Avery Dennison

2023

ANNUAL 
REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K

È

‘

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2023 or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from

to

Commission file number 1-7685
AVERY DENNISON CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State of Incorporation)

8080 Norton Parkway
Mentor, Ohio
(Address of Principal Executive Offices)

95-1492269
(I.R.S. Employer Identification No.)

44060
(Zip Code)

Registrant’s telephone number, including area code:
(440) 534-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1 par value
1.25% Senior Notes due 2025

AVY
AVY25

New York Stock Exchange
Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act:
Not applicable.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No È

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes È No ‘

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer È

Accelerated filer ‘

Non-accelerated filer ‘

Smaller reporting company ‘

Emerging growth company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. È

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in

the filing reflect the correction of an error to previously issued financial statements. ‘

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È

The aggregate market value of voting and non-voting common equity held by non-affiliates as of July 1, 2023, the last business day of the

registrant’s most recently completed second fiscal quarter, was approximately $13.7 billion.

Number of shares of common stock, $1 par value, outstanding as of January 27, 2024, the end of the registrant’s most recent fiscal month:

80,508,663.

The following documents are incorporated by reference into the Parts of this Form 10-K indicated below:

Document

Incorporated by reference into:

Portions of Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 25, 2024

Parts III, IV

AVERY DENNISON CORPORATION

FISCAL YEAR 2023 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Business

PART I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C.
Item 2.
Item 3.
Item 4.

Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures

PART II
Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Item 13.
Item 14.

Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

PART IV
Item 15.
Item 16.

Exhibit and Financial Statement Schedules
Form 10-K Summary
Signatures
Power of Attorney

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Safe Harbor Statement

The matters discussed in this Annual Report on Form 10-K contain “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements, which are not statements of historical fact,
contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur.
Words such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “guidance,”
“intend,” “may,” “might,” “objective,” “plan,” “potential,” “project,” “seek,” “shall,” “should,” “target,” “will,” “would,” or
variations thereof, and other expressions that refer to future events and trends, identify forward-looking statements. Our
forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties, which
could cause our actual results to differ materially from the expected results, performance or achievements expressed or
implied by such forward-looking statements.

We believe that the most significant risk factors that could affect our financial performance in the near term include:
(i) the impacts to underlying demand for our products from global economic conditions, political uncertainty, and changes
in environmental standards and governmental regulations; (ii) competitors’ actions, including pricing, expansion in key
markets, and product offerings; (iii) the cost and availability of raw materials; (iv) the degree to which higher costs can be
offset with productivity measures and/or passed on to customers through price increases, without a significant loss of
volume; (v) foreign currency fluctuations; and (vi) the execution and integration of acquisitions.

Certain risks and uncertainties are discussed in more detail under “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for the fiscal year ended
December 30, 2023. 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 related to the following:

•

International Operations – worldwide economic, social, political and market conditions; changes in political
conditions, including those related to China, the Russia-Ukraine war, the Israel-Hamas war and related hostilities
in the Middle East; fluctuations in foreign currency exchange rates; and other risks associated with international
operations, including in emerging markets

• Our Business – fluctuations in demand affecting sales to customers; fluctuations in the cost and availability of
raw materials and energy; changes in our markets due to competitive conditions, technological developments,
increasing environmental standards; the impact of
laws and regulations, tariffs and customer preferences;
competitive products and pricing; execution and integration of acquisitions; selling prices; customer and supplier
concentrations or consolidations; financial condition of distributors; outsourced manufacturers; product and
service quality; restructuring and other productivity actions; timely development and market acceptance of new
products, including sustainable or sustainably-sourced products; investment in development activities and new
implementation of new manufacturing technologies and installation of
production facilities; successful
manufacturing equipment; our ability to generate sustained productivity improvement; our ability to achieve and
sustain targeted cost reductions; collection of receivables from customers; our sustainability and governance
practices; and epidemics, pandemics or other outbreaks of illness

•

•

Information Technology – disruptions in information technology systems, cyber attacks or other security
breaches; and successful installation of new or upgraded information technology systems

Income Taxes – fluctuations in tax rates; changes in tax laws and regulations, and uncertainties associated with
interpretations of such laws and regulations; retention of tax incentives; outcome of tax audits; and the
realization of deferred tax assets

• Human Capital – recruitment and retention of employees and collective labor arrangements

• Our Indebtedness – credit risks; our ability to obtain adequate financing arrangements and maintain access to
capital; fluctuations in interest rates; volatility in financial markets; and compliance with our debt covenants

• Ownership of Our Stock – potential significant variability of our stock price and amounts of future dividends and

share repurchases

•

Legal and Regulatory Matters – protection and infringement of intellectual property;
impact of legal and
regulatory proceedings, including with respect to environmental, compliance and anti-corruption, environmental,
health and safety, and trade compliance

• Other Financial Matters – fluctuations in pension costs and goodwill impairment

Our forward-looking statements are made only as of February 21, 2024. We assume no duty to update these
forward- looking statements to reflect new, changed or unanticipated events or circumstances, other than as may be
required by law.

Avery Dennison Corporation | 2023 Annual Report 1

Item 1.

BUSINESS

Company Background

PART I

Avery Dennison Corporation (“Avery Dennison” or the “Company” and generally referred to as “we” or “us”) was
incorporated in Delaware in 1977 as Avery International Corporation, the successor corporation to a California
corporation of the same name incorporated in 1946.
In 1990, we merged one of our subsidiaries into Dennison
Manufacturing Company (“Dennison”), as a result of which Dennison became our wholly-owned subsidiary and in
connection with which we changed our name to Avery Dennison Corporation. You can learn more about us by visiting our
website at www.averydennison.com. Our website address provided in this Annual Report on Form 10-K is not intended
to function as a hyperlink and the information on our website is not, nor should it be considered, part of this report or
incorporated by reference into this report.

Business Overview and Reportable Segments

We are a global materials science and digital identification solutions company that provides a wide range of
branding and information solutions that optimize labor and supply chain efficiency, reduce waste, advance sustainability,
circularity and transparency, and better connect brands and consumers. Our products and solutions include labeling and
functional materials, radio-frequency identification (“RFID”) inlays and tags, software applications that connect the
physical and digital, and a variety of products and solutions that enhance branded packaging and carry or display
information that improves the customer experience. We serve an array of industries worldwide, including home and
personal care, apparel, general retail, e-commerce, logistics, food and grocery, pharmaceuticals and automotive.

Our reportable segments for fiscal year 2023 were:

• Materials Group; and

• Solutions Group

In 2023, our Materials Group and Solutions Group reportable segments comprised approximately 69% and 31%,

respectively, of our total net sales.

In 2023, international operations constituted a substantial majority of our business, representing approximately
69% of our net sales. As of December 30, 2023, we operated over 200 manufacturing and distribution facilities in more
than 50 countries.

Materials Group

Our Materials Group business is a leading provider to pressure-sensitive label and graphics industries worldwide.
Our innovative products include label materials, graphics and reflective materials and functional bonding materials, such
as tapes. Our label materials enhance shelf appeal for brands, inform shoppers, advance circularity, increase transparency,
help reduce waste and improve operational supply chain efficiency. Our graphics portfolio offers highly engineered
materials that range from vehicle wraps to architectural films. Materials Group plays a key role in advancing our fast-
growing intelligent labels business, providing the materials science capabilities and process engineering expertise
essential to developing and manufacturing intelligent labels at scale.

Our Materials Group manufactures and sells Fasson®-, JAC®-, and Avery Dennison®-brand pressure-sensitive
label materials and performance tapes products, Avery Dennison®- and Mactac®-brand graphics, and Avery Dennison®-
brand reflective products. Materials Group’s business tends not to be seasonal, except for certain outdoor graphics and
reflective products.

Pressure-sensitive materials consist primarily of papers, plastic films, metal foils and fabrics, which are coated with
internally-developed and purchased adhesives, and then laminated with specially-coated backing papers and films. They
are then sold in roll or sheet form with either solid or patterned adhesive coatings in a wide range of face materials, sizes,
thicknesses and adhesive properties.

A pressure-sensitive, or self-adhesive, material is one that adheres to a surface by press-on contact. It generally
consists of four layers: a face material, which may be paper, metal foil, plastic film or fabric; an adhesive, which may be
permanent or removable; a release coating; and a backing material to protect the adhesive from premature contact with
2 2023 Annual Report | Avery Dennison Corporation

other surfaces that can also serve as a carrier for supporting and dispensing individual labels. When the products are
ready for use, the release coating and protective backing are removed, exposing the adhesive so that the label or other
face material may be pressed or rolled into place. Because they are easy to apply without the need for adhesive activation,
self-adhesive materials can provide cost savings compared to other materials that require heat-or moisture-activated
adhesives, while also offering aesthetic and other advantages over alternative technologies.

Label materials are sold worldwide to label converters for labeling, decorating and specialty applications in the
home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits, food and logistics market
segments. When used in package decoration applications, the visual appeal of self-adhesive materials can help increase
sales of the products on which the materials are applied. Self-adhesive materials are also used to convey variable
information, such as RFID inlays to enable digital identities on items and bar codes for mailing or weight and price
information for packaged meats and other foods. Self-adhesive materials provide consistent and versatile adhesion and
are available in a large selection of materials, which can be made into labels of varying sizes and shapes.

Our graphics and reflective products include a variety of films and other products that are sold to the architectural,
commercial sign, digital printing and other related market segments. We also sell durable cast and reflective films to the
construction, automotive and fleet transportation market segments and reflective films for traffic and safety applications.
We provide sign shops, commercial printers and designers a broad range of pressure-sensitive materials that allow them
to create impactful and informative brand and decorative graphics. We offer a wide array of pressure-sensitive vinyl and
specialty materials designed for digital imaging, screen printing and sign cutting applications.

Our performance tapes products include a variety of Fasson®-brand and Avery Dennison®-brand tapes and other
pressure-sensitive adhesive-based materials and converted products, mechanical fasteners and performance polymers.
Our pressure-sensitive adhesive-based materials are available in roll form and in a wide range of face materials, sizes,
thicknesses and adhesive properties. These materials and converted products are used in non-mechanical fastening,
bonding and sealing systems for various automotive, electronics, building and construction, general industrial, personal
care, and medical applications. Our performance tapes products include Yongle®-brand tapes for wire harnessing and
industrial applications. The mechanical fasteners are primarily
cable wrapping in automotive, electrical and general
precision- extruded and injection-molded plastic devices used in various automotive, general
industrial and retail
applications.

Our larger competitors in label materials include UPM Raflatac, a subsidiary of UPM Corporation; Fedrigoni Self-
Adhesives; Lintec Corporation; Flexcon Corporation, Inc.; and an array of smaller regional and local companies. For
graphics and reflective products, our largest competitors are 3M Company (“3M”) and the Orafol Group. For performance
tapes products, our competitors include 3M; Tesa-SE, a subsidiary of Beiersdorf AG; Nitto Denko Corporation; and
numerous regional and specialty suppliers. For fastener products, there are a variety of competitors supplying extruded
and injection molded fasteners and fastener attaching equipment. We believe that entry of competitors into the field of
pressure- sensitive adhesives and materials is limited by technical knowledge and capital requirements. We believe that
our technical expertise, size and scale of operations, broad line of quality products and reliable service, product and
process innovation, distribution capabilities, brand strength and product innovation are the primary advantages in
maintaining and further developing our competitive position.

Solutions Group

Our Solutions Group is a leading global provider of information and branding products and solutions that cover a
breadth of customer needs from digital identification and data management, branding and embellishment, as well as
productivity, pricing and retail media. We empower customers across multiple retail and industry segments to connect
the physical and digital worlds,
leveraging our industry-leading RFID solutions. Our technology addresses complex
customer challenges, provides transparency and visibility across supply chains, improves labor and waste efficiency, and
enables better consumer experiences at the point of purchase and beyond. Market segments served include the global
apparel, logistics, food and grocery, and general retail industries. As a large ultra-high frequency RFID solutions provider,
we leverage our innovation and data management capabilities, global footprint and market access in the ongoing
advancement of our intelligent labels business.

The branding solutions of the Solutions Group include brand embellishments, graphic tickets, tags, and labels, and
sustainable packaging. Solutions Group’s information solutions include item-level RFID solutions; visibility and loss
prevention solutions; price ticketing and marking; care, content, and country of origin compliance solutions; brand
protection and security solutions; and Vestcom®-brand shelf-edge productivity and media solutions.

Avery Dennison Corporation | 2023 Annual Report 3

In the Solutions Group, our primary competitors include Checkpoint Systems, Inc., a subsidiary of CCL Industries
Inc.; R-pac International Corporation; and SML Group Limited. We believe that our product, process and solution
innovation, global distribution network, reliable service, product quality and consistency, and ability to serve customers
consistently with comprehensive solutions close to where they manufacture, source and sell are the key advantages in
maintaining and further developing our competitive position.

Research, Development and Innovation

As a global leader in materials science, we innovate to develop and introduce new products and solutions that help
customers solve for some of the most complex problems in the industries we serve. Our vision is to leverage the strengths
of our Materials and Solutions businesses to lead at the intersection of the physical and digital worlds. Our decades of
experience creating solutions for customers and our core capabilities in materials science, engineering and process
technology enable us to drive continuous innovation throughout our industries. Our innovation efforts focus on
anticipating market and customer challenges and opportunities, and applying technology to address them. Our
investment in innovation aims to accelerate growth, expand margins and enable customer success by leveraging scalable
innovation platforms and delivering sustainability initiatives and advanced technologies.

Many of our new products result from our research and development efforts. These efforts are directed primarily
toward developing products and solutions, operating techniques and improving productivity, sustainability and product
performance, often in close association with our customers or end users. These efforts provide intellectual property that
leverages our research and development relating to adhesives, as well as printing and coating technologies, films, release
and ink chemistries in Materials Group. We focus on research projects related to RFID, external embellishments, data and
digital solutions and printing technologies in Solutions Group, in each case for which we have and license a number of
patents. Additionally, our research and development efforts include sustainable innovation and design of products that
advance the circular economy, reduce materials and waste, use recycled content, and extend product end-of-life or
enable product recycling.

Acquisitions and Venture Investments

In addition to our investments to support organic growth, we have pursued complementary and synergistic
acquisitions. In 2023, we acquired Silver Crystal Group (“Silver Crystal”), a Canada-based provider of sports apparel
customization and application solutions across in-venue, direct-to-business and e-commerce platforms; LG Group, Inc.
(“Lion Brothers”), a Maryland-based designer and manufacturer of apparel brand embellishments; and Thermopatch, Inc.
(“Thermopatch”), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports,
industrial laundry, workwear and hospitality industries. The aggregate purchase consideration for these 2023 acquisitions
was approximately $231 million. In 2022, we acquired TexTrace AG (“TexTrace”), a Switzerland-based technology
developer specializing in custom-made woven and knitted radio-frequency identification products that can be sewn onto
or inserted into garments, as well as Rietveld Serigrafie B.V. and Rietveld Screenprinting Serigrafi Baski Matbaa Tekstil
Ithalat Ihracat Sanayi ve Ticaret Limited Sirketi (collectively, “Rietveld”), a Netherlands-based provider of external
embellishment solutions and application and printing methods for performance brands and team sports in Europe. The
aggregate purchase consideration for the acquisitions of TexTrace and Rietveld was approximately $35 million. During
2023, we also made one venture investment in a company developing technological solutions that we believe have the
potential to advance our businesses. For information regarding our acquisitions, see Note 2, “Business Acquisitions,” in
the Notes to Consolidated Financial Statements. For information regarding our venture investments, see Note 9, “Fair
Value Measurements,” in the Notes to Consolidated Financial Statements.

Patents, Trademarks and Licenses

The loss of individual patents or licenses would not be material to us taken as a whole, nor to our operating
segments individually. Our principal trademarks are Avery Dennison, our logo, and Fasson. We believe these trademarks
are strong in the market segments in which we operate.

Human Capital Resources

Our Global Workforce

With approximately 69% of our 2023 net sales originating outside the U.S. and approximately 40% of our net
sales originating in emerging markets (Asia Pacific, Latin America, Eastern Europe and Middle East/Northern Africa), our
4 2023 Annual Report | Avery Dennison Corporation

employees are located in more than 50 countries to best serve our customers. Approximately 83% of our employees at
year-end 2023 were located outside the U.S. and approximately 66% were located in emerging markets.

The charts below show our global employee population by region and operational function. Over 19,000 of our
approximately 35,000 employees at year-end 2023, representing approximately 56% of our global workforce, were in
Asia Pacific, serving our customers in that region. At that time, approximately 65% of our global workforce worked in the
operations of our manufacturing facilities or in positions directly supporting them from other locations.

Workforce by Region

Asia Pacific

North America

Europe

Latin America

Workforce by Function

Operations

Non-Operations

Talent & Development

56%

22

18

4

65%

35

Attracting, developing and retaining highly-skilled talent is critical to our ability to continuously deliver sustainable
growth. We provide ongoing support and resources to our team members worldwide to ensure that their skills evolve
with our business needs, industry trends and human capital management best practices, as well as enable increased
productivity, peak performance and career growth. We have robust talent review and succession planning processes that
provide individually targeted development opportunities for our team members. We emphasize on-the-job development
and coaching, and also provide facilitator-led and direct-access online training, responsibility for executing special
projects and, in some cases, cross-functional or cross-regional work assignments.

Pay & Benefits

Our compensation philosophy is to offer market-based, competitive wages and benefits in the markets where we
compete for talent – all of our employees were paid at least the applicable legal minimum wage, and over 98% of our
employees were paid above the applicable legal minimum wage at year-end 2023. Pay is generally positioned around the
market median, with variances based on knowledge, skills, years of experience and performance. In addition to base
wages, our compensation and benefit programs — which vary by region, country and business unit — include short-term
incentives (generally paid in cash), long-term incentives (e.g., cash- or stock-based awards), employee savings plans,
healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave and
employee assistance programs. We annually evaluate pay equity, making adjustments where appropriate. In 2023, we
reviewed pay equity (considering total base, annual incentive compensation and long term incentives) with respect to
gender for all non- manufacturing employees globally, as well as manufacturing employees in the U.S. and certain other
countries, and with respect to race/ethnicity for all U.S. employees. We offer flexible work arrangements for our office-
based workforce to provide them with greater flexibility to balance their work and personal commitments, while ensuring
that we meet the needs of our business. Our infrastructure, information security and digital tools support employee
efficiency and effectiveness wherever they work.

Employee Engagement

Because we believe that an engaged workforce promotes retention and minimizes employee turnover, we annually
conduct a global employee engagement survey. With a focus on continuous improvement, in 2023 we launched our
survey using a more advanced platform providing real-time access to results, improved analytics and ability to connect
data throughout the employee experience, more meaningful comparisons to external benchmarks, and ongoing pulse
survey capability. Our business and functional teams use the anonymized results of our survey to identify and implement
actions to address potential opportunities for improvement. While employee engagement is the result of many factors,
we believe strong, encouraging and open leadership, as well as a continued effort to foster a collaborative, supportive
culture, leads to strong workforce engagement.

