 2012 Results

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

Appendix: Results from Continuing Operations

Avery Dennison

Results from Continuing Operations (Excluding severance and related costs, asset impairment and lease cancellation charges, and other items)

Dollars in millions, except per share amounts

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

Total Company (continuing operations)

Reported Sales

$1,397.0

$1,492.8

$1,429.6

$1,462.6

$5,782.0

$1,526.5

$1,544.8

$1,500.4

$1,454.6

$6,026.3

Organic Sales Change

17%

10%

11%

12%

-2%

-1%

Adjusted operating income from continuing operations

before interest expense and taxes (non-GAAP)

$75.7

$113.9

$72.0

$73.3

$334.9

$84.6

$113.1

$81.9

$70.9

$350.5

Adjusted Operating Margin (non-GAAP)

5.4%

7.6%

5.0%

5.8%

5.5%

7.3%

5.5%

4.9%

5.8%

Effective Tax Rate

17.2%

19.5%

19.1%

-64.4%

1.2%

24.4%

32.8%

49.4%

28.1%

33.7%

Adjusted non-GAAP net income per common share

from continuing operations, assuming dilution

$0.45

$0.70

$0.40

$0.83

$2.39

$0.47

$0.60

$0.30

$0.36

$1.74

Pressure-sensitive Materials

Reported Sales

$918.4

$942.1

$914.4

$942.5

$3,717.4

$1,009.4

$1,006.2

$995.5

$960.5

$3,971.6

Organic Sales Change

14%

11%

10%

Adjusted Operating Income (non-GAAP)

$87.2

$87.3

$69.8

$314.1

$86.9

$90.7

$82.3

$69.8

$329.7

Adjusted Operating Margin (non-GAAP)

9.5%

9.3%

7.6%

7.4%

8.4%

8.6%

9.0%

8.3%

7.3%

8.3%

Retail Branding and Information Solutions

Reported Sales

$344.9

$412.0

$378.8

$386.4

$1,522.1

$375.2

$396.5

$360.7

$368.4

$1,500.8

Organic Sales Change

10%

23%

18%

11%

16%

-6%

-7%

-4%

-3%

Adjusted Operating Income (non-GAAP)

$1.9

$34.6

$11.9

$17.3

$65.7

$12.5

$27.4

$11.9

$16.3

$68.1

Adjusted Operating Margin (non-GAAP)

0.6%

8.4%

3.1%

4.5%

4.3%

3.3%

6.9%

3.3%

4.4%

4.5%

Other specialty converting businesses

Reported Sales

$133.7

$138.7

$136.4

$133.7

$542.5

$141.9

$142.1

$144.2

$125.7

$553.9

Organic Sales Change

12%

21%

13%

-2%

-3%

Adjusted Operating Income (loss) (non-GAAP)

$1.7

$3.2

$0.7

-$2.8

$2.8

-$1.4

$4.1

-$1.2

-$5.8

-$4.3

Adjusted Operating Margin (non-GAAP)

1.3%

2.3%

0.5%

-2.1%

0.5%

-1.0%

2.9%

-0.8%

-4.6%

-0.8%

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

Appendix: Results from Continuing Operations (Reconciliation)

Total Company (continuing operations)

Reconciliation of Operating Margins:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

Net Sales (A)

$1,397.0

$1,492.8

$1,429.6

$1,462.6

$5,782.0

$1,526.5

$1,544.8

$1,500.4

$1,454.6

$6,026.3

52.7

90.0

48.0

48.3

239.0

62.6

87.1

46.1

37.1

232.9

Adjustment:

Interest expense

17.4

21.1

19.0

18.8

76.3

17.7

17.9

71.0

Income from continuing operations before interest expense and taxes (C)

70.1

111.1

67.0

67.1

315.3

80.3

104.8

63.8

55.0

303.9

Adjustments:

Severance and related costs

4.0

2.0

1.2

2.8

10.0

2.7

7.2

14.6

11.0

35.5

Asset impairment and lease cancellation charges

0.2

0.6

1.3

0.6

2.7

3.3

0.1

0.3

5.3

9.0

Other items

(1)

1.4

0.2

2.5

2.8

6.9

-1.7

1.0

3.2

-0.4

2.1

Adjusted operating income from continuing operations before interest

expense and taxes (non-GAAP) (D)

$75.7

$113.9

$72.0

$73.3

$334.9

$84.6

$113.1

$81.9

$70.9

$350.5

Income from continuing operations before taxes as a percentage of sales

(B)/(A)

3.8%

6.0%

3.4%

3.3%

4.1%

5.6%

3.1%

2.6%

3.9%

Operating Margin (C)/(A)

5.0%

7.4%

4.7%

4.6%

5.5%

5.3%

6.8%

4.3%

3.8%

5.0%

Adjusted Operating Margin (non-GAAP) (D)/(A)

5.4%

7.6%

5.0%

5.8%

5.5%

7.3%

5.5%

4.9%

5.8%

Total Company (continuing operations)

Reconciliation of GAAP to Non-GAAP Net Income Per Common Share from

Continuing Operations:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

As reported net income from continuing operations per common share,

assuming dilution

$0.35

$0.54

$0.44

$0.93

$2.27

$0.35

$0.50

$0.33

$0.27

$1.45

Non-GAAP adjustments per common share, net of tax:

