Avery Dennison Creates New Division for Radio Frequency Identification Business; Company Reaffirms Commitment to Growing RFID Business.

PASADENA, Calif. -- Avery Dennison Corporation (NYSE:AVY) today announced the formation of a new business unit dedicated to the manufacturing and marketing of low-cost radio frequency identification (RFID) inlays and tags. The new division will leverage the Company's existing distribution system by marketing RFID inlays and tags to its label converter customers, who supply pressure-sensitive labels to diverse end-user markets.

"As we shift our RFID activities from a business venture mode to implementing our high-speed, low-cost manufacturing strategy, we continue to be enthusiastic about the excellent long-term growth opportunities of RFID," said Philip M. Neal, chairman and chief executive officer of Avery Dennison. "We see our emerging RFID business as the Company's largest long-term growth opportunity."

"Retail, pharmaceutical and packaged goods companies throughout the world are confirming that pressure-sensitive labels are ideal vehicles for carrying an RFID chip and antenna. As one of the world's largest producers of pressure-sensitive labeling materials, and with our unique manufacturing expertise that enables us to produce large quantities of self-adhesive labels with superior precision, we are ideally positioned to capture a meaningful share of this potentially huge, new market," said Neal.

The Company's new RFID business unit will be headed by Mathew S. Mellis, 58, who has been appointed vice president, RFID and Specialty Converting. Mellis is a 25-year Avery Dennison veteran with expertise in key aspects of the label converting industry, having led the Company's industrial and automotive products business for the past 14 years. His experience includes managing the operation that manufactures Avery Dennison's innovative battery tester label, one of the Company's first electronic labels that features a complex, multi-layer construction. Stan Drobac, 47, vice president of RFID Applications, will continue to lead the division's sales, marketing, research and development activities and will report to Mellis.

The Company continues to participate in numerous RFID pilot projects with leading retailers and consumer products companies. Avery Dennison is also a participant in a pilot program with the U.S. Transportation Safety Administration to enhance security at the nation's ports by developing an RFID-enabled device that monitors container shipments on ocean vessels.

Avery Dennison has accelerated its investment in RFID, with plans in 2004 to more than double the previous year's spending on RFID research and development activities. The Company is developing a variety of RFID labeling applications, as well as building an infrastructure and creating cost-effective manufacturing processes to enable the Company to produce quantities of RFID labels in the hundreds of millions. Avery Dennison has stated that it expects to begin generating revenue from its RFID business by the end of 2004, with significant growth expected in 2005 and beyond.

Avery Dennison is a global leader in pressure-sensitive technology and innovative self-adhesive solutions for consumer products and label materials. Based in Pasadena, Calif., the Company had 2003 sales of $4.8 billion. Avery Dennison develops, manufactures and markets a wide range of products for consumer and industrial markets, including Avery-brand office products and graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, reflective highway safety products, automated retail tag, labeling and branding systems, and specialty tapes and polymers.

Forward-Looking Statements 

Certain information presented in this news release 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 price and availability of raw materials; foreign exchange rates; worldwide and local economic conditions; selling prices; impact of legal proceedings, including the U.S. Department of Justice criminal investigation, as well as the European Commission and Canadian Department of Justice investigations, into competitive practices in the label stock industry and any related proceedings or lawsuits pertaining to these investigations or to the subject matter thereof; impact of epidemiological events such as Severe Acute Respiratory Syndrome (SARS) on the economy and the Company's customers and suppliers; successful integration of acquired companies; financial condition and inventory strategies of customers; introduction and acceptance of new products; fluctuations in demand affecting sales to customers; and other matters referred to in the Company's SEC filings.