Avery Dennison Corporation | 2023 Annual Report 5

Workforce Health & Safety

Safety is one of our highest priorities, and we continually work to ensure our manufacturing facilities, distribution
centers and administrative offices focus on safety, so that anyone working in or visiting one of our locations feels and
remains safe from injury. Our global Recordable Incident Rate of 0.22 in 2023 was significantly lower than the
Occupational Safety and Health Administration manufacturing industry average of 3.2 in 2022 (the most recent available
industry average).

Diversity, Equity & Inclusion

Our diversity, equity and inclusion (“DEI”) efforts are intended to foster an environment where employees can
grow and be increasingly productive and innovative, enhancing our reputation as a great place to work and allowing us to
attract and retain talent for the benefit of our stakeholders. These efforts continue to gain momentum and create impact.
In 2023, we significantly increased the number of questions we asked around DEI in our annual employee engagement
survey. By aligning to external best practice questions, we can more deeply understand our DEI progress and
opportunities. Our DEI global strategic pillars of focus continue to be:
increasing the number of women who hold
leadership positions; enhancing the experience of our manufacturing employees; increasing representation and inclusion
for underrepresented groups, with priority populations and actions established regionally; and making merit and
transparency even more foundational to our employee experience. During 2023, we continued conducting listening
sessions to better understand both our strengths and areas of opportunity, and have deployed programmatic strategies
such as leadership development programming; sponsorship and mentorship programs; connection events to build a
culture of inclusion for our manufacturing employees across the globe; and talent analytics and pipeline modeling to
further advance inclusion. Additionally, our Regional DEI Councils and Employee Resource Groups (“ERGs”) continue to
be integral in advancing our DEI strategy. ERGs, which are open to all employees, bring team members who have shared
interests, providing them a means to collectively amplify their voices.

Manufacturing and Environmental Matters

We use various raw materials – primarily paper, plastic films and resins, as well as specialty chemicals purchased
from various commercial and industrial sources – that are subject to price fluctuations. Although shortages can occur from
time to time, these raw materials are generally available.

We produce a majority of our self-adhesive materials using water-based emulsion and hot-melt adhesive
technologies. A portion of our manufacturing process for self-adhesive materials utilizes organic solvents, which, unless
controlled, could be emitted into the atmosphere or contaminate soil or groundwater. Emissions from these operations
contain small amounts of volatile organic compounds, which are regulated by federal, state,
local and foreign
governments. We continue to evaluate the use of alternative materials and technologies to minimize these emissions. In
connection with the maintenance and acquisition of certain manufacturing equipment, we invest in solvent capture and
control units to assist in regulating these emissions.

We have developed adhesives and adhesive processing systems that minimize the use of solvents. Emulsion
adhesives, hot-melt adhesives, and solventless and emulsion silicone systems have been installed in many of our facilities.

Based on current information, we do not believe that the cost of complying with applicable laws regulating the
emission or discharge of materials into the environment, or otherwise relating to the protection of the environment, will
have a material effect upon our capital expenditures, consolidated financial position, results of operations or competitive
position.

For information regarding our potential responsibility for cleanup costs at certain hazardous waste sites, see

Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
amendments to those reports filed with, or furnished to, the Securities and Exchange Commission (“SEC”) pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of
charge on our investor website at www.investors.averydennison.com as soon as reasonably practicable after they are
electronically filed with or furnished to the SEC. This website address is not intended to function as a hyperlink and the

6 2023 Annual Report | Avery Dennison Corporation

information located there is not, nor should it be considered, part of this report or incorporated by reference into this
report. We also make available on the investors section of our website under Corporate Governance – the following
documents as currently in effect: (i) Amended and Restated Certificate of Incorporation; (ii) Amended and Restated
Bylaws; (iii) Corporate Governance Guidelines; (iv) Code of Conduct, which applies to our directors, officers and
employees; (v) Code of Ethics for our Chief Executive Officer and Senior Financial Officers; (vi) charters of the Audit,
Talent and Compensation, Governance and Finance Committees of our Board of Directors; and (vii) Audit Committee
Complaint Procedures for Accounting and Auditing Matters. These documents are also available free of charge upon
written request to our Corporate Secretary, Avery Dennison Corporation, 8080 Norton Parkway, Mentor, Ohio 44060.

Reports filed with or furnished to the SEC may be viewed at www.sec.gov.

Item 1A.

RISK FACTORS

The risk factors described in this section could materially adversely affect our business, including our results of
operations, cash flows and financial condition, and cause the value of our securities to decline. This list of risks is not
exhaustive. Our ability to attain our goals and objectives is dependent on numerous factors and risks, including, but not
limited to, the most significant ones described in this section.

Risk Related to Our International Operations

The demand for our products is impacted by the effects of, and changes in, worldwide economic, social, political and
market conditions, which have had in the past and could in the future have a material adverse effect on our business.

We have operations in more than 50 countries and our domestic and international operations are strongly
influenced by matters beyond our control, including changes in political, social, economic and labor conditions (including
governmental shutdowns), tax laws (including U.S. taxes on foreign earnings), and international trade regulations
(including tariffs), as well as the impact these changes have on demand for our products. In 2023, approximately 69% of
our net sales were from international operations.

Macroeconomic developments such as impacts from slower growth in geographic regions in which we operate;
inflation; raw material, freight and labor availability and cost; energy costs; political, social, supply chain and other
disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in the global credit or
financial markets leading to a loss of consumer confidence could result in a material adverse effect on our business as a
result of, among other things,
lower consumer spending, reduced asset valuations, diminished liquidity and credit
availability, volatility in securities prices, credit rating downgrades and fluctuations in foreign currency exchange rates.

Tensions remain in relations between the U.S. and China. In recent years, the U.S. government imposed or
increased tariffs on various products imported into the U.S. from China. This has resulted in reciprocal tariffs on goods
imported from the U.S.
into China. The impacts on our operations to date have not been significant. However, our
business could be significantly impacted if additional tariffs or other restrictions are imposed on products. These actions
or other developments in international trade relations could have a material adverse effect on our business.

In addition, business and operational disruptions or delays caused by political, social or economic instability and
unrest – such as recent civil, political and economic disturbances in Argentina, Afghanistan, Syria, Iraq, Yemen, Iran,
Turkey, North Korea, Hong Kong and Sri Lanka and the related impact on global stability, the Russia-Ukraine war, the
Israel-Hamas war, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world –
could contribute to a climate of economic and political uncertainty that could have a material adverse effect on our
business. The Russia- Ukraine war that began in February 2022 continued in 2023 and we maintained our position of not
shipping products for the Russian market throughout the year. The impact of the continuing war and our exit from our
Russia-related business, as well as any further retaliatory actions taken by Russia, the U.S., the European Union and other
jurisdictions, is unknown and could have a material adverse effect on our business. In October 2023, the war between
Israel and Hamas began. Our sales in Israel in 2022 were less than 1% of our total net sales and have declined since the
beginning of the war. We have experienced some disruptions in our operations in Israel and implemented plans to
address these disruptions, which included sourcing production from alternative locations while focusing on the continued
safety of our Israeli employees and their families. The impact of this war and any related hostilities in the Middle East
region or elsewhere is unknown and could have a material adverse effect on our business.

We are not able to predict the duration and severity of adverse economic, social, political or market conditions in

the U.S. or other countries.

Avery Dennison Corporation | 2023 Annual Report 7

Foreign currency exchange rates, and fluctuations in those rates, may materially adversely affects our business.

The substantial majority of our net sales in 2023 was in foreign currencies. Fluctuations in currency exchange
rates, such as those associated with the Argentine peso and Chinese renminbi which had unfavorable impacts in 2023,
may result in a variety of negative effects, including lower net sales, increased costs, lower gross margin percentages,
increased allowance for credit losses and/or write-offs of accounts receivable, and required recognition of impairments of
capitalized assets, including goodwill and other intangible assets. Foreign currency translation decreased our net sales in
2023 by approximately $58 million compared to the prior year.

We monitor our foreign currency exposures and may use hedging instruments to mitigate transactional exposure
to changes in foreign currencies. The effectiveness of our hedges in part depends on our ability to accurately forecast our
future cash flows, which is particularly difficult during periods of uncertain demand for our products and services and
highly volatile foreign currency exchange rates. Our hedging activities may offset only a portion, or none at all, of the
material adverse financial effects of unfavorable movements in foreign currency exchange rates over the limited time the
hedges are in place and we may incur significant losses from these activities.

Our strategy includes increased growth in emerging markets, including China, which creates greater exposure to
unstable political conditions, civil unrest, economic volatility, contagious disease and other risks applicable to
international operations.

A significant amount of our net sales – approximately 40% in 2023 – originated in emerging markets, which
includes countries in Asia Pacific, Latin America, Eastern Europe and Middle East/Northern Africa. The profitable growth
of our business in emerging markets is a significant focus of our long-term growth strategy and our regional results have
and can fluctuate significantly based on their economic conditions. Our business operations have been and may continue
to be adversely affected by the current and future political environment in China, including as a result of its response to
tariffs imposed by the U.S. government on goods imported from China, tariffs imposed by China on U.S. goods, the
increasing use of economic sanctions and export control restrictions, any trade agreements entered into between the U.S.
and China, and tensions related to Hong Kong and Taiwan. Our ability to operate in China or other emerging markets has
been and may continue to be adversely affected by changes in the laws and regulations of these jurisdictions or their
interpretation thereof,
import and export tariffs, raw materials, environmental
regulations, land use rights, property, foreign currency conversion, the regulation of private enterprises and other matters.

including those relating to taxation,

Epidemics, pandemics or other outbreaks of illness, disease or virus and other adverse developments in emerging
markets materially adversely affected our business at various times during the 2020-2023 period. There have been and
could be further disruptions in our supply chain or ability to manufacture our products, as well as temporary closures of
our facilities or those of our suppliers or customers, which have impacted and could in the future impact our sales and
operating results.

If we are unable to successfully expand our business in emerging markets or achieve the return on capital we
expect from our investments in these countries, our financial performance could be materially adversely affected. In
addition to the risks applicable to our international operations, factors that have negatively impacted our operations in
these emerging markets from time to time include the less established or reliable legal systems and possible disruptions
due to unstable political conditions, civil unrest or economic volatility. These factors can have a material adverse effect on
our business in the affected markets by decreasing consumer purchasing power, reducing demand for our products or
increasing our costs.

Our operations and activities outside of the U.S. subjects us to risks different from and potentially greater than those
associated with our domestic operations.

A substantial portion of our employees and assets are located outside of the U.S. and, in 2023, approximately 69%
of our sales was generated outside of the U.S. International operations and activities involve risks that are different from
and potentially greater than the risks we face in our domestic operations, including changes in foreign political, regulatory
and economic conditions, whether nationally, regionally or locally; changes in foreign currency exchange rates; inflation;
reduced protection of intellectual property rights; laws and regulations impacting the ability to repatriate foreign earnings;
challenges complying with foreign laws and regulations, including those relating to sales, operations, taxes, employment
and legal proceedings; establishing effective controls and procedures to monitor compliance with U.S.
laws and
regulations such as the Foreign Corrupt Practices Act and similar foreign laws and regulations, such as the UK’s Bribery
8 2023 Annual Report | Avery Dennison Corporation

Act of 2010; differences in lending practices; challenges with complying with applicable export and import control laws
and regulations; and differences in language, culture and time zone.

Risks Related to Our Business

As a manufacturer, our sales and profitability depend upon the availability and cost of raw materials and energy,
which are subject to price fluctuations, and our ability to control or offset increases in raw material and labor costs.
Raw material and freight cost increases have impacted our business.

The markets for the raw materials used in our businesses are challenging and can be volatile, impacting raw
material availability and pricing. Additionally, energy costs can be volatile and unpredictable. Shortages and inflationary or
other increases in the costs of raw materials, labor, freight and energy have occurred in the past, and could recur. In 2021
and 2022, we implemented targeted price increases in our Materials Group reportable segment to address raw material
inflation, which began moderating in 2023. If we experience inflationary headwinds in the future, we may implement
similar pricing measures. Our performance depends in part on our ability to offset increased raw material costs by raising
our selling prices or re-engineering our products.

It is also important for us to obtain timely delivery of materials, equipment, and other resources from suppliers, and
to make timely delivery to customers. We may experience supply chain disruptions due to natural and other disasters or
other events, or our existing relationships with suppliers could deteriorate or end in the future. Any such disruption in our
supply chain could have a material adverse effect on our sales and profitability, and any sustained inability to obtain
adequate supplies could have a material adverse effect on our business.

We are affected by changes in our markets due to competitive conditions, technological developments, laws and
regulations, and customer preferences. If we do not compete effectively or respond appropriately to these changes, it
could reduce market demand, or we could lose market share or reduce our selling prices to maintain market share,
any of which could materially adversely affect our business.

We face the risk that existing or new competitors, which include some of our customers, distributors, and
suppliers, will expand in our key market segments or develop new technologies, enhancing their competitive position
relative to ours. Competitors also may be able to offer additional products, services, lower prices or other incentives that
we cannot or that, to maintain profitability, we may not be able to offer. There can be no assurance that we will be able to
compete successfully against current or future competitors or new technologies.

We also are exposed to changes in customer order patterns, such as changes in the levels of inventory maintained
by customers and the timing of customer purchases, which may be affected by announced price increases, changes in our
customer incentive programs, or changes in the customer’s ability to achieve incentive targets. Changes in customers’
preferences for our products can also affect demand for our products and a decline in demand for our products could
have a material adverse effect on our business. In our Materials Group reportable segment, as supply chain constraints
eased in 2022, customers increased inventory levels following a period of reduced availability. In the fourth quarter of
2022, inventories downstream from our company began to unwind swiftly, resulting in lower demand. This continued in
2023, with volume improving sequentially throughout the year.

We are affected by changes in our markets due to increasing environmental standards. If we do not respond
appropriately to these changes, it could negatively impact market demand, our market share and pricing, any of
which could materially adversely affect our business. Adverse weather conditions and natural disasters, including
those related to the impacts of climate change, adversely affect our business.

A substantial amount of our label materials is sold for use in plastic packaging in the food, beverage, and home
In recent years, there has been an accelerated focus on sustainability and
and personal care market segments.
transparency in sustainability reporting, with greater concern regarding climate change and single-use plastics, corporate
commitments and increasing stakeholder expectations regarding the reuse and recyclability of plastic packaging and
recycled content, and increased regulation in multiple geographies regarding the collection, recycling and use of recycled
content. Changes in consumer preferences and laws and regulations related to the use of plastics reduces demand for
certain of our products but also has the potential to increase demand for our more sustainable products. We have
established a strategic innovation platform, among other things, focused on material circularity and waste elimination/
reduction to develop products and solutions that advance the circular economy and address the need for increased
Avery Dennison Corporation | 2023 Annual Report 9

recyclability of plastic packaging, in collaboration with our customers and the businesses in our supply chain. We have
made considerable investments in our sustainability-driven products, but there can be no assurance that they will be
successful, and a significant reduction in the use of plastic packaging could materially adversely affect demand for our
products.

The scientific consensus is that the emission of greenhouse gases (“GHG”) is altering our atmosphere in ways that
are adversely affecting global climate. There is continuing concern from members of the scientific community and the
general public that GHG emissions and other human activities have or will cause significant changes in weather patterns
and increase the frequency or severity of extreme weather events, including droughts, wildfires and flooding. These types
of extreme weather events have and may continue to adversely impact us, our suppliers, our customers and their ability to
purchase our products and our ability to timely receive appropriate raw materials to manufacture and transport our
products on a timely basis. Concern regarding climate change has led and is likely to continue leading to increasing
demands by legislators and regulators, customers, consumers, investors, employees and non-governmental organizations
for companies to reduce their GHG emissions. One of our 2025 sustainability goals is to achieve at least a 3% absolute
reduction in our GHG emissions year-over-year and at least a 26% absolute reduction compared to our 2015 baseline by
2025; we have already exceeded the cumulative 2025 GHG emissions reduction goal. As part of our more ambitious
2030 sustainability goals, we are aiming by 2030 to reduce our Scope 1 and 2 GHG emissions by 70% compared to our
2015 baseline and work with our supply chain to reduce Scope 3 GHG emissions by 30% against our 2018 baseline; we
also have an ambition to be net zero by 2050. We could face risks to our reputation, investor confidence and market
share if we are unable to continue reducing our GHG emissions. Increased raw material costs, such as for fuel and
electricity, and compliance-related costs could also impact customer demand for our products. The extent of the impact of
climate change on our business is uncertain, as it will depend on the limits imposed by, and timing of, new or stricter laws
and regulations, more stringent environmental standards and expectations, and evolving customer and consumer
preferences, but it is likely to increase our costs and could have a material adverse effect on our business.

We have recently acquired companies and are likely to acquire other companies. Acquisitions come with significant
risks and uncertainties, including those related to integration, technology and employees.

To grow existing businesses and expand into new areas, we have made acquisitions and are likely to continue
acquiring companies that increase our presence in high value product categories, increase our pace of innovation and
advance our sustainability priorities. In 2023, we acquired Silver Crystal, Lion Brothers and Thermopatch for aggregate
purchase consideration of approximately $231 million.
In 2022, we acquired TexTrace and Rietveld for aggregate
purchase consideration approximately $35 million. The success of any acquisition depends on the ability of the combined
company to realize the anticipated benefits from combining our businesses. Realizing these benefits depends, in part, on
maintaining adequate focus on executing the business strategies of the combined company as well as the successful
integration of assets, operations, functions and personnel. We continue to evaluate potential acquisition targets and
ensure we have a robust pipeline of potential opportunities.

Various risks, uncertainties and costs are associated with acquisitions. Effective integration of systems, controls,
employees, product lines, market segments, customers, suppliers and production facilities and cost savings can be
difficult to achieve and the success of integration activities can be uncertain. While we have not experienced significant
issues with our acquisitions to date, if management of our combined company is unable to continue minimizing the
potential disruption of the combined company’s ongoing business during the integration process, the anticipated benefits
of any acquisition may not be fully realized. In addition, the inability to successfully manage the implementation of
appropriate systems, policies, benefits and compliance programs for the combined company could have a material
adverse effect on our business. We may not be able to retain key employees of an acquired company or achieve the
projected performance targets for the business into which an acquired company is integrated. Both before and after the
closing of an acquisition, our business and that of the acquired company may suffer due to uncertainty or diversion of
management attention. Future acquisitions could result
interest expense,
restructuring charges and amortization expenses related to intangible assets. There can be no assurance that acquisitions
will be successful and contribute to our profitability. Further, we may not be able to identify value-accretive acquisition
targets that support our strategy of expanding our position in high value product categories or be able to successfully
execute additional acquisitions in the future.

in increased debt, dilution,

liabilities,

10 2023 Annual Report | Avery Dennison Corporation

A significant consolidation of our customer base could negatively impact our business.