Severance and related costs , asset impairment and lease cancellation

charges, and other items

$0.10

$0.16

-$0.04

-$0.10

$0.12

$0.10

-$0.03

$0.09

$0.29

Adjusted non-GAAP net income from continuing operations per common

share, assuming dilution

$0.45

$0.70

$0.40

$0.83

$2.39

$0.47

$0.60

$0.30

$0.36

$1.74

Income from continuing operations before taxes (B)

Fourth Quarter and Full-Year 2011 Financial Review and Analysis | January 31, 2012

Appendix: Results from Continuing Operations (Reconciliation)

Pressure-sensitive Materials

Reconciliation of Operating Margins:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

Net Sales

$918.4

$942.1

$914.4

$942.5

$3,717.4

$1,009.4

$1,006.2

$995.5

$960.5

$3,971.6

Operating income, as reported

85.3

85.8

67.3

68.6

307.0

83.5

86.4

76.8

66.1

312.8

Adjustments:

Severance and related costs

1.5

2.0

1.0

4.5

1.9

4.3

4.7

1.8

12.7

Asset impairment and lease cancellation charges

0.2

0.9

0.2

1.3

1.5

0.3

1.9

3.7

Other items

0.2

-0.5

1.6

1.3

0.0

0.5

Adjusted operating income (non-GAAP)

$87.2

$87.3

$69.8

$314.1

$86.9

$90.7

$82.3

$69.8

$329.7

Operating Margin

9.3%

9.1%

7.4%

7.3%

8.3%

8.6%

7.7%

6.9%

7.9%

Adjusted Operating Margin (non-GAAP)

9.5%

9.3%

7.6%

7.4%

8.4%

8.6%

9.0%

8.3%

7.3%

8.3%

Retail Branding and Information Solutions

Reconciliation of Operating Margins:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

Net Sales

$344.9

$412.0

$378.8

$386.4

$1,522.1

$375.2

$396.5

$360.7

$368.4

$1,500.8

Operating (loss) income, as reported

-1.4

34.0

10.0

17.3

59.9

12.2

25.1

2.6

10.0

49.9

Non-GAAP adjustments:

Severance and related costs

2.1

1.0

-0.4

2.7

0.6

2.2

9.4

6.3

18.5

Asset impairment and lease cancellation charges

0.6

0.3

0.4

1.3

1.4

0.1

-0.1

0.0

1.4

Other items

1.2

0.6

1.8

-1.7

Adjusted operating income (non-GAAP)

$1.9

$34.6

$11.9

$17.3

$65.7

$12.5

$27.4

$11.9

$16.3

$68.1

Operating Margin

-0.4%

8.3%

2.6%

4.5%

3.9%

3.3%

6.3%

0.7%

2.7%

3.3%

Adjusted Operating Margin (non-GAAP)

0.6%

8.4%

3.1%

4.5%

4.3%

3.3%

6.9%

3.3%

4.4%

4.5%

Other specialty converting businesses

Reconciliation of Operating Margins:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

Net Sales

$133.7

$138.7

$136.4

$133.7

$542.5

$141.9

$142.1

$144.2

$125.7

$553.9

Operating income (loss), as reported

1.3

3.2

0.1

-5.0

-0.4

-2.0

3.4

-1.8

-6.5

-6.9

Non-GAAP adjustments:

Severance and related costs

0.4

0.2

2.2

2.8

0.2

0.7

0.5

2.9

4.3

Asset impairment and lease cancellation charges

0.1

0.4

0.1

3.4

3.9

Other items

0.3

-5.6

Adjusted operating income (loss) (non-GAAP)

$1.7

$3.2

$0.7

-$2.8

$2.8

-$1.4

$4.1

-$1.2

-$5.8

-$4.3

Operating Margin

1.0%

2.3%

0.1%

-3.7%

-0.1%

-1.4%

2.4%

-1.2%

-5.2%

-1.2%

Adjusted Operating Margin (non-GAAP)

1.3%

2.3%

0.5%

-2.1%

0.5%

-1.0%

2.9%

-0.8%

-4.6%

-0.8%

Appendix: Results from Continuing Operations (Reconciliation)

(1)

Totals may not sum due to rounding.

Total Company (continuing operations)

Estimated change in sales due to:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

As reported sales change

11%

19%

12%

-1%

Foreign currency translation

-5%

-2%

-1%

-5%

-6%

-3%

Acquisitions, net of divestitures

Extra week in fiscal year

Organic sales change

(1)

17%

10%

11%

12%

-2%

-1%

Pressure-sensitive Materials

Estimated change in sales due to:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

As reported sales change

11%

16%

10%

Foreign currency translation

-6%

-2%

-1%

-6%

-7%

-3%

Acquisitions, net of divestitures

Extra week in fiscal year

Organic sales change

(1)

14%

11%

10%

Retail Branding and Information Solutions

Estimated change in sales due to:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

As reported sales change

25%

17%

10%

15%

-4%

-5%

-1%

Foreign currency translation

-3%

-1%

-2%

-3%

-1%

Acquisitions, net of divestitures

Extra week in fiscal year

Organic sales change

(1)

10%

23%

18%

11%

16%

-6%

-7%

-4%

-3%

Other specialty converting businesses

Estimated change in sales due to:

1Q10

2Q10

3Q10

4Q10

FY10

1Q11

2Q11

3Q11

4Q11

FY11

As reported sales change

13%

21%

11%

12%

-6%

Foreign currency translation

-4%

-5%

-2%

Acquisitions, net of divestitures

Extra week in fiscal year

Organic sales change

(1)

12%

21%

13%

-2%

-3%

Avery Dennison (AVY) 8-KFourth Quarter and Full-year 2011 Results