Avery Dennison announces record fourth quarter and year; 37 percent increase in fourth-quarter earnings per share.

PASADENA, Calif.--(BUSINESS WIRE)--Jan. 30, 1996--Avery Dennison Corp. (NYSE/PSE:AVY) Tuesday reported a 37 percent earnings-per-share increase for the fourth quarter, and record sales, net income and earnings per share for the full year.

For the fourth quarter:

-- Earnings per share increased 37 percent to 71 cents per share.

-- Net income increased 32 percent to $37.7 million.

-- Sales increased 5 percent to $776.7 million.

For the year:

-- Earnings per share increased 37 percent to $2.70 per share.

-- Net income increased 31 percent to $143.7 million.

-- Sales increased 9 percent to $3.1 billion.

-- Return on equity increased to 18.6 percent.

-- Return on total capital increased to 14.4 percent.

Charles D. Miller, chairman and chief executive officer, stated: "Sales and profitability were up in both U.S. and international operations, and all three business sectors reported increased sales and profits. Our focused efforts to grow sales and profits from new products and outstanding service are working. We are particularly pleased with our return on equity and return on total capital for the year."

During the fourth quarter, the company completed the divestiture of $70 million in sales of non-strategic North American label converting operations. Proceeds from the sale of these operations are being used to repay debt, fund the company's share buy-back program, and accelerate profit improvement programs. The after-tax net gain is 2 cents per share.

In October 1995, the quarterly dividend was increased to 30 cents per share. This marks the 20th consecutive year of increased dividends. The company also repurchased an additional 852,000 shares of stock during the year for a total cost of $35.1 million.

"1995 was a record year, and solid results for the fourth quarter give us significant momentum going into 1996. We look forward to another successful year," Miller stated.

Avery Dennison, based in Pasadena, makes self-adhesive materials, tapes and labels, office products, tags, retail systems and specialty chemicals. Consumer brands include AVERY office labels, indexes, binders, markers and software, and FASSON self-adhesive materials for industrial markets. The company has 15,500 employees in 200 manufacturing facilities and sales offices in 34 countries. -0-

                            AVERY DENNISON
                  CONSOLIDATED STATEMENT OF INCOME
               (In millions, except per-share amounts)

                         Three Months Ended           Year Ended
                         Dec 30,     Dec 31,      Dec 30,    Dec 31,
                           1995       1994         1995       1994

Net sales               $  776.7   $  736.7     $3,113.9   $2,856.7
Cost of products sold      538.2      501.7      2,156.6    1,948.9
Gross profit               238.5      235.0        957.3      907.8
Marketing, general &
 administrative expense    170.4      180.1        689.8      691.9
Net gain on
 divestitures and
 restructuring
 charges                     1.5         --          1.5         --
Interest expense            10.6        9.9         44.3       43.0
Income before taxes         59.0       45.0        224.7      172.9
Taxes on income             21.3       16.5         81.0       63.5
Net income              $   37.7   $   28.5     $  143.7   $  109.4
Net income per share
 of common stock        $   0.71   $  0.52      $   2.70   $   1.97
Average shares
 outstanding                53.2      54.7          53.3       55.6
Shares outstanding
 at period end              53.1      53.5          53.1       53.5

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                  Supplementary Sector Information

                                                Operating Margins
                         1995     %       1995 as      Before
                         Sales  Change   Reported(a)  Net Gain   1994

Pressure-sensitive
 adhesives & materials  $1,739   13.1%      9.0%       9.9%       9.8%
Office products            897    6.5%      8.4%      10.1%       8.0%
Converted products         612    6.1%     11.2%       5.9%       5.5%

(a)  Includes net gain from divestiture and restructuring charges.

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                           AVERY DENNISON
                 CONDENSED CONSOLIDATED BALANCE SHEET
                           (In millions)

                                            Year Ended
                                       Dec 30,       Dec 31,
                                        1995          1994
ASSETS

Current assets:
 Cash and cash equivalents          $    27.0     $     3.1
 Trade accounts receivable, net         444.1         391.8
 Inventories, net                       223.2         206.4
 Other current assets                   105.8          75.6
Total current assets                    800.1         676.9
Property, plant and equipment, net      907.4         831.6
Intangibles resulting from business
 acquisitions, net                      124.3         127.6
Other assets                            131.8         127.0
                                    $ 1,963.6     $ 1,763.1

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Short-term and current portion
  of long-term debt                 $   115.4     $    73.4
 Accounts payable                       169.9         181.5
 Accrued liabilities                    387.2         299.2
Total current liabilities               672.5         554.1
Long-term debt                          334.0         347.3
Other long-term liabilities             141.3         132.7
Shareholders' equity:
 Common stock                            62.1          62.1
 Capital in excess of par value         191.6         193.0
 Retained earnings                      837.8         753.2
 Cumulative translation adjustment       33.8          16.7
 Cost of unallocated ESOP shares        (27.0)        (37.6)
 Minimum pension liability               (2.6)         (5.0)
 Treasury stock at cost                (279.9)       (253.4)
Total shareholders' equity              815.8         729.0
                                    $ 1,963.6     $ 1,763.1

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                           AVERY DENNISON
            CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
                           (In millions)

                                        Year Ended
                                  Dec 30,        Dec 31,
                                   1995           1994

Operating Activities:
Net income                      $  143.7       $  109.4
Adjustments to reconcile net
 income to net cash provided
 by operating activities:
Depreciation                        95.3           87.9
Amortization                        12.6           14.6
Net gain on divestitures and
 restructuring charges              (1.5)            --
Deferred taxes                     (17.6)          (6.7)
Changes in assets and
 liabilities, net of the effect
 of foreign currency translation,
 business divestitures and
 restructuring charges             (44.6)          59.8
Net cash provided by operating
 activities                        187.9          265.0

Investing Activities:
Purchase of property, plant
 and equipment                    (190.3)        (163.3)
Proceeds from sale of assets
 and business divestitures          96.7           16.2
Other                              (19.1)         (10.2)
Net cash used in investing
 activities                       (112.7)        (157.3)

Financing Activities:
Net (decrease) increase in
 long-term debt                     (7.9)          51.2
Net increase (decrease) in
 short-term debt                    40.5          (16.0)
Dividends paid                     (59.1)         (55.1)
Purchase of treasury stock         (35.1)        (105.7)
Other                               10.2           15.0
Net cash used in financing
 activities                        (51.4)        (110.6)
Effect of foreign currency
 translation on cash balances        0.1            0.2
Increase (decrease) in cash
 and cash equivalents               23.9           (2.7)
Cash and cash equivalents,
 beginning of period                 3.1            5.8
Cash and cash equivalents,
 end of period                  $   27.0       $    3.1

CONTACT: Avery Dennison Corp., Pasadena

Diane B. Dixon, 818/304-2118 (media relations)

[e-mail]

or

Wayne H. Smith, 818/304-2001 (investor relations)

[e-mail]