A significant consolidation of our customer base could negatively impact our business. In recent years, some
converter customers served by our Materials Group reportable segment have consolidated and integrated vertically and
some of our largest customers have acquired companies with similar or complementary product lines.
Industry
consolidation could continue to increase the concentration of our business with our largest customers. Further
consolidation may be accompanied by pressure from customers for us to lower our selling prices. While we have been
generally successful at managing customer consolidations in the past, increased pricing pressures from our customers
could have a material adverse effect on our business.

Because some of our products are sold by third parties, our business depends in part on the financial condition of
these parties and their customers.

Some of our products are sold not only by us, but also by third-party distributors. Some of our distributors also
market products that compete with our products. Changes in the financial or business conditions, including economic
weakness, market trends or industry consolidation, or the purchasing decisions of these distributors or their customers
could materially adversely affect our business.

Our reputation, sales, and earnings could be materially adversely affected if the quality of our products and services
does not meet customer expectations. In addition, product liability claims or regulatory actions could materially
adversely affect our business and reputation.

There are times when we experience product quality issues resulting from defective materials, manufacturing,
packaging or design. These issues are often discovered before shipping, causing delays in shipping, delays in the
manufacturing process, or, occasionally, cancelled orders. When issues are discovered after shipment, they may result in
additional shipping costs, discounts, refunds or loss of future sales. Both pre-shipping and post-shipping quality issues
could have a material adverse effect on our business and negatively impact our reputation.

Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our
business. In addition to the risk of substantial monetary judgments and penalties that could have a material adverse effect
on our business, product liability claims or regulatory actions could result in negative publicity, reputational harm and loss
of brand value. We also could be required to recall and possibly discontinue the sale of products deemed to be defective
or unsafe, which could result in adverse publicity and significant expenses. Although we maintain product liability
insurance coverage, claims are subject to a deductible or may not be covered under the terms of the policy.

Changes in our business strategies and the restructuring of our operations affect our costs and the profitability of our
businesses. In addition, our profitability may be materially adversely affected if we generate less productivity
improvement from our restructuring actions than projected.

As our business environment changes, we have adjusted and may need to further adjust our business strategies or
restructure our operations or particular businesses. As we continue to develop and adjust our growth strategies, we may
invest in new businesses that have short-term returns that are negative or low and whose ultimate business prospects
are uncertain or could prove unprofitable. We engage in restructuring actions from time to time to reduce our costs and
increase efficiencies across our business segments. We expended approximately $79 million in 2023 compared to $8
million for restructuring actions in 2022. Our restructuring actions in 2023 included a restructuring plan to further
optimize the European footprint of our Materials Group reportable segment. We had incremental savings from
restructuring actions, net of transition costs, of approximately $69 million in fiscal year 2023. We intend to continue
efforts to reduce costs in all our businesses, which have in the past included, and may continue to include, facility closures
and square footage reductions, headcount reductions, organizational restructuring, process standardization, and
manufacturing relocation. The success of these efforts is not assured and targeted savings may not be realized. In
addition, cost reduction actions can result in restructuring charges and could expose us to production risk, loss of sales
and employee turnover. We cannot provide assurance that we will achieve the intended results of any of our restructuring
actions, which involve operational complexities, consume management attention and require substantial resources and
effort. If we fail to achieve the intended results of such actions, our costs could increase, our assets could be impaired, and
our returns on investments could be lower.

Avery Dennison Corporation | 2023 Annual Report 11

Our ability to develop and successfully market new products and applications impacts our competitive position.

The timely introduction of new products and improvements to current products helps determine our success. Many
of our current products are the result of our research and development efforts, for which we expensed $135.8 million in
2023. These efforts are directed primarily toward developing new products and operating techniques and improving
product performance, often in close association with our customers or end users. These efforts include patent and
product development work relating to printing and coating technologies, as well as adhesive, release and ink chemistries
in Materials Group. We focus on research projects related to RFID and external embellishments in Solutions Group, for
which we have and license a number of patents. Additionally, our research and development efforts include sustainable
innovation and design of products that increase the use of recycled content, reduce waste, extend life or enable recycling.
Research and development is complex and uncertain, requiring innovation and anticipation of market trends, which
means that the costs of these expenditures may not be recovered through additional sales. We could focus on products
that ultimately are not accepted by customers or end users or we could experience delays in the production or launch of
new products could compromise our competitive position.

Our infrastructure needs impact our business and expenditures.

We continue to invest in our long-term growth and margin expansion plans, with $285.1 million in capital
expenditures, including fixed assets and information technology, in 2023. We may not be able to recoup the costs of our
infrastructure investments if actual demand is not as we anticipate. In recent years, we expanded Materials Group’s
manufacturing capabilities in India and a location in Indiana; moved our Solutions Group’s Vietnam business into a new,
expanded facility; and made additional investments in both capacity and business development globally for our Intelligent
Labels RFID platform, including new facilities in Brazil and Mexico. We also transferred Materials Group’s European
medical capacity from Belgium to Ireland. In addition, we added capacity through our acquisitions of Silver Crystal, Lion
Brothers and Thermopatch in 2023. Infrastructure investments, which are long-term in nature, may not generate the
expected return due to changes in the marketplace, failures in execution, and other factors. Significant changes from our
expected need for and/ or returns on our infrastructure investments could materially adversely affect our business.

Difficulty in the collection of receivables as a result of economic conditions or other market factors could have a
material adverse effect on our business.

Although we have processes to administer credit granted to customers and believe our allowance for credit losses
is adequate, we have increased the allowance due to, for example, epidemics, pandemics or other outbreaks of illness,
supply chain challenges, issues with raw material availability and cost, freight and labor availability, and inflationary
pressures, and in the future may experience losses as a result of our inability to collect some of our accounts receivable. A
customer’s financial difficulties are likely to result in reduced business with that customer. We may also assume higher
credit risk relating to receivables of a customer experiencing financial difficulty. If these developments were to occur
widely in our customer base, our inability to collect on our accounts receivable from customers could substantially reduce
our cash flows and income and have a material adverse effect on our business.

including our investors, customers and
There is a rapidly evolving awareness and focus from stakeholders,
employees, with respect to global climate change and our company’s sustainability and governance practices, which
could affect our business.

Investor and societal expectations with respect to sustainability or governance matters have been evolving and
increasing. We risk damage to our reputation if we do not continue to act responsibly with respect to these matters in the
following key areas: environmental stewardship; DEI; corporate governance; support
for our communities; and
transparency. A failure to adequately meet stakeholders’ expectations could result in loss of business, diluted market
valuation, an inability to attract and retain customers and personnel, increased negative investor sentiment toward us
and/or our customers and the diversion of investment to other industries, which could have a negative impact on our
stock price and access to and cost of capital.

Epidemics, pandemics or other outbreaks of illness, and restrictions intended to prevent their spread, could materially
adversely impact our business.

Epidemics, pandemics or other outbreaks of illness, disease or virus in the markets in which we do business, and
actions taken to contain or prevent their further spread, could materially impact our business, as they did at various times
during the 2020-2023 period. They could result in restrictive governmental measures being implemented to control their
12 2023 Annual Report | Avery Dennison Corporation

spread, including quarantines, restrictions on travel, “shelter in place” rules, stay-at-home orders, density limitations,
social distancing measures, and/or restrictions on types of business that may continue to operate, which could materially
adversely affect our business.

Risks Related to Information Technology

Significant disruption to the information technology infrastructure that stores our information could materially
adversely affect our business.

We rely on the efficient and uninterrupted operation of a large and complex information technology infrastructure
to link our global business. Like all information technology systems, ours are susceptible to a number of risks including,
but not limited to, damage or interruptions resulting from obsolescence, natural disasters, power failures, human error,
viruses, social engineering, phishing, ransomware or other malicious attacks and data security breaches. We upgrade and
install new systems, which, if installed or programmed incorrectly or on a delayed timeframe, could cause delays or
impede the manufacture or shipment of products, or disrupt the processing of
cancellations of customer orders,
transactions. We have continued to implement measures to mitigate our risk related to system and network disruptions,
but if a significant disruption were to occur, we could incur significant losses and remediation costs that could have a
material adverse effect on our business.

Additionally, we rely on services provided by third-party vendors for certain information technology processes,
including system infrastructure management, application management, and software as a service. While we have
matured our cybersecurity due diligence process, this reliance on third parties makes our operations vulnerable to a failure
by any one of these vendors to perform adequately or maintain effective internal controls.

Cybersecurity or other security breaches could compromise our information and expose us to liability, which could
have a material adverse effect on our business and reputation.

We maintain information necessary to conduct our business in digital form, which is stored in data centers and on
our networks and third-party cloud services,
including confidential and proprietary information as well as personal
information regarding our customers and employees. The secure maintenance of this information is critical to our
operations. Data maintained in digital form is subject to the risk of intrusion, tampering and theft. We develop and
maintain systems and processes at significant cost to prevent this from occurring, but these systems require ongoing
monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.
We experience non-material cybersecurity events each year that are escalated through our documented and tested
Security Incident Response Plan, and although we have not experienced a significant breach in recent years, the
possibility of intrusion, tampering and theft cannot be eliminated entirely. Our information technology and infrastructure
are vulnerable to attacks by hackers or breaches due to employee error, malfeasance or other disruptions, and the threat
landscape remains challenging with our digital business transformation, hybrid workforces, the increasing use of artificial
intelligence, and interconnected supply chains expanding the risk of attack. We also perform cybersecurity due diligence
and mitigate identified risks during our M&A due diligence process; however, there is still a risk that a recent or future
acquisition experiences an event that could lead to a breach before risks are able to be mitigated.

Additionally, we provide confidential, proprietary and personal information to third parties when it is necessary to
pursue business objectives. While we obtain written agreements and assurances that these third parties will protect this
information and, where appropriate, assess the protections utilized by these third parties, we are aware of suppliers in our
ecosystem who have experienced security events, and there is a risk the confidentiality of data held by third parties may
be compromised.

Breaches or attacks can compromise our network, the network of a third party to whom we have disclosed
confidential, proprietary or personal information, a data center where we have stored such information or a third-party
cloud service provider, and the information stored there can be accessed, publicly disclosed, lost or stolen. Any access,
disclosure or loss of information could disrupt our operations, result in legal claims or proceedings, damage our
reputation, impair our ability to conduct business, or result in the loss or diminished value of profitable opportunities and
the loss of revenue as a result of unlicensed use of our intellectual property. Contractual provisions with third parties,
including cloud service providers, often substantially limit our ability to fully recover our losses. If the personal information
of our customers or employees were to be misappropriated, we could incur costs to compensate our customers or
employees or pay damages or fines as a result of litigation or regulatory actions and our reputation with our customers
Avery Dennison Corporation | 2023 Annual Report 13

and employees could be injured, resulting in loss of business or decline in morale. Data privacy legislation and regulation
have been increasing in recent years – including, for example, the General Data Protection Regulation in the EU, the
Personal Information Protection Law in China, the General Data Protection Law in Brazil and the state of California’s
Privacy Rights Act – and although we have made reasonable efforts to comply with all applicable laws and regulations,
there can be no assurance that we will not be subject to regulatory action in the event of a data privacy violation.

Cybersecurity risk and ransomware attacks on companies continue to significantly increase and there can be no
assurance that we have fully protected our information, that third parties to whom we have disclosed such information or
with whom we have stored such information (in data centers and in the cloud) are taking similar precautions, or that we
will not experience hacking or intrusion attempts that could have a material adverse effect on our business. In addition to
maintaining a robust set of endpoint, network, email and cloud security solutions, we continue to take steps to further
improve the security of our networks and computer systems, including strengthening authentication; continuing to mature
our zero trust architecture and strategy; furthering our advanced malware detection measures; further enhancing and
testing our security incident response plan; upgrading legacy information technology systems to simplify and standardize
business processes and applications; adopting a robust cloud security strategy across multiple platforms; continuously
improving information technology project and portfolio management discipline; setting more aggressive key performance
indicator targets and implementing appropriate mitigation measures; continuing to mature our data loss prevention
framework to protect our critical data, network and site access controls; advancing our user access management
program; limiting USB drive access across our company; increasing network segmentation; enhancing our focus on third
party risk management; and improving our capabilities based on threat intelligence and the publicized incidents
experienced by other companies, as well as ones that we have experienced despite their minimal operational or financial
impact to date.

Risks Related to Income Taxes

Changes in our tax rates affect our business.

Our effective tax rate is affected by changes in the mix of earnings in countries with differing statutory tax rates,
changes in the valuation of deferred tax assets and liabilities, or changes in tax laws and regulations or their
interpretation. The impact of these changes could materially impact our business.

Legislation implementing changes in taxation of business activities, adoption of other corporate tax reform policies,
or other changes in tax legislation or policies impact our expenses.

Corporate tax reform, prevention of base-erosion and tax transparency continue to be high priorities for many tax
jurisdictions worldwide, including the U.S. As a result, policies regarding corporate income and other taxes are under
heightened scrutiny globally, with tax reform legislation having been proposed or enacted in a number of jurisdictions.

In addition, many countries have enacted, or plan to enact,

legislation and other guidance to align their
international tax rules with the Organisation for Economic Co-operation and Development’s (“OECD”) Base Erosion and
Profit Shifting recommendations and directives, which aim to standardize and modernize global corporate tax policy,
cross-border tax, transfer-pricing documentation rules, and nexus-based tax incentive practices. Moreover, the OECD
continues to focus on fundamental changes to the profit allocation among tax jurisdictions in which companies do
business and the implementation of a global minimum tax. The timing and ultimate impact of such changes on our
effective tax rate remain uncertain as the countries in which we operate continue to adopt these directives. Due to the
size of our international business activities, any substantial change in corporate tax policies, enforcement activities or
legislative or regulatory actions could have a material adverse effect on our business.

Our inability to retain or renew certain tax incentives in foreign jurisdictions could materially adversely affect our
effective tax rate.

Our effective tax rate reflects benefits from concessionary tax rates in certain foreign jurisdictions based on the
geographic location of our manufacturing activities, the industries that we serve, or the business model under which we
operate. If we do not meet the criteria required to retain or renew these tax incentives, our effective tax rate could be
materially adversely affected.

14 2023 Annual Report | Avery Dennison Corporation

The amount of various taxes we pay is subject to ongoing compliance requirements and audits by federal, state and
foreign tax authorities.

We are subject to regular examinations of our income tax returns by various tax authorities. We regularly assess
the likelihood of material adverse outcomes resulting from these examinations to determine the adequacy of our provision
for taxes. In addition, tax enforcement has become increasingly aggressive in recent years focused primarily on transfer
pricing and intercompany documentation. Our estimate of the potential outcome of uncertain tax issues requires
significant judgment and is subject to our assessment of relevant risks, facts, and circumstances existing at the time. We
use these assessments to determine the adequacy of our provision for income taxes and other tax-related accounts. Our
results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are
made or resolved, which may materially adversely affect our effective tax rate.

We have deferred tax assets that we may not be able to realize under certain circumstances.

If we are unable to generate sufficient taxable income in certain jurisdictions, or if there is a significant change in
the time period within which the underlying temporary differences become taxable or deductible, we could be required to
increase our valuation allowances against our deferred tax assets. This would increase our effective tax rate and could
have a material adverse effect on our business. In addition, changes in statutory tax rates may change our deferred tax
asset or liability balances, with either a favorable or unfavorable impact on our effective tax rate. A significant portion of
our indefinite- lived net operating loss carryforwards is concentrated in Luxembourg and may require decades to be fully
utilized under our current business model. Decreases in the statutory tax rate or changes in our ability to generate
sufficient future taxable income in Luxembourg could materially adversely affect our effective tax rate. In addition, the
computation and assessment of the realizability of our deferred tax assets may also be materially impacted by new
legislation or regulations.

Risks Related to Human Capital

For us to remain competitive, deliver on our business strategy and avoid business disruption, it is important to recruit
high caliber talent, retain key management and highly-skilled employees and receive high quality service from all
outsourced service providers. This includes providing market-competitive compensation and benefits and ensuring a
diverse, equitable and inclusive workplace.

Competition to recruit and retain critical talent has increased in recent years. Our ongoing productivity efforts and
restructuring actions can increase this challenge. When it comes to our outsourced service providers, we have
experienced delays or errors and reduced resource availability and manage ongoing risk when it comes to people,
processes and software. We also have increased our focus on risks related to artificial intelligence.

Executive succession planning is also critical to our long-term success. We experienced several recent key
management changes,
including promotions in 2023 of long-serving and experienced leaders to the positions of
President and Chief Executive Officer and our President, Solutions Group. While we believe we have appropriate
leadership development programs and succession plans in place that are regularly discussed with our Board’s Talent and
Compensation Committee, any failure to ensure effective leadership transitions and knowledge transfer involving key
management (or any highly-skilled employees) could hinder our strategic planning and execution.

We have various non-U.S. collective labor arrangements, which make us subject to potential work stoppages, as well
as union and works council campaigns and other labor disputes, any of which could adversely impact our business.

Work interruptions or stoppages could significantly impact our ability to deliver for our customers. In addition,
collective bargaining agreements, union contracts and labor laws may impair our ability to reduce labor costs by closing or
downsizing manufacturing facilities because of limitations on personnel and salary and other restrictions. A work
stoppage at one or more of our facilities, or the facilities of our customers or at any of our suppliers, could have a material
adverse effect on our business.

In addition, the recent and ongoing geopolitical unrest and weather-related effects of climate change in numerous
regions could impact the safety and productivity of our current employees. Those impacts could also hinder our ability to
recruit and grow our talent pools in the impacted regions/countries.

Avery Dennison Corporation | 2023 Annual Report 15

Risks Related to Our Indebtedness

If our indebtedness increases significantly or our credit ratings are downgraded, we may have difficulty obtaining
acceptable short- and long-term financing.

At December 30, 2023, we had approximately $3.24 billion of debt. Our level of indebtedness and credit ratings
are significant factors in our ability to obtain short- and long-term financing. Higher debt levels could negatively impact
our ability to support our business needs and result in higher financing costs. The credit ratings assigned to us also
impact the interest rates we pay. A downgrade of our short-term credit ratings could impact our ability to access the
commercial paper markets and increase our borrowing costs if we needed to obtain short-term funding under our
revolving credit facility. If our access to commercial paper markets were to become limited and we were required to
obtain short-term funding under our revolving credit facility or our other credit facilities, we would have increased
exposure to variable interest rates.

An increase in interest rates adversely affects our business.

In 2023, our average variable-rate borrowings were approximately $608 million. Increases in short-term interest
rates directly impact the amount of interest we pay. Fluctuations in interest rates can increase our borrowing costs and
have a material adverse effect on our business.

Since 2022, the U.S. Federal Reserve and similar monetary policymaking entities around the world have raised
interest rates in an effort to curb rising inflation across the globe. As of December 30, 2023, the U.S. Federal Reserve’s
benchmark interest rate was between 5.25% and 5.50%, up from between 4.25% and 4.50% the same time in 2022. As
long-term interest rates rise, our borrowing costs increase. Continued increases in interest rates could, among other
things, reduce the availability and/or increase the costs of obtaining new debt and refinancing existing indebtedness and
negatively impact our business.

Our current and future debt covenants may limit our flexibility.

Our credit facilities and the indentures governing our medium- and long-term notes contain, and any of our future
indebtedness likely would contain, restrictive covenants that impose operating and financial restrictions on us. Among
other things, these covenants restrict our ability to incur additional indebtedness, incur certain liens on our assets, make
certain investments, sell our assets or merge with third parties, or enter into certain transactions. We are also required to
maintain specified financial ratios under certain conditions. These restrictive covenants and ratios may limit or prohibit us
from engaging in certain activities and transactions that may be in the best interest of our business, putting us at a
competitive disadvantage relative to our competitors, which could materially adversely affect our business.

Risk Related to Ownership of Our Stock

Our stock price is subject to significant variability.

Changes in our stock price may, among other things, affect our access to, or cost of financing from, capital
markets, our stock-based compensation arrangements and our effective tax rate. Our stock price is influenced by changes
in the overall stock market and demand for equity securities in general. Other factors, including our financial performance
on an absolute basis and relative to peer companies and competitors, as well as market expectations of our performance,
the level of perceived growth of our industries, and other company-specific factors, may also materially adversely affect
our stock price. There can be no assurance that our stock price will not continue to experience significant variability in the
future.

We cannot guarantee that we will continue to repurchase shares of our common stock or pay dividends on our
common stock or that repurchases will enhance long-term stockholder value. Changes in our levels of stock
repurchases or dividends could affect our stock price and increase its variability.

In April 2022, our Board authorized the repurchase of shares of our common stock with a fair market value of up to
$750 million, in addition to the amount of shares that were then available for repurchase under our previous Board
authorization. In 2023, we repurchased 0.8 million shares of our common stock at an aggregate cost of $137.5 million. As
of December 30, 2023, shares of our common stock in the aggregate amount of $592.8 million remained authorized for
repurchase under this Board authorization. We make share repurchases through a variety of methods, which may include
16 2023 Annual Report | Avery Dennison Corporation

open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our
share repurchase authorizations do not obligate us to acquire any specific number of shares or to repurchase any specific
number of shares for any fixed period. The timing and amount of our repurchases, if any, are subject to market and
economic conditions, applicable legal requirements and other relevant factors. We may limit, suspend or discontinue
repurchasing shares at any time at our discretion and without prior notice.

Although we increased our quarterly dividend rate by approximately 8% in April 2023, there can be no assurance
that we will maintain this rate or approve further increases in the future. Future dividends are subject to market and
economic conditions, applicable legal requirements and other relevant factors. We are not obligated to continue declaring
dividends for any fixed period, and our payment of dividends could be suspended or discontinued at any time at our
discretion and without prior notice. We will continue to retain future earnings to develop our business, as opportunities
arise, and evaluate the amount and timing of future dividends based on our operating results, financial condition, capital
allocation strategies and general business conditions. The amount and timing of any future dividends may vary, and the
payment of any dividend does not assure that we will pay dividends in the future.

In addition, any future repurchases of our common stock or payment of dividends, or any determination to cease
repurchasing stock or paying dividends, could affect our stock price and significantly increase its variability. Our share
repurchases and any future dividends could cause our stock price to be higher than it would otherwise be and could
potentially reduce the market liquidity for our stock. Additionally, any future repurchases of our common stock or payment
of dividends could impact our ability to invest in our businesses or pursue acquisitions and venture investments. Although
our share repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so
because the market price of our common stock may decline below the levels at which we repurchased shares of stock
and short-term stock price fluctuations could reduce the program’s effectiveness.

Risks Related to Legal and Regulatory Matters

Infringing intellectual property rights of third parties or inadequately acquiring or protecting our intellectual property
could harm our ability to compete or grow.

Because our products involve complex technology and chemistry, we are involved from time to time in litigation
involving patents and other intellectual property. Parties have filed, and in the future may file, claims against us alleging
that we have infringed their intellectual property rights. We are currently party to a litigation in which ADASA Inc.
(“Adasa”), an unrelated third party, alleged that certain of our RFID products within our Solutions Group reportable
segment infringed its patent. As of December 30, 2023 our contingent liability for this matter was $82.9 million which
reflects our best estimate of
the anticipated judgment. For more information on this litigation, see Note 8,
“Contingencies,” in the Notes to Consolidated Financial Statements. If we are unsuccessful in our appeals related to the
Adasa matter or are held liable for infringement in other matters, we could be required to pay damages, obtain licenses or
cease making or selling certain products. There can be no assurance that licenses would be available on commercially
reasonable terms or at all. The defense of these claims, whether or not meritorious, or the development of new
technologies is costly and diverts the attention of management.

We also have valuable intellectual property upon which third parties may infringe. We attempt to protect and
restrict access to our intellectual property and proprietary information by relying on the patent, trademark, copyright and
trade secret laws of the U.S. and other countries, as well as non-disclosure agreements. However, it may be possible for a
third party to obtain our information without our authorization, independently develop similar technologies, or breach a
non-disclosure agreement entered into with us. In addition, many of the countries in which we operate do not have
intellectual property laws as protective as those in the U.S. The use of our intellectual property by someone else without
our authorization could reduce or eliminate certain competitive advantages we have, cause us to lose sales or otherwise
harm our business. Further, the costs associated with protecting our intellectual property rights could materially adversely
impact our business.

We have obtained and applied for U.S. and foreign trademark registrations and patents, and will continue to
evaluate whether to register additional trademarks and apply for additional patents. We cannot guarantee that any of our
pending applications will be approved by the applicable governmental authorities. Further, we cannot assure that the
validity of our patents or our trademarks will not be challenged. In addition, third parties may be able to develop
competing products using technology that avoids our patents.

Avery Dennison Corporation | 2023 Annual Report 17

Unfavorable developments in legal proceedings, investigations and other legal and regulatory matters, could impact
us in a materially adverse manner.

There can be no assurance that any outcome of any litigation,

investigation or other legal, environmental,
compliance and regulatory matter will be favorable. Our financial results could be materially adversely affected by an
unfavorable outcome to pending or future litigation and investigations, and other legal, regulatory, environmental and
compliance matters. See Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements for more
information.

We are required to comply with anti-corruption and other compliance laws and regulations of the U.S. government
and various international jurisdictions, and our failure to comply with these laws and regulations could have a
material adverse effect on our business.

We are required to comply with the anti-corruption and other compliance laws and regulations of the U.S.
government and various international jurisdictions, such as the U.S. Foreign Corrupt Practices Act and the UK’s Bribery
Act of 2010. If we fail to comply with anti-corruption laws, we could be subject to substantial civil and criminal penalties,
including fines, monetary damages and incarceration for responsible employees and managers.
if our
distributors or agents fail to comply with these laws, our business may also be materially adversely affected through
reputational harm and penalties.

In addition,

We are required to comply with environmental, health, and safety laws at our operations around the world. The costs
of complying with these laws is significant and increasing.

We are subject to national, state, provincial and/or local environmental, health, and safety laws and regulations in
the U.S. and other countries in which we operate, including those related to the disposal of hazardous waste and GHG
emissions from our manufacturing processes. These laws, which are continually evolving and imposing additional
requirements on our current and former manufacturing facilities, impose liability for the costs of, and damages resulting
from, cleaning up current sites, past spills, disposals and other releases of hazardous substances. Enforcement of these
laws can be unclear and is subject to the discretion of governmental agencies. Any failure to comply with existing and
future environmental, health and safety laws could subject us to fees, penalties, costs or liabilities, impact our production
capabilities, limit our ability to sell, expand or acquire facilities, and have a material adverse effect on our business. Laws
and regulations related to the environment, product content and product safety are complex, change often, and can be
open to different interpretations. In addition, we could be materially and adversely impacted by any environmental or
product safety enforcement action affecting our suppliers, particularly in emerging markets.

We have accrued liabilities for the environmental clean-up of certain sites, including the eleven sites for which U.S.
governmental agencies have designated us as a potentially responsible party as of our 2023 fiscal year-end, where it is
probable that a loss will be incurred and the cost or amount of loss can be reasonably estimated. See Note 8,
“Contingencies,” in the Notes to Consolidated Financial Statements for more information. However, because of the
uncertainties associated with environmental assessment and remediation activities, the actual expense to remediate
currently identified sites could be higher than the liabilities accrued and additional sites could be identified in the future.

We are subject to export and import control laws and regulations in the jurisdictions in which we do business that
could subject us to liability or impair our ability to compete in these markets.

Export control laws and economic sanctions prohibit the shipment of some of our products to embargoed or
sanctioned countries, governments and persons. While we train our employees to comply with these regulations, use
third party screening software, and take other measures, we cannot guarantee that a violation will not occur. A prohibited
shipment has negative consequences, including government investigations, penalties, fines, civil and criminal sanctions
and/ or reputational harm. Any change in export or import regulations, economic sanctions or related legislation, shift in
the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies
targeted by such regulations, could decrease our ability to export or sell our products internationally. Any limitation on our
ability to export or sell our products could materially adversely affect our business.

Some of our products are subject to export control laws and regulations and may be exported only with an export
license or through an applicable export license exception. If we fail to comply with export licensing, customs regulations,
economic sanctions or other laws, we could be subject to substantial civil or criminal penalties, including fines, criminal
18 2023 Annual Report | Avery Dennison Corporation

charges against responsible employees and loss of export or import privileges. In addition, if our distributors fail to obtain
appropriate import, export or re-export licenses or permits, we may also be materially adversely affected through
reputational harm and penalties. Obtaining the necessary export license for a particular sale may be time consuming and
expensive and could result in the delay or loss of sales opportunities.

Risks Related to Other Financial Matters

Our pension assets are significant and subject to market, interest and credit risk that may reduce their value.

Changes in the value of our pension assets, which was approximately $663 million as of December 30, 2023,
could materially adversely affect our earnings and cash flows. In particular, the value of our investments may decline due
to increases in interest rates or volatility in financial markets. We continuously evaluate options to better manage the
volatility associated with our pension liabilities and may take actions to reduce the financial volatility associated with our
pension liabilities, which could result in significant charges. Although we mitigate these risks by investing in high quality
securities, ensuring adequate diversification of our investment portfolio and monitoring our portfolio’s overall risk profile,
the value of our investments may nevertheless decline.

The actuarial assumptions used for valuation purposes affect our earnings and cash flows. Changes in accounting
standards and government regulations could also affect our pension and postretirement plan expense and funding
requirements.

We evaluate the assumptions used in determining projected benefit obligations and the fair value of plan assets
for our non-U.S. pension plans and other postretirement benefit plans in consultation with outside actuaries. Our pension
and projected postretirement benefit expenses and funding requirements increase or decrease as a result of the
assumptions we use,
including the discount rate, expected long-term rate of return or mortality rates. Because of
changing market conditions or changes in participant populations, the actuarial assumptions that we use may differ from
actual results, which could have a significant impact on our pension and postretirement benefit obligations and related
costs. Funding obligations for each plan are determined based on the value of assets and liabilities on a specific date in
accordance with applicable government regulations. Our pension funding requirements, and the timing of funding
payments, could also be affected by future legislation or regulation. In 2023, the Dutch Senate passed the Dutch Pension
Act, which requires traditional defined benefit plans to be phased out and transition to defined contribution plans by
January 1, 2028.

An impairment in the carrying value of goodwill could negatively impact our results of operations and net worth.

Goodwill is initially recorded at fair value and not amortized and is reviewed for impairment annually (or more
frequently if impairment indicators are present). As of December 30, 2023, the carrying value of our goodwill was $2.01
billion. In 2023, we determined that the goodwill of our reporting units was not impaired. We review goodwill for
impairment by comparing the fair value of a reporting unit to its carrying value. In assessing fair value, we make estimates
and assumptions about sales, operating margins, growth rates, and discount rates based on our business plans, economic
projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors
and management’s judgment in applying these factors. Goodwill valuations have been calculated primarily using an
income approach based on the present value of projected future cash flows of each reporting unit. We could be required
to evaluate the carrying value of goodwill prior to the annual assessment if we experience disruptions to our business,
unexpected significant declines in operating results, divestiture of a significant component of our business or sustained
market capitalization declines. These types of events could result in goodwill
impairment charges in the future.
Impairment charges could materially adversely affect our business in the periods in which they are made.

Item 1B.

UNRESOLVED STAFF COMMENTS

None.

Avery Dennison Corporation | 2023 Annual Report 19

Item 1C.

CYBERSECURITY

Cybersecurity Risk Management and Strategy

Our cybersecurity risk management (“CSRM”) program, which is designed to protect the confidentiality, integrity

and availability of our critical systems and information, includes a comprehensive cybersecurity incident response plan.

We design and assess our program based on the ISO 27000 and the National

Institute of Standards and
Technology (NIST) SP-800 and Cybersecurity Framework (“CSF”). We use these frameworks to help us identify, assess
and manage cybersecurity risks relevant to our business. It is not intended to suggest that we meet any particular
technical standards, specifications or requirements.

Our CSRM program complements our overall enterprise risk management program, using similar methodologies

and governance processes to identify risks and mitigating strategies.

Our CSRM program includes risk assessments designed to help identify potentially material cybersecurity risks to
our critical systems, information, products and services, as well as our broader enterprise IT environment; an IT security
team principally responsible for managing our cybersecurity risk assessment processes, security controls and response to
any cybersecurity events; the use of third party experts and service providers, where appropriate, to assess, test and
otherwise assist with protecting our security environment; cybersecurity awareness training for our employees and
further training for our incident response personnel and senior management; a cybersecurity incident response plan that
includes procedures for assessing and coordinating our response to cybersecurity events; and a third-party risk
management process for service providers, suppliers and vendors.

We have not experienced cybersecurity events that have materially affected our operations, results of operations,
if realized, would be

or financial condition. However, we face certain ongoing risks from cybersecurity threats that,
reasonably likely to materially affect us, including our operations, results of operations, or financial condition.

Risks and uncertainties related to cybersecurity are discussed in greater detail under “Risks Related to Information

Technology” in Item 1A of this report.

Cybersecurity Governance

Our Board of Directors (our “Board”) considers cybersecurity risk as part of its risk oversight function and has
delegated to the Audit Committee primary responsibility for overseeing our CSRM program and engaging with
management on cybersecurity and other risks related to our IT controls and security at least twice per year. Management
updates the Audit Committee, if and as needed, regarding any significant cybersecurity events, as well as events that may
have had lesser potential impact.

In addition to reports from its Chair on the Audit Committee’s discussions on cybersecurity, our Board members
receive periodic presentations on cybersecurity topics from our Chief Information Officer and our Information Security
Officer (“ISO”) as part of their continuing education on risks impacting public companies.

Our cybersecurity leadership team (“CSLT”), which includes leaders accountable for security operations, incident
response, risk and compliance, data security, application security, digital solutions security, vulnerability management and
operational technology security, is responsible for assessing and managing our risks from cybersecurity threats. The team
has primary responsibility for our overall CSRM program and supervises both our internal cybersecurity personnel and our
external cybersecurity consultants. Information security personnel maintain a variety of technical and managerial security
certifications and have broad security experience in manufacturing, finance, software and IT environments.

The CSLT supervises our efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents
through a variety of means, which may include briefings from internal security personnel; threat intelligence and other
including external consultants; and reports from
information obtained from governmental, public or private sources,
cybersecurity systems deployed in our IT environment.

20 2023 Annual Report | Avery Dennison Corporation

Item 2.

PROPERTIES

As of December 30, 2023, we operated manufacturing facilities in excess of 100,000 square feet in the reportable

segments and locations listed below.

Materials Group

U.S.

Non-U.S.

Solutions Group

Peachtree City, Georgia; Fort Wayne, Greenfield, and Lowell, Indiana; Fairport Harbor,
Mentor, Oak Harbor, and Painesville, Ohio; Mill Hall, Pennsylvania
Soignies and Turnhout, Belgium; Vinhedo, Brazil; Guangzhou, Kunshan, and Zhuozhou,
India; Longford,
China; Champ-sur-Drac, France; Gotha, Germany; Pune and Noida,
Ireland; Kibbutz Hanita, Israel; Rodange, Luxembourg; Bangi, Malaysia; Queretaro, Mexico;
Rayong, Thailand; and Cramlington, United Kingdom

U.S.
Non-U.S.

New Century, Kansas and Miamisburg, Ohio
Dhaka, Bangladesh; Guangzhou, Nansha, Panyu, and Suzhou, China; Bufalo, Honduras;
Ancarano, Italy; Kulim, Malaysia; and Long An Province, Vietnam

In addition to the manufacturing facilities described above, our other principal facilities include our corporate
headquarters and divisional office in Mentor, Ohio and our divisional and corporate offices located in Dallas, Texas;
Vinhedo, Brazil; Hong Kong and Kunshan, China; and Oegstgeest, the Netherlands.

We own all of the principal properties identified above, except for the facilities in the following locations, which are
leased: Hong Kong, Panyu and Zhuozhou, China; Bufalo, Honduras; Kibbutz Hanita, Israel; New Century, Kansas; Mentor,
Ohio; and Oegstgeest, the Netherlands.

We consider all our properties, whether owned or leased, suitable and adequate for our current needs. We
generally expand production capacity as needed to meet increased demand. Owned buildings and plant equipment are
insured against major losses from fire and other usual business risks, subject to applicable deductibles. We are not aware
of any material defects in title to, or significant encumbrances on, our properties, except for certain mortgage liens.

Item 3.

LEGAL PROCEEDINGS

See Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements.

Item 4.

MINE SAFETY DISCLOSURES

Not applicable.

Avery Dennison Corporation | 2023 Annual Report 21

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

(a)

Our common stock is listed under the ticker symbol “AVY” on the New York Stock Exchange. We did not sell
securities in any unregistered transactions during fiscal year 2023. We have historically paid quarterly cash
dividends. Future dividend payments are subject to the approval by our Board of Directors based on our earnings,
capital requirements, financial condition and other factors.

We had 3,600 shareholders of record as of December 30, 2023, the last day of our 2023 fiscal year.

Stockholder Return Performance

The graph below compares the cumulative stockholder return on our common stock, including reinvestment of
dividends, with the return on the S&P 500 Stock Index, S&P 500 Industrials Index and Dow Jones U.S. Container &
Packaging Index, in each case for the five-year period ending December 31, 2023. In 2023, we disaggregated our market
basket used in previous years into the S&P 500 Industrials Index and the Dow Jones U.S. Container & Packaging Index, of
which we are a member. We believe this presentation provides greater clarity on our relative performance, reflecting it in
a manner more consistent with the methodology used by peer companies.

Avery Dennison

S&P 500 Index

S&P 500 Industrials Index

Dow Jones U.S. Container
& Packaging Index

$300

$250

$200

$150

$100

$50
12/31/2018

12/31/2019

12/31/2020

12/31/2021

12/31/2022

12/31/2023

Total Return Analysis(1)

Avery Dennison
S&P 500 Index
S&P 500 Industrials Index
Dow Jones U.S. Container &
Packaging Index

12/31/2018
$100
100
100

12/31/2019
$149
131
129

12/31/2020
$179
156
144

12/31/2021
$254
200
174

12/31/2022
$216
164
164

12/31/2023
$245
207
194

100

129

156

173

142

153

(1)

Assumes $100 invested on December 31, 2018 and reinvestment of dividends.

(b)

Not applicable.

22 2023 Annual Report | Avery Dennison Corporation

(c)

Repurchases of Equity Securities by Issuer

Repurchases by us or our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) of the Exchange Act) of
registered equity securities in the fourth quarter of 2023 are shown in the table below. Repurchased shares may be
reissued under our long-term incentive plan or used for other corporate purposes.

Period(1)
October 1, 2023 – October 28, 2023
October 29, 2023 – November 25, 2023
November 26, 2023 – December 30, 2023

Total number of
shares
purchased as
part of publicly
announced
plans(2)(4)
59.1
55.7
—

Approximate
dollar value
of shares that
may yet be
purchased
under the
plans(5)
$602.6
592.8
592.8

Total number
of shares
purchased(2)
59.1
55.7
—

Average
price paid
per share(3)
$178.5
176.2
—

Total

114.8

$177.5

114.8

$592.8

(1)

(2)

(3)

(4)

(5)

The periods shown are our fiscal months during the thirteen-week quarter ended December 30, 2023.
Shares in thousands.
Average price paid per share includes transaction costs to acquire the shares and excludes the non-deductible 1% excise tax on the net value of
repurchases imposed under the Inflation Reduction Act of 2022.
In April 2022, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees,
commissions or other expenses related to such purchases, in addition to the amount outstanding under our previous Board authorization. Board
authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.
Dollars in millions.

Item 6.

RESERVED

Avery Dennison Corporation | 2023 Annual Report 23

Item 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

ORGANIZATION OF INFORMATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, provides
management’s views on our financial condition and results of operations, should be read in conjunction with the
Consolidated Financial Statements and related notes thereto, and includes the sections shown below.

Non-GAAP Financial Measures .................................................................................................................. 24
Overview and Outlook ............................................................................................................................. 25
Analysis of Results of Operations ............................................................................................................... 28
Results of Operations by Reportable Segment .............................................................................................. 30
Financial Condition .................................................................................................................................. 32
Critical Accounting Estimates .................................................................................................................... 38
Recent Accounting Requirements .............................................................................................................. 41

NON-GAAP FINANCIAL MEASURES

We report our financial results in conformity with accounting principles generally accepted in the United States of
America, or GAAP, and also communicate with investors using certain non-GAAP financial measures. These non-GAAP
financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial
measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results
prepared in accordance with GAAP. We use these non-GAAP financial measures internally to evaluate trends in our
underlying performance, as well as to facilitate comparison to the results of competitors for quarters and year-to-date
periods, as applicable. Based on feedback from investors and financial analysts, we believe that the supplemental non-
GAAP financial measures we provide are also useful to their assessments of our performance and operating trends, as
well as liquidity. Reconciliations are provided in accordance with Regulation G and S-K and reconcile our non-GAAP
financial measures with the most directly comparable GAAP financial measures.

Our 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 more difficult to assess our underlying performance in a single period. By excluding the accounting effects, positive or
negative, of certain items (e.g., restructuring charges, outcomes of certain legal proceedings, certain effects of strategic
transactions and related costs,
losses from debt extinguishments, gains or losses from curtailment or settlement of
pension obligations, gains or losses on sales of certain assets, gains or losses on venture investments, currency
adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful
supplemental information that facilitates an understanding of our core operating results and liquidity measures. While
some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or
timing.

We use the non-GAAP financial measures defined below in this MD&A.

• Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of
foreign currency translation, the reclassification of sales between segments; where applicable, an extra week
in our fiscal year; the calendar shift resulting from the extra week in the prior fiscal year; and currency
adjustment for transitional reporting of highly inflationary economies. The estimated impact of foreign
currency translation is calculated on a constant currency basis, with prior-period results translated at current
period average exchange rates to exclude the effect of foreign currency fluctuations.

• Organic sales change refers to sales change ex. currency, excluding the estimated impact of acquisitions and

product line divestitures.

We believe that sales change ex. currency and organic sales change assist investors in evaluating the sales change

from the ongoing activities of our businesses and enhance their ability to evaluate our results from period to period.

24 2023 Annual Report | Avery Dennison Corporation

• Adjusted free cash flow refers to cash flow provided by operating activities, less payments for property, plant
and equipment, software and other deferred charges, plus proceeds from company-owned life insurance
policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance
and sales (purchases) of investments. Where applicable, adjusted free cash flow is also adjusted for certain
acquisition-related transaction costs. We believe that adjusted free cash flow assists investors by showing the
amount of cash we have available for debt reductions, dividends, share repurchases, and acquisitions.

• Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts
receivable and inventories, net of accounts payable, and excludes cash and cash equivalents, short-term
borrowings, deferred taxes, other current assets and other current liabilities, as well as net current assets or
liabilities held-for-sale divided by annualized current quarter net sales. We believe that operational working
capital as a percentage of annualized current quarter net sales assists investors in assessing our working
capital requirements because it excludes the impact of fluctuations attributable to our financing and other
activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current
liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working
capital as a percentage of sales from period to period. The items excluded from this measure are not
significantly influenced by our day-to-day activities managed at the operating level and do not necessarily
reflect the underlying trends in our operations.

OVERVIEW AND OUTLOOK

Fiscal Year

Our fiscal years generally consist of 52 weeks, but every fifth or sixth fiscal year consists of 53 weeks; our 2023,
2022, and 2021 fiscal years consisted of 52-week periods ending December 30, 2023, December 31, 2022 and
January 1, 2022, respectively.

Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table

below.

Reported net sales change

Foreign currency translation

Sales change ex. currency(1)

Acquisitions

Organic sales change(1)

(1)

Totals may not sum due to rounding.

2023

2022

(8)%
1

(7)%
(1)

(8)%

8 %
6

13 %
(4)

10 %

In 2023, net sales decreased on an organic basis primarily due to lower volume, partially offset by the impact of
pricing actions. In 2022, net sales increased on an organic basis primarily due to pricing actions, partially offset by lower
volume/mix.

Avery Dennison Corporation | 2023 Annual Report 25

Net Income

Net income decreased from approximately $757 million in 2022 to approximately $503 million in 2023. The major

factors affecting this decrease were:

• Lower volume driven primarily by inventory destocking
• Higher restructuring charges
• Increase accrual for a legacy legal matter
• Higher employee-related costs
• Argentine peso remeasurement loss
• Growth investments

Offsetting factors:
• Benefits from productivity initiatives, including temporary cost-saving actions, material re-engineering and

savings from restructuring actions, net of transition costs

• The net impact of pricing and raw material input costs
• Lower provision for income taxes

Business Acquisitions

2023 Business Acquisitions

On November 23, 2023, we completed our business acquisition of Silver Crystal Group (“Silver Crystal”), a
Canada-based provider of sports apparel customization and application solutions across in-venue, direct-to-business and
e-commerce platforms. On May 22, 2023, we completed our business acquisition of LG Group, Inc. (“Lion Brothers”), a
Maryland-based designer and manufacturer of apparel brand embellishments. On March 6, 2023, we completed our
business acquisition of Thermopatch, Inc. (“Thermopatch”), a New York-based manufacturer specializing in labeling,
embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. These acquisitions
expanded the product portfolio in our Solutions Group reportable segment.

The acquisitions of Silver Crystal, Lion Brothers and Thermopatch are referred to collectively as the “2023

Acquisitions.”

The aggregate purchase consideration, including purchase consideration payable, for the 2023 Acquisitions was
approximately $231 million. We funded the 2023 Acquisitions using cash and commercial paper borrowings. In addition
to the cash paid at closing, the sellers in one of these acquisitions are eligible for earn-out payments of up to $5 million,
subject to the acquired company achieving certain post-acquisition performance targets. As of the acquisition date, we
included an estimate of the fair value of these earn-out payments in the aggregate purchase consideration.

The final allocations of purchase consideration for the 2023 Acquisitions to assets and liabilities are ongoing as we
continue to evaluate certain balances, estimates and assumptions during the measurement period (up to one year from
their respective acquisition date). Consistent with the allowable time to complete our assessment, the valuation of certain
acquired assets and liabilities, including environmental liabilities and income taxes, is currently pending finalization.

The 2023 Acquisitions were not material,

individually or in the aggregate, to the Consolidated Financial

Statements.

2022 Business Acquisitions

In January 2022, we completed our business acquisitions of TexTrace AG (“TexTrace”), a Switzerland-based
technology developer specializing in custom-made woven and knitted RFID products that can be sewn onto or inserted
into garments, and Rietveld Serigrafie B.V. and Rietveld Screenprinting Serigrafi Baski Matbaa Tekstil Ithalat Ihracat
Sanayi ve Ticaret Limited Sirketi (collectively, “Rietveld”), a Netherlands-based provider of external embellishment
solutions and application and printing methods for performance brands and team sports in Europe. These acquisitions
expanded the product portfolio in our Solutions Group reportable segment. The acquisitions of TexTrace and Rietveld are
referred to collectively as the “2022 Acquisitions.”

The aggregate purchase consideration for the 2022 Acquisitions was approximately $35 million. We funded the
2022 Acquisitions using cash and commercial paper borrowings. In addition to the cash paid at closing, the sellers in one
of these acquisitions are eligible for earn-out payments of up to $30 million, subject to the acquired company achieving
certain post- acquisition performance targets. As of the acquisition date, we included an estimate of the fair value of
these earn-out payments in the aggregate purchase consideration.
26 2023 Annual Report | Avery Dennison Corporation

The 2022 Acquisitions were not material,

individually or in the aggregate, to the Consolidated Financial

Statements.

Cost Reduction Actions

2023 Actions

In the third quarter of 2023, we approved a restructuring plan (the “2023 Plan”) to further optimize the European
footprint of our Materials Group reportable segment by reducing operations in a manufacturing facility in Belgium. The
cumulative charges associated with the 2023 Plan consisted of severance and related costs for the reduction of
approximately 210 positions as well as asset impairment charges. During 2023 we recorded $30.4 million in
restructuring charges related to the 2023 Plan. The activities related to the 2023 Plan are expected to be substantially
completed by mid-2025.

We recorded $49.0 million in restructuring charges, net of reversals, related to other 2023 actions (collectively
with the 2023 Plan, “2023 Actions”). These charges consisted of severance and related costs for the reduction of
approximately 1,450 positions and asset impairment charges at numerous locations across our company.

2019/2020 Actions

During 2022, we recorded $7.3 million in restructuring charges, net of reversals, related to our 2019/2020 actions.
These charges consisted of severance and related costs for the reduction of approximately 830 positions and asset
impairment charges at numerous locations across our company, reflecting actions in both our reportable segments. The
actions in our Materials Group reportable segment were primarily associated with consolidations of its operations in North
America and its graphics business in Europe, in part in response to the pandemic. The actions in our Solutions Group
reportable segment were primarily related to global headcount and footprint reduction, with some actions accelerated
and expanded in response to the pandemic. Our activities related to our 2019/2020 actions began in the fourth quarter of
fiscal year 2019 and continued through fiscal year 2022.

We realized approximately $69 million and $26 million, respectively, in savings from restructuring, net of transition

costs, primarily related to our 2023 actions in 2023 and our 2019/2020 actions in 2022.

Restructuring charges were included in “Other expense (income), net” in the Consolidated Statements of Income.

Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information.

Accounting Guidance Updates

Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for this

information.

Cash Flow

(In millions)
Net cash provided by operating activities
Purchases of property, plant and equipment
Purchases of software and other deferred charges
Proceeds from company-owned life insurance policies
Proceeds from sales of property, plant and equipment
Proceeds from insurance and sales (purchases) of investments, net
Payments for certain acquisition-related transaction costs

Adjusted free cash flow

2023
$ 826.0
(265.3)
(19.8)
48.1
1.0
1.9
—

$ 591.9

2022
$ 961.0
(278.1)
(20.4)
—
2.3
1.9
.6

$ 667.3

2021
$1,046.8
(255.0)
(17.1)
—
1.1
3.1
18.8

$ 797.7

In 2023, net cash provided by operating activities decreased compared to 2022 primarily due to lower net income
and higher tax payments, net of refunds, partially offset by changes in operational working capital and lower incentive
compensation payments. In 2023, adjusted free cash flow decreased compared to 2022 primarily due to lower net cash
provided by operating activities, partially offset by higher proceeds from company-owned life insurance policies and
lower purchases of property, plant and equipment.

Avery Dennison Corporation | 2023 Annual Report 27

Outlook

Certain factors that we believe will contribute to our 2024 results are described below.

• We anticipate net sales to increase due to higher volume as our markets improve following significant
inventory destocking downstream from our company in 2023, which we may partially offset with deflation-
related pricing actions.

• We anticipate incremental savings from restructuring actions, net of transition costs.

• We expect an insignificant impact to our full-year operating income from foreign currency translation, based

on recent rates.

• We expect our full-year effective tax rate to be in the mid-twenty percent range.

ANALYSIS OF RESULTS OF OPERATIONS

Income before Taxes

(In millions, except percentages)
Net sales
Cost of products sold

Gross profit
Marketing, general and administrative expense
Other expense (income), net
Interest expense
Other non-operating expense (income), net

Income before taxes

Gross profit margin

Gross Profit Margin

2023
$8,364.3
6,086.8

2,277.5
1,313.7
180.9
119.0
(30.8)

2022
$9,039.3
6,635.1

2,404.2
1,330.8
(.6)
84.1
(9.4)

2021
$8,408.3
6,095.5

2,312.8
1,248.5
5.6
70.2
(4.1)

$ 694.7

$ 999.3

$ 992.6

27.2 %

26.6 %

27.5 %

Gross profit margin in 2023 increased compared to 2022 primarily due to benefits from productivity initiatives,
including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition
costs, and the net impact of pricing and raw material inputs costs, partially offset by lower volume and higher employee-
related costs.

Gross profit margin in 2022 decreased compared to 2021 primarily due to the net impact of higher selling prices,
higher raw material costs and higher freight costs, as well as higher employee-related costs, partially offset by higher
volume/mix primarily related to the impact of acquisitions.

Marketing, General and Administrative Expense

Marketing, general and administrative expense decreased in 2023 compared to 2022 primarily due to benefits
including temporary cost-saving actions and savings from restructuring actions, net of

from productivity initiatives,
transition costs, partially offset by higher employee-related costs and growth investments.

Marketing, general and administrative expense increased in 2022 compared to 2021 primarily due to the impact of

acquisitions and growth investments, partially offset by the impact of favorable foreign currency translation.

28 2023 Annual Report | Avery Dennison Corporation

Other Expense (Income), Net

(In millions)
Other expense (income), net by type
Restructuring charges:

2023

2022

2021

Severance and related costs
Asset impairment charges and lease cancellation costs

$ 70.8
8.6

$ 7.6
.1

$ 10.5
3.1

Other items:

Outcomes of legal proceedings, net
Argentine peso remeasurement loss
Transaction and related costs
(Gain) loss on venture investments
(Gain) loss on sales of assets
Gain on sale of product line

64.3
29.9
5.3
1.5
.5
—

6.3
—
.3
(13.5)
(1.4)
—

(.4)
—
20.9
(23.0)
.2
(5.7)

Other expense (income), net

$180.9

$

(.6)

$

5.6

Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information

regarding restructuring charges.

Refer to Note 9, “Fair Value Measurements,” to the Consolidated Financial Statements for more information

regarding gains on venture investments.

Refer to Note 8, “Contingencies,” and Note 15, “Segment and Disaggregated Revenue Information,” to the

Consolidated Financial Statements for more information regarding outcomes of legal proceedings.

Interest Expense

Interest expense increased by approximately $34.9 million in 2023 compared to 2022, primarily as a result of

higher interest rates on borrowings and higher debt levels.

Interest expense increased by approximately $13.9 million in 2022 compared to 2021, primarily as a result of
additional interest from the $800 million of senior notes we issued in August 2021 and higher interest rates on short-
term borrowings.

Other Non-Operating Expense (Income), Net

Other non-operating income increased in 2023 compared to 2022 due to higher interest income, primarily in

Argentina.

Net Income and Earnings per Share

(In millions, except percentages and per share amounts)
Income before taxes
Provision for income taxes
Equity method investment (losses) gains

Net income

Net income per common share
Net income per common share, assuming dilution

Effective tax rate

Provision for Income Taxes

2023
$694.7
191.7
—

$503.0

$ 6.23
6.20

2022
$999.3
242.2
—

$757.1

$ 9.28
9.21

2021
$992.6
248.6
(3.9)

$740.1

$ 8.93
8.83

27.6 %

24.2 %

25.0 %

Our effective tax rate in 2023 increased compared to 2022 primarily due to higher non-deductible expenses
resulting from the impact of the Argentine peso remeasurement loss, higher tax charges from the recognition of uncertain
tax positions in certain foreign jurisdictions, and lower U.S. federal return-to-provision benefits. Our effective tax rate in
2022 decreased compared to 2021 primarily due to higher benefits related to the settlement of certain foreign tax audits,
partially offset by U.S. federal return-to-provision benefits that were lower than in 2021.

Avery Dennison Corporation | 2023 Annual Report 29

Many countries have enacted, or plan to enact, changes to their tax laws based on the Organization for Economic
Cooperation and Development (“OECD”) Base Erosion and Profit Shifting recommendations to implement a global
minimum tax, namely the Pillar Two framework. The first component of the Pillar Two framework is expected to be
effective for our company in 2024, with a second component expected to be effective in 2025. While we do not expect
the implementation of a global minimum tax to have a material impact on our effective tax rate, our analysis is ongoing as
the OECD continues to release additional guidance and countries implement legislation.

Our effective tax rate can vary from period to period due to a variety of factors, such as changes in our mix of
earnings in countries with differing statutory tax rates, changes in our tax reserves, settlements of income tax audits,
changes in tax laws and regulations, return-to-provision adjustments, tax impacts related to stock-based payments, and
our execution of tax planning strategies.

Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information.

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT

Operating income refers to income before taxes, interest and other non-operating expense (income), net.

Materials Group

(In millions)
Net sales including intersegment sales
Less intersegment sales

Net sales
Operating income(1)

(1)

Included charges associated with restructuring actions and related costs in all years,
Argentine peso remeasurement loss and loss on sale of assets in 2023, outcomes of
legal proceedings in 2023 and 2021, gain on venture investment in 2022, and gain
on sale of product line, gain on sale of assets, and transaction and related costs in
2021

2023
$5,968.4
(157.1)

$5,811.3
700.9

2022
$6,632.2
(137.1)

$6,495.1
859.3

2021
$6,312.3
(105.8)

$6,206.5
883.3

$

88.3

$

(13.4)

$

(25.7)

Net Sales

The factors impacting reported net sales change are shown in the table below.

Reported net sales change

Foreign currency translation
Sales change ex. currency(1)

Organic sales change(1)
(1)

Totals may not sum due to rounding.

2023

2022

(11)%
—
(10)

(10)%

5 %
6
11

11 %

In 2023, net sales decreased on an organic basis compared to the same period in the prior year due to lower
volume driven primarily by inventory destocking, partially offset by the impact of pricing actions. On an organic basis, net
sales decreased by a low double-digit rate in North America, a mid-to-high teens rate in Western Europe and a mid-to-
high single digit rate in emerging markets.

In 2022, net sales increased on an organic basis compared to the same period in the prior year due to pricing
actions, partially offset by lower volume/mix. On an organic basis, net sales increased a low double-digit rate in North
America, a high-teens rate in Western Europe and by a mid-to-high single digit rate in emerging markets.

Operating Income

Operating income decreased in 2023 compared to the same period in 2022 primarily due to lower volume, higher
restructuring charges and the Argentine peso remeasurement loss, partially offset by benefits from productivity initiatives,
including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition
costs, and the net impact of pricing and raw material input costs.

30 2023 Annual Report | Avery Dennison Corporation

Operating income decreased in 2022 compared to the same period in 2021 primarily due to unfavorable volume/
mix, the impact of unfavorable foreign currency translation, higher employee-related costs and the impact of a Brazil
indirect tax credit in the prior year, partially offset by the net impact of higher selling prices, higher raw material costs and
higher freight costs.

Solutions Group

(In millions)
Net sales including intersegment sales
Less intersegment sales

Net sales
Operating income(1)

2023
$2,588.5
(35.5)

$2,553.0
165.7

2022
$2,581.6
(37.4)

$2,544.2
302.3

2021
$2,239.1
(37.3)

$2,201.8
257.2

(1)

legal
Included charges associated with restructuring actions, outcomes of
loss on venture
proceedings, and transaction and related costs in all years,
investments in 2023, gain on sales of assets in 2022, loss on sale of asset and gain
on venture investments in 2021.

$

86.3

$

7.8

$

36.6

Net Sales

The factors impacting reported net sales change are shown in the table below.

Reported net sales change

Reclassification of sales between segments
Foreign currency translation

Sales change ex. currency(1)

Acquisitions

Organic sales change(1)

(1)

Totals may not sum due to rounding.

2023

2022

— %
—
2

2
(3)

(1)%

16 %
(1)
4

19
(14)

5 %

In 2023, on an organic basis, net sales increased by a high single-digit rate in high-value categories and decreased
by a low-double digit rate in the base business compared to the prior year. Company-wide, on an organic basis, sales of
Intelligent Label solutions increased by a low-double digit rate compared to the prior year.

In 2022, on an organic basis, net sales increased by a mid-teens rate in high-value categories and decreased by a
low-single digit rate in the base business compared to the prior year. Company-wide, on an organic basis, sales of
Intelligent Label solutions increased by a mid-teens rate compared to the prior year.

Operating Income

Operating income decreased in 2023 compared to 2022 primarily due to an increased accrual for the Adasa legal
matter (described in Note 8, “Contingencies” to the Consolidated Financial Statements), higher employee-related costs,
lower volume, growth investments and the impact of unfavorable foreign currency translation, partially offset by benefits
including temporary cost-saving actions and savings from restructuring actions, net of
from productivity initiatives,
transition costs.

Operating income increased in 2022 compared to 2021 primarily due to the combined benefit of higher organic
volume and acquisitions, the impact of legal proceedings in the prior year, and lower transaction and related costs,
partially offset by higher amortization of other intangibles resulting from business acquisitions, growth investments and
higher employee-related costs.

Avery Dennison Corporation | 2023 Annual Report 31

FINANCIAL CONDITION

Liquidity

Operating Activities

(In millions)
Net income
Depreciation
Amortization
Provision for credit losses and sales returns
Stock-based compensation
Deferred taxes and other non-cash taxes
Other non-cash expense and loss (income and gain), net
Trade accounts receivable
Inventories
Accounts payable
Taxes on income
Other assets
Other liabilities

Net cash provided by operating activities

2023
$ 503.0
187.4
111.0
49.9
22.3
(24.4)
37.1
(16.7)
111.7
(87.6)
(18.7)
37.7
(86.7)

$ 826.0

2022
$ 757.1
177.4
113.3
50.1
47.4
18.4
23.5
(22.1)
(140.7)
68.2
18.9
15.3
(165.8)

$ 961.0

2021
$ 740.1
167.3
76.8
35.7
37.2
2.6
11.7
(113.2)
(182.7)
255.2
(7.3)
4.1
19.3

$ 1,046.8

In 2023, cash flow provided by operating activities decreased compared to 2022 primarily due to lower net income
and higher tax payments, net of refunds, partially offset by changes in operational working capital and lower incentive
compensation payments.

In 2022, cash flow provided by operating activities decreased compared to 2021 primarily due to changes in
operational working capital, higher incentive compensation payments and the timing of payroll payments, partially offset
by higher net income and lower income tax payments, net of refunds.

Investing Activities

(In millions)
Purchases of property, plant and equipment
Purchases of software and other deferred charges
Proceeds from company-owned life insurance policies
Proceeds from sales of property, plant and equipment
Proceeds from insurance and sales (purchases) of investments, net
Proceeds from sale of product line and venture investment
Payments for acquisitions, net of cash acquired, and venture
investments

Net cash used in investing activities

2023
$(265.3)
(19.8)
48.1
1.0
1.9
—

(224.9)

$(459.0)

2022
$(278.1)
(20.4)
—
2.3
1.9
1.1

2021
$ (255.0)
(17.1)
—
1.1
3.1
7.6

(39.5)

(1,477.6)

$(332.7)

$(1,737.9)

Purchases of Property, Plant and Equipment

In 2023, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support
growth in certain countries in Asia Pacific, primarily Malaysia, in the U.S. and in certain countries in Latin America,
primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support
growth in the U.S. and in certain countries in Europe, primarily France, and in Asia Pacific, primarily China. In 2022, in our
Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain
in our Materials Group reportable
countries in Asia Pacific,
segment, we primarily invested in buildings and equipment in the U.S. and certain countries in Europe, primarily France,
and Latin America, primarily Brazil.
in our Materials Group reportable segment, we primarily invested in
equipment to support growth in the U.S. and certain countries in Asia Pacific, including India and China, and Europe,

including Malaysia, China and Vietnam, and in the U.S.;

In 2021,

32 2023 Annual Report | Avery Dennison Corporation

including France and Luxembourg; in our Solutions Group reportable segment we primarily invested in equipment to
support growth in certain countries in Asia Pacific, including China, Malaysia and Bangladesh, and in the U.S.

Purchases of Software and Other Deferred Charges

In 2023, 2022 and 2021, we invested in information technology upgrades worldwide.

Proceeds from Company-Owned Life Insurance Policies

In 2023, we utilized approximately $48 million of the cash surrender value available under our company-owned

life insurance policies.

Proceeds from Sale of Product Line and Venture Investment

In 2022, we received proceeds of $1.1 million from the sale of a venture investment. In 2021, proceeds from the

sale of a product line were in our Materials Group reportable segment.

Payments for Acquisitions, Net of Cash Acquired, and Venture Investments

We paid consideration, net of cash acquired, of approximately $223 million for the 2023 Acquisitions and
$30 million for the 2022 Acquisitions. We funded the 2023 Acquisitions and 2022 Acquisitions using cash and
commercial paper borrowings. In 2021, we paid consideration, net of cash acquired, of approximately $1.44 billion to
acquire CB Velocity Holdings, LLC (“Vestcom”) and $32 million to acquire ZippyYum, LLC (“ZippyYum”) and JDC
Solutions, Inc. (“JDC”). We funded the Vestcom acquisition using the net proceeds from the senior notes we issued in
August 2021, commercial paper borrowings and cash. We funded the ZippyYum and JDC acquisitions using cash and
commercial paper borrowings. We also made certain venture investments in 2023, 2022 and 2021.

Refer to Note 2, “Business Acquisitions,” to the Consolidated Financial Statements for more information.

Financing Activities

(In millions)
Net increase (decrease) in borrowings with maturities of three
months or less
Additional long-term borrowings
Repayments of long-term debt and finance leases
Dividends paid
Share repurchases
Net (tax withholding) proceeds related to stock-based compensation
Other

Net cash (used in) provided by financing activities

2023

2022

2021

$ (36.6)
394.9
(255.9)
(256.7)
(137.5)
(23.8)
(1.6)

$(317.2)

$ 34.6
—
(6.3)
(238.9)
(379.5)
(25.1)
—

$(615.2)

$ 259.2
791.7
(13.4)
(220.6)
(180.9)
(25.4)
(6.3)

$ 604.3

Borrowings and Repayment of Debt

During 2023, 2022 and 2021, our commercial paper borrowings were used to fund acquisitions, dividend

payments, share repurchases, capital expenditures and other general corporate purposes.

In March 2023, we issued $400 million of senior notes, due March 15, 2033, which bear an interest rate of
5.750% per year, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting
discounts and offering expenses, were $394.9 million, which we used to repay both existing indebtedness under our
commercial paper programs and our $250 million aggregate principal amount of senior notes that matured on April 15,
2023.

In August 2021, we issued $500 million of senior notes, due February 15, 2032, which bear an interest rate of
2.250%, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts
and offering expenses, were $493.7 million. Additionally, in August 2021, we issued $300 million of senior notes, due
August 15, 2024, which we can repay without penalty on or after August 15, 2022 and bear an interest rate of 0.850%,

Avery Dennison Corporation | 2023 Annual Report 33

payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering
expenses, were $298 million. We used the net proceeds from these two debt issuances to finance a portion of the
Vestcom acquisition.

Refer to Note 2, “Business Acquisitions,” and Note 4, “Debt,” to the Consolidated Financial Statements for more

information.

Dividends Paid

We paid dividends per share of $3.18, $2.93 and $2.66 in 2023, 2022 and 2021, respectively. In April 2023, we
increased our quarterly dividend rate to $.81 per share, representing an increase of approximately 8% from our previous
quarterly dividend rate of $.75 per share.
In April 2022, we increased our quarterly dividend to $.75 per share,
representing an increase of approximately 10% from our previous dividend rate of $.68 per share.

Share Repurchases

From time to time, our Board authorizes the repurchase of shares of our outstanding common stock. Repurchased
shares may be reissued under our long-term incentive plan or used for other corporate purposes. In 2023, 2022 and
2021, we repurchased approximately 0.8 million, 2.2 million and 0.9 million shares of our common stock, respectively.

In April 2022 our Board authorized the repurchase of shares of our common stock with a fair market value of up to
$750 million, excluding any fees, commissions or other expenses related to such purchases and in addition to any amount
outstanding under our previous Board authorization. Shares of our common stock in the aggregate amount of $592.8
million as of December 30, 2023 remained authorized for
this Board authorization. Board
authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.

repurchase under

Net (Tax Withholding) Proceeds Related to Stock-Based Compensation

In 2023, tax withholding for stock-based compensation was comparable to 2022 and 2021.

Approximately .02 million stock options were exercised in 2021. Refer to Note 12, “Long-Term Incentive

Compensation,” to the Consolidated Financial Statements for more information.

Analysis of Selected Balance Sheet Accounts

Long-lived Assets

Property, plant and equipment, net, increased by approximately $86 million to $1.63 billion at year-end 2023,
which primarily reflected purchases of property, plant and equipment and the impact of foreign currency translation,
partially offset by depreciation expense.

Goodwill increased by approximately $151 million to $2.01 billion at year-end 2023, which reflected the impact of

the acquired goodwill associated with the 2023 Acquisitions and foreign currency translation.

Other intangibles resulting from business acquisitions, net, increased by approximately $9 million to $849.1 million
at year-end 2023, reflecting the valuation of intangible assets associated with the 2023 Acquisitions, partially offset by
current year amortization expense.

Refer to Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” to the Consolidated

Financial Statements for more information.

Other assets decreased by approximately $1 million to $809.6 million at year-end 2023, primarily reflecting the
utilization of the cash surrender value available under our company-owned life insurance policies, partially offset by
higher operating lease assets.

Long-term Retirement Benefits and Other Liabilities

Other long-term retirement benefits and other liabilities increased by approximately $133 million to $500.3 million
at year-end 2023, primarily reflecting the contingent liability recorded for the Adasa legal matter and higher operating
lease liabilities.

34 2023 Annual Report | Avery Dennison Corporation

Shareholders’ Equity Accounts

The balance of our shareholders’ equity increased by approximately $96 million to $2.13 billion at year-end 2023.
Refer to Note 11, “Supplemental Equity and Comprehensive Income Information,” to the Consolidated Financial
Statements for more information.

Impact of Foreign Currency Translation

(In millions)

Change in net sales

2023

2022

$

(58)

$ (417)

In 2023, international operations generated approximately 69% of our net sales. Our future results are subject to
changes in political, social and economic conditions in the regions in which we operate and the impact of fluctuations in
foreign currency exchange rates.

The unfavorable impact of foreign currency translation on net sales in 2023 compared to 2022 was primarily

related to sales in China, partially offset by favorable impact from euro-denominated sales.

Effect of Foreign Currency Transactions

The impact on net income from transactions denominated in foreign currencies is largely mitigated because the
costs of our products are generally denominated in the same currencies in which they are sold. In addition, to reduce our
income and cash flow exposure to transactions in foreign currencies, we enter into foreign exchange forward, option and
swap contracts where available and appropriate. Refer to Note 5, “Financial Instruments,” to the Consolidated Financial
Statements for more information.

During 2023,

the Argentine peso devalued significantly compared to the U.S. dollar which resulted in
remeasurement loss of approximately $30 million which was included in “Other expense (income), net” in the
Consolidated Statements of Income.

Analysis of Selected Financial Ratios

We utilize the financial ratios discussed below to assess our financial condition and operating performance. We
believe this information assists our investors in understanding the factors impacting our cash flow other than net income
and capital expenditures.

Operational Working Capital Ratio

Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working
capital (deficit) below. Our objective is to minimize our investment in operational working capital, as a percentage of
annualized current-quarter net sales, to maximize our cash flow and return on investment. Operational working capital, as
a percentage of annualized current-quarter net sales, in 2023 was lower than in 2022. Further information regarding the
components of operational working capital is provided below.

(In millions, except percentages)

(A) Working capital (deficit)

Reconciling items:

Cash and cash equivalents
Other current assets
Short-term borrowings and current portion of long-term debt and finance leases
Current income taxes payable and other current accrued liabilities

(B) Operational working capital

(C) Fourth-quarter net sales, annualized

2023

2022

$

96.5

$ (17.8)

(215.0)
(245.4)
622.2
800.2

$1,058.5

$8,442.0

(167.2)
(230.5)
598.6
861.9

$1,045.0

$8,103.6

Operational working capital, as a percentage of annualized current-quarter net sales
(B) ÷ (C)

12.5 %

12.9 %

Avery Dennison Corporation | 2023 Annual Report 35

Accounts Receivable Ratio

The average number of days sales outstanding was 61 days in 2023 compared to 62 days in 2022, calculated
using the accounts receivable balance at year-end divided by the average daily sales in the fourth quarter of 2023 and
2022, respectively.

Inventory Ratio

Average inventory turnover was 6.6 in 2023 compared to 6.0 in 2022, calculated using the annualized fourth-
quarter cost of products sold in 2023 and 2022, respectively, and divided by the inventory balance at the respective year-
end. The increase in average inventory turnover primarily reflected higher prior-year inventory balances due to customer
inventory destocking.

Accounts Payable Ratio

The average number of days payable outstanding was 77 days in 2023 compared to 80 days in 2022, calculated
using the accounts payable balance at year-end divided by the annualized fourth-quarter cost of products sold in 2023
and 2022, respectively. The decrease in the average number of days payable outstanding from the prior year primarily
reflected the timing of vendor payments, the impact of acquisitions and the impact of foreign currency translation.

Capital Resources

Capital resources include cash flows from operations, cash and cash equivalents and debt financing, including
access to commercial paper borrowings supported by the Revolver. We use these resources to fund our operational
needs.

At year-end 2023, we had cash and cash equivalents of $215.0 million held in accounts at third-party financial
institutions in numerous locations throughout the world. At year-end 2023, the majority of our cash and cash equivalents
was held by our foreign subsidiaries, primarily in the Asia Pacific region.

To meet our U.S. cash requirements, we have several cost-effective liquidity options available. These options
include borrowing funds at reasonable rates, including borrowings from our foreign subsidiaries, and repatriating foreign
earnings and profits. However, if we were to repatriate foreign earnings and profits, a portion would be subject to cash
payments of withholding taxes imposed by foreign tax authorities. Additional U.S. taxes may also result from the impact
of foreign currency fluctuations related to these earnings and profits.

In January 2023, we extended the maturity date of the Revolver by one year to February 13, 2026, and increased
the commitments by $400 million, from $800 million to $1.2 billion. Additionally, we amended the Revolver to replace the
LIBOR benchmark interest rate with Term SOFR, Euribor and SONIA benchmark interest rates. We use the Revolver as a
back-up facility for our commercial paper program and for other corporate purposes.

The Revolver contains a financial covenant that requires us to maintain a maximum leverage ratio (calculated as a
ratio of consolidated debt to consolidated EBITDA as defined in the agreement) of not more than 3.50 to 1.00; provided
that, in the event of an acquisition by us that exceeds $250 million, which occurred when we acquired Vestcom, the
maximum leverage ratio increases to 4.00 to 1.00 for the fiscal quarter in which the acquisition occurs and the three fiscal
quarters immediately following that fiscal quarter. As of December 30, 2023 and December 31, 2022, our ratio was
substantially below the maximum ratio allowed by the Revolver.

In addition to the Revolver, we have short-term lines of credit available in various countries of approximately
$327 million in the aggregate at December 30, 2023. These lines may be cancelled at any time by us or the issuing banks.
Short- term borrowings outstanding under these lines of credit were $1.0 million and $2.4 million at December 30, 2023
and December 31, 2022, respectively, with weighted average interest rates of 2.24% and 0.64%, respectively. Refer to
Note 4, “Debt,” to the Consolidated Financial Statements for more information.

We are exposed to financial market risk resulting from changes in interest and foreign currency exchange rates,

and to possible liquidity and credit risks of our counterparties.

We currently anticipate using cash flows from operations and commercial paper borrowings to repay the

$300 million of senior notes we issued in 2021, which mature in the third quarter of 2024.

36 2023 Annual Report | Avery Dennison Corporation

Capital from Debt

The carrying value of our total debt increased by approximately $142 million to $3.24 billion at year-end 2023
from 2022, primarily reflecting our issuance of $400 million of senior notes in March 2023 and the revaluation of our
euro- denominated senior notes, partially offset by the repayment of our $250 million of senior notes maturing in April
2023 and a net decrease in commercial paper borrowings.

Credit ratings are a significant factor in our ability to raise short- and long-term financing. The credit ratings
assigned to our company also impact the interest rates we pay and our access to commercial paper, credit facilities, and
other borrowings. A downgrade of our short-term credit ratings could impact our ability to access commercial paper
markets. If our access to commercial paper markets were to become limited, the Revolver and our other credit facilities
would be available to meet our short-term funding requirements. When determining our credit rating, we believe that
rating agencies primarily consider our competitive position, business outlook, consistency of cash flows, debt level and
liquidity, geographic footprint and management team. We remain committed to maintaining an investment grade rating.

Fair Value of Debt

The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury
securities or euro government bond securities, as applicable, on notes with similar rates, credit ratings and remaining
maturities. The fair value of short-term borrowings, which includes commercial paper issuances and short-term lines of
credit, approximates their carrying value given their short duration. The fair value of our total debt was $3.11 billion at
December 30, 2023 and $2.85 billion at December 31, 2022. Fair value amounts were determined based primarily on
Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable.
Refer to Note 1, “Summary of Significant Accounting Policies,” for more information.

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

Material Cash Requirements at End of Year 2023

We have short- and long-term material cash requirements related to our contractual obligations that arise in the
normal course of business. In addition to principal and interest payments on our outstanding debt obligations, our
contractual obligations primarily consist of lease payments and purchase commitments.

Refer to Note 4, “Debt,” to the Consolidated Financial Statements for a summary of our principal payments for
short- term borrowings and long-term debt obligations as of December 30, 2023. Future interest payments for long-term
debt as of December 30, 2023 are approximately $90 million in 2024; $87 million in 2025; $78 million in 2026; $78
million in 2027; $78 million in 2028; and $199 million from 2029 through maturity.

As of December 30, 2023, we have a commitment to purchase approximately $164 million of raw materials in

fiscal year 2024.

Refer to Note 7, “Commitments and Leases,” to the Consolidated Financial Statements for a summary of our lease

obligations as of December 30, 2023.

Refer to Note 6, “Pension and Other Postretirement Benefits,” to the Consolidated Financial Statements for
information regarding our defined benefit pension plan contributions and future benefit payments, deferred compensation
plan benefit payments and unfunded termination indemnity benefits.

Refer to Note 12, “Long-term Incentive Compensation,” to the Consolidated Financial Statements for information

regarding cash-based awards to employees under one of our long-term incentive compensation plans.

Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information

regarding our unrecognized tax benefits of approximately $88 million.

Avery Dennison Corporation | 2023 Annual Report 37

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with GAAP requires our management to make estimates and
assumptions for the reporting period and as of the financial statement date. These estimates and assumptions affect our
reported amounts of assets and liabilities, disclosure of contingent liabilities, and reported amounts of revenue and
expense. Actual results could differ from these estimates.

Critical accounting estimates are those that are important to our financial condition and results, and which require
us to make difficult, subjective and/or complex judgments. Critical accounting estimates cover accounting matters that are
inherently uncertain because their future resolution is unknown. We believe our critical accounting estimates include
accounting for goodwill, business combinations, pension and postretirement benefits, taxes based on income and long-
term incentive compensation.

Goodwill

Business combinations are accounted for using the acquisition method, with the excess of the acquisition cost over
the fair value of net tangible assets and identified intangible assets acquired considered goodwill. As a result, we disclose
goodwill separately from other intangible assets. Our reporting units are composed of either a discrete business or an
aggregation of businesses with similar economic characteristics.

We perform our annual impairment test of goodwill during the fourth quarter. Certain factors may cause us to
perform an impairment test prior to the fourth quarter, including significant underperformance of a business relative to
expected operating results, significant adverse economic and industry trends, significant decline in our market
capitalization for an extended period of time relative to net book value, or a decision to divest a portion of a reporting unit.
In performing impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary
to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-
likely-than-not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative assessment.

A quantitative assessment primarily consists of using the present value (discounted cash flow) method to
determine the fair value of reporting units with goodwill. We compare the fair value of each reporting unit to its carrying
amount, and, to the extent the carrying amount exceeds the unit’s fair value, we recognize an impairment of goodwill for
the excess up to the amount of goodwill of that reporting unit. In consultation with outside specialists, we estimate the
fair value of our reporting units using various valuation techniques, with the primary technique being a discounted cash
flow analysis. A discounted cash flow analysis requires us to make various assumptions about our reporting units,
including their respective forecasted sales, operating margins and growth rates, as well as discount rates. Our
assumptions about discount rates are based on the weighted average cost of capital for comparable companies. Our
assumptions about sales, operating margins and growth rates are based on our forecasts, business plans, economic
projections, anticipated future cash flows, and marketplace data. We also make assumptions for varying perpetual
growth rates for periods beyond our long-term business plan period. We base our fair value estimates on projected
financial information and assumptions that we believe are reasonable. However, actual future results may differ materially
from these estimates and projections. The valuation methodology we use to estimate the fair value of reporting units
requires inputs and assumptions that reflect current market conditions, as well as the impact of planned business and
operational strategies that require management judgment. The estimated fair value could increase or decrease depending
on changes in the inputs and assumptions.

In our annual impairment analysis in the fourth quarter of 2023, the goodwill of all reporting units in our Materials
Group and Solutions Group reportable segments were tested utilizing a qualitative assessment. Based on this
assessment, we determined that the fair values of these reporting units were more-likely-than-not greater than their
respective carrying values. Therefore, the goodwill of our reporting units was not impaired.

Business Combinations

The results of acquired businesses are included in our Consolidated Financial Statements from their acquisition
date. Assets and liabilities of an acquired business are recorded at their estimated fair values on the acquisition date. We
engage third-party valuation specialists to assist us in determining these fair values where necessary. Any excess
consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.

38 2023 Annual Report | Avery Dennison Corporation

The allocation of purchase price requires management to make significant estimates and assumptions. While we
believe our assumptions and estimates are reasonable, they are inherently uncertain and based in part on our experience,
market conditions, our projections of future performance, and information obtained from management of the acquired
companies. Critical estimates include, but are not limited to, the following:

• Future revenue and profit margins;

• Royalty rates;

• Discount rates;

• Customer retention rates;

• Technology migration curves; and

• Useful lives assigned to acquired intangible assets.

Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis over their respective

estimated useful lives to marketing, general and administrative expense.

Pension and Postretirement Benefits

The assumptions we use in determining projected benefit obligations and the fair value of plan assets for our
defined benefit pension plans and other postretirement benefit plans are evaluated by management in consultation with
outside actuaries. In the event that we determine that changes are warranted in the assumptions we use, such as the
discount rate, expected long-term rate of return or health care costs, future pension and postretirement benefit expenses
could increase or decrease. Due to changes in market conditions or participant population, the actuarial assumptions we
use may differ from actual results, which could have a significant impact on our pension and postretirement liabilities and
related costs.

Discount Rate

In consultation with our actuaries, we annually review and determine the discount rates we use in valuing our
postretirement obligations. The assumed discount rates for our non-U.S. pension plans reflect market rates for high
quality corporate bonds currently available. Our discount rates are determined by evaluating yield curves consisting of
large populations of high quality corporate bonds. The projected pension benefit payment streams are then matched with
the bond portfolios to determine a rate that reflects the liability duration unique to our pension and postretirement benefit
plans. As of December 30, 2023, a 0.25% increase in the discount rates associated with our non-U.S. plans would have
decreased our year-end projected benefit obligation by $27 million and decreased expected periodic benefit cost for the
coming year by approximately $1 million. Conversely, a 0.25% decrease in the discount rates associated with our non-
U.S. plans would have increased our year-end projected benefit obligation by approximately $27 million and would not
have a significant impact on expected periodic benefit cost for the coming year.

We use the full yield curve approach to estimate the service and interest cost components of net periodic benefit
cost for our pension and other postretirement benefit plans. Using this approach, we apply multiple discount rates from a
yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at
the measurement date. We believe this approach provides a more precise measurement of service and interest cost by
aligning the timing of plan liability cash flows to the corresponding rates on the yield curve.

Long-term Return on Plan Assets

We determine the long-term rate of return assumption for plan assets by reviewing the historical and expected
returns of both the equity and fixed income markets, taking into account our asset allocation, the correlation between
returns in our asset classes, and our mix of active and passive investments. Additionally, current market conditions,
including interest rates, are evaluated and market data is reviewed for reasonableness and appropriateness. An increase
or decrease of 0.25% on the long-term return on assets associated with our non-U.S. plans would have decreased or
increased our periodic benefit cost for the coming year by approximately $2 million.

Avery Dennison Corporation | 2023 Annual Report 39

Taxes Based on Income

Because we are subject to income tax in the U.S. and multiple foreign jurisdictions,

judgment is required in
evaluating and estimating our worldwide provision for income taxes, accruals for taxes, deferred taxes and tax positions.
Our provision for income taxes is determined using the asset and liability approach in accordance with GAAP. Deferred
tax assets represent amounts available to reduce income taxes payable in future years. These assets arise because of
temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating
losses and tax credit carryforwards. These amounts are adjusted, as appropriate, to reflect changes in tax rates expected
to be in effect when the temporary differences reverse. We evaluate the realizability of these future tax deductions and
credits by assessing the period over which recoverability is allowed by law and the adequacy of future expected taxable
income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available
tax planning strategies. Our assessment of these sources of income relies heavily on estimates. Our forecasted earnings
by jurisdiction are determined by how we operate our business and any changes to our operations may affect our
effective tax rate. For example, our future income tax rate could be adversely affected by earnings being lower than
anticipated in jurisdictions in which we have significant deferred tax assets that are dependent on such earnings to be
realized. We use our historical experience and operating forecasts to evaluate expected future taxable income. To the
extent we do not consider it more-likely-than-not that a deferred tax asset will be recovered, a valuation allowance is
established in the period we make that determination.

We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the
actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded
when identified.

Tax laws and regulations are complex and subject to different interpretations by taxpayers and governmental
taxing authorities. We review our tax positions quarterly and adjust the balances if and as new information becomes
available. Significant judgment is required in determining our tax expense and evaluating our tax positions, including
evaluating uncertainties. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of
relevant facts and circumstances existing at the balance sheet date, taking into consideration existing laws, regulations
and practices of the governmental taxing authorities exercising jurisdiction over our operations. We recognize and
measure our uncertain tax positions following the more-likely-than-not threshold for recognition and measurement for
tax positions we take or expect to take on a tax return.

Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information.

Long-Term Incentive Compensation

Valuation of Stock-Based Awards

We base our stock-based compensation expense on the fair value of awards, adjusted for estimated forfeitures,
amortized on a straight-line basis over the requisite service period for stock options and restricted stock units (“RSUs”).
We base compensation expense for performance units (“PUs”) on the fair value of awards, adjusted for estimated
forfeitures, and amortized on a straight-line basis as these awards cliff-vest at the end of the requisite performance
period. We base compensation expense related to market-leveraged stock units (“MSUs”) on the fair value of awards,
adjusted for estimated forfeitures, and amortized on a graded-vesting basis over their respective performance periods.

Compensation expense for awards with a market condition as a performance objective, which includes PUs and

MSUs, is not adjusted if the condition is not met, as long as the requisite service period is met.

We determine the fair value of RSUs and the component of PUs that is subject to the achievement of a
performance objective based on a financial performance condition based on the fair market value of our common stock as
of the date of the grant, adjusted for foregone dividends. Over the performance period of the PUs, the estimated number
of shares of our common stock issuable upon vesting is adjusted upward or downward based on the probability of
achieving the performance objectives established for the award.

We determine the fair value of stock-based awards that are subject to achievement of performance objectives
based on a market condition, which includes MSUs and the other component of PUs, using the Monte-Carlo simulation
model, which utilizes multiple input variables, including expected stock price volatility and other assumptions appropriate
for determining fair value, to estimate the probability of satisfying the respective target performance objectives
established for the award.
40 2023 Annual Report | Avery Dennison Corporation

Forfeiture Rate

Changes in estimated forfeiture rates are recorded as cumulative adjustments in the period estimates are revised.

Certain of our assumptions are based on management’s estimates,

in consultation with outside specialists.
Significant changes in assumptions for future awards and actual forfeiture rates could materially impact our stock-based
compensation expense and results of operations.

Valuation of Cash-Based Awards

Cash-based awards consist of long-term incentive units (“LTI Units”) granted to eligible employees. LTI Units are
classified as liability awards and remeasured at each quarter-end over the applicable vesting or performance period. In
addition to LTI Units with terms and conditions that mirror those of RSUs, we also grant certain employees LTI Units with
terms and conditions similar to those of PUs and MSUs.

RECENT ACCOUNTING REQUIREMENTS

Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for this

information.

Avery Dennison Corporation | 2023 Annual Report 41

Item 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

We are exposed to the impact of changes in foreign currency exchange rates and interest rates. We generally do

not purchase or hold foreign currency or interest rate or commodity contracts for trading purposes.

Our objective in managing our exposure to foreign currency changes is to reduce the risk to our earnings and cash
flow associated with foreign exchange rate changes. As a result, we enter into foreign exchange forward, option and
swap contracts to reduce risks associated with the value of our existing foreign currency assets,
liabilities, firm
commitments and anticipated foreign revenues and costs, when available and appropriate. The gains and losses on these
contracts are intended to offset changes in the related exposures. We do not hedge our foreign currency translation
exposure in a manner that would entirely eliminate the effects of changes in foreign exchange rates on our net income.

Our objective in managing our exposure to interest rate changes is to reduce the impact of interest rate changes
on earnings and cash flows. To achieve this objective, we may periodically use interest rate contracts to manage our
exposure to interest rate changes.

Additionally, we enter into certain natural gas futures contracts to reduce the risks associated with natural gas we

anticipate using in our manufacturing operations. These amounts are not material to our financial statements.

In the normal course of operations, we also face other risks that are either non-financial or non-quantifiable. These
risks principally include changes in economic or political conditions, other risks associated with international operations,
commodity price risk, and legal and compliance risk, which are not reflected in the analyses described below.

Foreign Exchange Value-At-Risk

We use a Value-At-Risk (“VAR”) model to determine the estimated maximum potential one-day loss in earnings
associated with our foreign exchange positions and contracts. This approach assumes that market rates or prices for
foreign exchange positions and contracts are normally distributed. VAR model estimates are made assuming normal
market conditions. The model includes foreign exchange derivative contracts. Forecasted transactions, firm commitments,
accounts receivable and accounts payable denominated in foreign currencies, which certain of these instruments are
intended to hedge, are excluded from the model.

The VAR model is a risk analysis tool and does not represent actual losses in fair value that we could incur, nor

does it consider the potential effect of favorable changes in market factors.

In both 2023 and 2022, the VAR was estimated using a variance-covariance methodology. The currency
correlation was based on one-year historical data obtained from one of our domestic banks. A 95% confidence level was
used for a one-day time horizon.

The estimated maximum potential one-day loss in earnings for our foreign exchange positions and contracts was

not significant at year-end 2023 or 2022.

Interest Rate Sensitivity

In 2023 and 2022, an assumed 41 and 12 basis point, respectively,

increase in interest rates affecting our
variable- rate borrowings (10% of our weighted average interest rate on floating rate debt) would not have had a
significant impact on interest expense.

42 2023 Annual Report | Avery Dennison Corporation

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Financial Statements:

Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022
Consolidated Statements of Income for 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for 2023, 2022 and 2021
Consolidated Statements of Shareholders’ Equity for 2023, 2022 and 2021
Consolidated Statements of Cash Flows for 2023, 2022 and 2021
Notes to Consolidated Financial Statements

Page
44

46
47
48
49
50
51

Avery Dennison Corporation | 2023 Annual Report 43

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Avery Dennison Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Avery Dennison Corporation and its
subsidiaries (the “Company”) as of December 30, 2023 and December 31, 2022, and the related consolidated statements
of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period
ended December 30, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).
We also have audited the Company’s internal control over financial reporting as of December 30, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and
its cash flows for each of the three years in the period ended December 30, 2023 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 30, 2023, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
44 2023 Annual Report | Avery Dennison Corporation

detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.

Because of

its inherent

reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

internal control over

limitations,

financial

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i) relates
to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.

Revenue Recognition from Certain Product Revenue

As described in Notes 1 and 15 to the consolidated financial statements, revenue is recognized for an amount that
reflects the consideration which is expected from the sale of products when the Company satisfies a performance
obligation by transferring control of products to a customer. Management considers a number of factors in determining
when control has been transferred to a customer, including the following: (i) the Company’s present right to payment;
(ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and
rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Control generally transfers to a
customer at a point in time upon shipment or delivery, depending on the specific terms of sale with the customer. The
Company’s consolidated net sales were $8,364.3 million for the year ended December 30, 2023, of which a majority
relates to certain product revenue in the Company’s Materials Group and Solutions Group reportable segments.

The principal consideration for our determination that performing procedures relating to revenue recognition from
certain product revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to the
Company’s revenue recognition from certain product revenue.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to the revenue recognition process, including controls over the recognition of certain product revenue as
the amount of consideration which is expected from the sale of products when the Company satisfies a performance
obligation. These procedures also included, among others (i) testing the completeness, accuracy, and occurrence of
revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as
purchase orders, invoices, contracts, proof of shipment, and subsequent payment receipts and (ii) confirming a sample of
outstanding customer invoice balances as of December 30, 2023 and, for confirmations not returned, obtaining and
inspecting source documents, such as invoices, proof of shipment, and subsequent payment receipts.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

February 21, 2024

We have served as the Company’s auditor since at least 1960, which were the Company’s first financial
statements subject to SEC reporting requirements. We have not been able to determine the specific year we began
serving as auditor of the Company or a predecessor company.

Avery Dennison Corporation | 2023 Annual Report 45

Consolidated Balance Sheets

(Dollars in millions, except per share amount)

December 30, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

Trade accounts receivable, less allowances of $34.4 at year-end 2023

and 2022

Inventories

Other current assets

Total current assets

Property, plant and equipment, net

Goodwill

Other intangibles resulting from business acquisitions, net

Deferred tax assets

Other assets

Liabilities and Shareholders’ Equity

Current liabilities:

Short-term borrowings and current portion of long-term debt and finance leases

Accounts payable

Accrued payroll and employee benefits

Accrued trade rebates

Income taxes payable

Other current liabilities

Total current liabilities

Long-term debt and finance leases

Long-term retirement benefits and other liabilities

Deferred tax liabilities and income taxes payable

Commitments and contingencies (see Notes 7 and 8)

Shareholders’ equity:

Common stock, $1 par value per share, authorized – 400,000,000 shares at year-end

2023 and 2022; issued – 124,126,624 shares at year-end 2023 and 2022;
outstanding – 80,495,585 and 80,810,016 shares at year-end 2023 and 2022,
respectively

Capital in excess of par value

Retained earnings

Treasury stock at cost, 43,631,039 and 43,316,608 shares at year-end 2023 and

2022, respectively

Accumulated other comprehensive loss

Total shareholders’ equity

See Notes to Consolidated Financial Statements

46 2023 Annual Report | Avery Dennison Corporation

$ 215.0

$ 167.2

1,414.9

920.7

245.4

2,796.0

1,625.8

2,013.6

849.1

115.7

809.6

1,374.4

1,009.9

230.5

2,782.0

1,540.2

1,862.4

840.3

115.1

810.5

$ 8,209.8

$ 7,950.5

$ 622.2

1,277.1

213.4

142.4

57.6

386.8

2,699.5

2,622.1

500.3

260.0

124.1

854.5

4,691.8

(3,134.4)

(408.1)

2,127.9

$ 598.6

1,339.3

228.5

173.8

76.2

383.4

2,799.8

2,503.5

367.1

247.9

124.1

879.3

4,414.6

(3,021.8)

(364.0)

2,032.2

$ 8,209.8

$ 7,950.5

Consolidated Statements of Income

(In millions, except per share amounts)
Net sales

Cost of products sold

Gross profit

Marketing, general and administrative expense

Other expense (income), net

Interest expense

Other non-operating expense (income), net

Income before taxes

Provision for income taxes

Equity method investment (losses) gains

Net income

Per share amounts:

Net income per common share

Net income per common share, assuming dilution

Weighted average number of shares outstanding:

Common shares

Common shares, assuming dilution

See Notes to Consolidated Financial Statements

2023
$8,364.3

6,086.8

2,277.5

1,313.7

180.9

119.0

(30.8)

694.7

191.7

—

2022
$9,039.3

6,635.1

2,404.2

1,330.8

(.6)

84.1

(9.4)

999.3

242.2

—

2021
$8,408.3

6,095.5

2,312.8

1,248.5

5.6

70.2

(4.1)

992.6

248.6

(3.9)

$ 503.0

$ 757.1

$ 740.1

$

$

6.23

6.20

$

$

9.28

9.21

$

$

8.93

8.83

80.7

81.1

81.6

82.2

82.9

83.8

Avery Dennison Corporation | 2023 Annual Report 47

Consolidated Statements of Comprehensive Income

(In millions)
Net income

Other comprehensive income (loss), net of tax:

Foreign currency translation:

Translation gain (loss)

Pension and other postretirement benefits:

Net gain (loss) recognized from actuarial gain/loss and prior service cost/ credit

Reclassifications to net income

Cash flow hedges:

Gain (loss) recognized on cash flow hedges

Reclassifications to net income

Other comprehensive income (loss), net of tax

Total comprehensive income, net of tax

See Notes to Consolidated Financial Statements

2023
$503.0

2022
$757.1

2021
$740.1

(14.6)

(96.6)

(25.2)

(1.0)

(7.0)

3.7

(44.1)

$458.9

6.3

2.8

4.9

1.5

(81.1)

$676.0

30.7

27.9

4.4

5.4

(1.7)

66.7

$806.8

48 2023 Annual Report | Avery Dennison Corporation

Consolidated Statements of Shareholders’ Equity

(Dollars in millions, except per share amounts)
Balance as of January 2, 2021

Net income

Other comprehensive income (loss), net of tax

Repurchase of 925,425 shares for treasury

Issuance of 257,189 shares under stock-based
compensation plans

Contribution of 123,015 shares to 401(k) plan

Dividends of $2.66 per share

Balance as of January 1, 2022

Net income

Other comprehensive income (loss), net of tax

Repurchase of 2,173,416 shares for treasury

Issuance of 223,676 shares under stock-based
compensation plans

Contribution of 153,803 shares to 401(k) plan

Dividends of $2.93 per share

Common
stock, $1
par value
$124.1

Capital in
excess of
par value
$862.1

—

—

—

—

—

—

—

—

—

.2

—

—

Retained
earnings
$3,349.3

740.1

—

—

Treasury
stock
$(2,501.0)

—

—

(180.9)

(7.2)

19.1

(220.6)

16.6

5.5

—

Accumulated
other
comprehensive
loss
$(349.6)

—

66.7

—

—

—

—

Total
$1,484.9

740.1

66.7

(180.9)

9.6

24.6

(220.6)

$124.1

$862.3

$3,880.7

$(2,659.8)

$(282.9)

$1,924.4

—

—

—

—

—

—

—

—

—

17.0

—

—

757.1

—

—

(4.4)

20.1

(238.9)

—

—

(379.5)

10.6

6.9

—

—

(81.1)

—

—

—

—

757.1

(81.1)

(379.5)

23.2

27.0

(238.9)

Balance as of December 31, 2022

$124.1

$879.3

$4,414.6

$(3,021.8)

$(364.0)

$2,032.2

Net income

Other comprehensive income (loss), net of tax

Repurchase of 780,721 shares for treasury

Issuance of 297,885 shares under stock-based
compensation plans

Contribution of 168,404 shares to 401(k) plan

Dividends of $3.18 per share

—

—

—

—

—

—

—

—

—

(24.8)

—

—

503.0

—

—

8.9

22.0

(256.7)

—

—

(137.5)

16.5

8.4

—

—

(44.1)

—

—

—

—

503.0

(44.1)

(137.5)

.6

30.4

(256.7)

Balance as of December 30, 2023

$124.1

$854.5

$4,691.8

$(3,134.4)

$(408.1)

$2,127.9

See Notes to Consolidated Financial Statements

Avery Dennison Corporation | 2023 Annual Report 49

Consolidated Statements of Cash Flows

(In millions)

Operating Activities

Net income

Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation

Amortization

Provision for credit losses and sales returns

Stock-based compensation

Deferred taxes and other non-cash taxes

Other non-cash expense and loss (income and gain), net

Changes in assets and liabilities and other adjustments:

Trade accounts receivable

Inventories

Accounts payable

Taxes on income

Other assets

Other liabilities

Net cash provided by operating activities

Investing Activities

Purchases of property, plant and equipment

Purchases of software and other deferred charges

Proceeds from company-owned life insurance policies

Proceeds from sales of property, plant and equipment

Proceeds from insurance and sales (purchases) of investments, net

Proceeds from sale of product line and venture investment

Payments for acquisitions, net of cash acquired, and venture investments

Net cash used in investing activities

Financing Activities

Net increase (decrease) in borrowings with maturities of three months or less

Additional long-term borrowings

Repayments of long-term debt and finance leases

Dividends paid

Share repurchases

Net (tax withholding) proceeds related to stock-based compensation

Other

Net cash (used in) provided by financing activities

Effect of foreign currency translation on cash balances

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

See Notes to Consolidated Financial Statements

50 2023 Annual Report | Avery Dennison Corporation

2023

2022

2021

$ 503.0

$ 757.1

$ 740.1

187.4

111.0

49.9

22.3

(24.4)

37.1

(16.7)

111.7

(87.6)

(18.7)

37.7

(86.7)

826.0

(265.3)

(19.8)

48.1

1.0

1.9

—

(224.9)

(459.0)

(36.6)

394.9

(255.9)

(256.7)

(137.5)

(23.8)

(1.6)

(317.2)

(2.0)

47.8

177.4

113.3

50.1

47.4

18.4

23.5

(22.1)

(140.7)

68.2

18.9

15.3

(165.8)

961.0

(278.1)

(20.4)

—

2.3

1.9

1.1

167.3

76.8

35.7

37.2

2.6

11.7

(113.2)

(182.7)

255.2

(7.3)

4.1

19.3

1,046.8

(255.0)

(17.1)

—

1.1

3.1

7.6

(39.5)

(332.7)

(1,477.6)

(1,737.9)

34.6

—

(6.3)

(238.9)

(379.5)

(25.1)

—

(615.2)

(8.6)

4.5

259.2

791.7

(13.4)

(220.6)

(180.9)

(25.4)

(6.3)

604.3

(2.8)

(89.6)

252.3

$ 162.7

167.2

$ 215.0

162.7

$ 167.2

Notes to Consolidated Financial Statements

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

We are a global materials science and digital identification solutions company that provides a wide range of
branding and information solutions that optimize labor and supply chain efficiency, reduce waste, advance sustainability,
circularity and transparency, and better connect brands and consumers. Our products and solutions include labeling and
functional materials, radio-frequency identification (“RFID”) inlays and tags, software applications that connect the
physical and digital, and a variety of products and solutions that enhance branded packaging and carry or display
information that improves the customer experience. We serve an array of industries worldwide, including home and
personal care, apparel, general retail, e-commerce, logistics, food and grocery, pharmaceuticals and automotive.

Principles of Consolidation

Our Consolidated Financial Statements include the accounts of majority-owned and controlled subsidiaries.

Intercompany accounts, transactions and profits are eliminated in consolidation.

Fiscal Year

Our fiscal years generally consist of 52 weeks, but every fifth or sixth fiscal year consists of 53 weeks; our 2023,
2022, and 2021 fiscal years consisted of 52-week periods ending December 30, 2023, December 31, 2022 and
January 1, 2022, respectively.

Accounting Guidance Updates

Supplier Finance Programs

In the first quarter of 2023, we adopted guidance that requires disclosures of key supplier finance program terms,
information about obligations under these programs and a rollforward of these obligations. This guidance was effective
for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the
disclosure on rollforward information, which is effective for fiscal years beginning after December 15, 2023. See Note 16,
“Supplemental Financial Information,” for more information.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America, or GAAP, requires management to make estimates and assumptions for the reporting period and as of
the date of our financial statements. These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expense. As the effects of
future events cannot be determined, actual results could differ significantly from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents generally consist of cash on hand, deposits in banks, cash-in-transit, and bank drafts
and short-term investments with maturities of three months or less when purchased or received. The carrying value of
these assets approximates fair value due to the short maturity of these instruments.

Inventories

We state inventories at the lower of cost or net realizable value and categorize them as raw materials, work-in-
progress, or finished goods. Cost is determined using the first-in, first-out method. We record inventory that is damaged,
obsolete, excess and slow-moving to cost of products sold and we establish a lower cost basis for the inventory. Slow-
moving inventory is reviewed by category and may be recognized partially or fully to cost of products sold depending on
the type of product, level of usage and length of time the product has been included in inventory.

Trade Accounts Receivable

We record trade accounts receivable at the invoiced amount. Our allowance for credit losses reflects customer
trade accounts receivable that are estimated to be partially or entirely uncollectible. These allowances are used to reduce
Avery Dennison Corporation | 2023 Annual Report 51

gross trade receivables to their net realizable values. We record these allowances based on estimates related to the
following:

• The financial condition of customers;

• The aging of receivable balances;

• Our historical collection experience; and

• Current and expected future macroeconomic and market conditions.

Property, Plant and Equipment

We generally compute depreciation using the straight-line method over the estimated useful

lives of the
respective assets, ranging from ten to 45 years for buildings and improvements and three to 15 years for machinery and
equipment. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the term of the
associated leases. We expense maintenance and repair costs as incurred; we capitalize renewals and improvements.
Upon the sale or retirement of assets, the accounts are relieved of the cost and the related accumulated depreciation, with
any resulting gain or loss included in net income.

Leases

Our leases primarily relate to office and warehouse space, machinery, transportation, and equipment for
information technology. We determine if an arrangement is a lease or contains a lease at inception. For lease accounting
purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and
liabilities for short- term leases. We have options to renew or terminate some of our leases. We evaluate renewal and
termination options based on considerations available at the lease commencement date and over the lease term to
determine if we are reasonably certain to exercise these options. As most of our leases do not provide an implicit rate, we
use our incremental borrowing rate based on the information available at the lease commencement date to determine the
present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term,
with variable lease payments recognized in the periods in which they are incurred.

Software

We capitalize software costs incurred during the application development stage of software development,
including costs incurred for design, coding,
installation to hardware, testing, and upgrades and enhancements that
provide the software or hardware with additional functionalities and capabilities. We expense software costs, including
internal and external training costs and maintenance costs, incurred during the preliminary project stage and the post-
implementation and/or operation stage.
In addition, we capitalize implementation costs incurred under a hosting
arrangement that is a service contract. Capitalized software, which is included in “Other assets” in the Consolidated
Balance Sheets, is amortized on a straight-line basis over the estimated useful life of the software, which is generally
between five and ten years.

Venture Investments

We invest in privately held companies and utilize the measurement alternative for equity investments that do not
have readily determinable fair values, measuring them at cost less impairment plus or minus observable price changes in
orderly transactions. The carrying value of our venture investments is included in “Other assets” in the Consolidated
Balance Sheets.

See Note 9, “Fair Value Measurements,” for more information.

Impairment of Long-lived Assets

We record impairment charges when the carrying amounts of long-lived assets are determined not to be
recoverable. We measure recoverability by comparing the undiscounted cash flows expected from the applicable asset or
asset group’s use and eventual disposition to its carrying value. We calculate the amount of impairment loss as the
excess of the carrying value over the fair value. Historically, changes in market conditions and management strategy have
caused us to reassess the carrying amount of our long-lived assets.

52 2023 Annual Report | Avery Dennison Corporation

Goodwill and Other Intangibles Resulting from Business Acquisitions

We account for business combinations using the acquisition method, with the excess of the acquisition cost over
the fair value of net tangible assets and identified intangible assets acquired considered goodwill. As a result, we disclose
goodwill separately from other intangible assets. Other identifiable intangibles include customer relationships, patented
and other developed technology, and trade names and trademarks.

We perform an annual impairment test of goodwill during the fourth quarter and, as necessary, if changes in facts
and circumstances that indicate the fair value of a reporting unit may be less than its carrying value. Factors that may
cause us to perform an impairment test outside of our annual assessment include significant underperformance of a
business relative to expected operating results, significant adverse economic and industry trends, significant decline in
our market capitalization for an extended period of time relative to net book value, or our decision to divest a portion of a
reporting unit. In performing impairment tests, we have the option to first assess qualitative factors to determine whether
it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that
it is more-likely-than- not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative
assessment. A quantitative assessment primarily uses the present value (discounted cash flow) method to determine the
fair value of reporting units with goodwill.

We compare the fair value of each reporting unit to its carrying amount, and, to the extent the carrying amount
exceeds the unit’s fair value, we recognize an impairment of goodwill for the excess up to the amount of goodwill of that
reporting unit.

In consultation with outside specialists, we estimate the fair value of our reporting units using various valuation
techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires
us to make various assumptions about our reporting units, including their respective forecasted sales, operating margins
and growth rates, as well as discount rates. Our assumptions about discount rates are based on the weighted average
cost of capital for comparable companies. Our assumptions about sales, operating margins and growth rates are based on
our forecasts, business plans, economic projections, anticipated future cash flows, and marketplace data. We also make
assumptions for varying perpetual growth rates for periods beyond our long-term business plan period. We base our fair
value estimates on projected financial information and assumptions that we believe are reasonable. However, actual
future results may differ materially from these estimates and projections. The valuation methodology we use to estimate
the fair value of reporting units requires inputs and assumptions that reflect current market conditions, as well as the
impact of planned business and operational strategies that require management judgment. The estimated fair value could
increase or decrease depending on changes in the inputs and assumptions.

We test indefinite-lived intangible assets, consisting of trade names and trademarks, for impairment in the fourth
quarter or whenever events or circumstances indicate that it is more-likely-than-not that their carrying amounts exceed
their fair values. In performing the impairment tests, we have the option first to assess qualitative factors to determine
whether it is necessary to perform a quantitative assessment for indefinite-lived intangible asset impairment. If we decide
not to perform a qualitative assessment, or if the qualitative assessment indicates that it is more-likely-than-not that the
fair value of an indefinite-lived intangible asset is less than its carrying value, we perform a quantitative assessment. Fair
value is estimated as the discounted value of future revenues using a royalty rate that a third party would pay to use the
asset. Variation in the royalty rates could impact our estimate of fair value. If the carrying amount of an asset exceeds its
fair value, an impairment loss is recognized in an amount equal to that excess.

We amortize finite-lived intangible assets, consisting of customer relationships, patented and other developed

technology, trade names and trademarks, and other intangibles, on a straight-line basis over their estimated useful lives.

See Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” for more information.

Foreign Currency

We translate asset and liability accounts of international operations into U.S. dollars at current rates. Revenues and
expenses are translated at the weighted average currency rate for the fiscal year. We record gains and losses resulting
from hedging the value of investments in certain international operations and from the translation of balance sheet
accounts directly as a component of other comprehensive income.

We account for our operations in Argentina as highly inflationary, because the country’s three-year cumulative

inflation rate exceeds 100%. As a result, the functional currency of our Argentine subsidiary is the U.S. dollar.

Avery Dennison Corporation | 2023 Annual Report 53

Financial Instruments

We enter into foreign exchange derivative contracts to reduce our risk from exchange rate fluctuations associated
with receivables, payables, loans and firm commitments denominated in certain foreign currencies that arise primarily as a
result of our operations outside the U.S. From time to time, we enter into interest rate contracts to help manage our
exposure to certain interest rate fluctuations. We also enter into futures contracts to hedge certain price fluctuations for a
portion of our anticipated domestic purchases of natural gas. The maximum length of time for which we hedge our
exposure to the variability in future cash flows is 36 months for forecasted foreign exchange and commodity transactions
and 10 years for cross-currency swap transactions.

On the date we enter into a derivative contract, we determine whether the derivative will be designated as a
hedge. Derivatives designated as hedges are classified as either (1) hedges of the fair value of a recognized asset or
liability or an unrecognized firm commitment (“fair value” hedges) or (2) hedges of a forecasted transaction or the
variability of cash flows that are to be received or paid in connection with a recognized asset or liability (“cash flow”
hedges). Other derivatives not designated as hedges are recorded on the balance sheets at fair value, with changes in fair
value recognized in earnings. Our policy is not to purchase or hold any foreign currency, interest rate or commodity
contracts for trading purposes.

We assess, both at the inception of any hedge and on an ongoing basis, whether our hedges are highly effective. If
we determine that a hedge is not highly effective, we prospectively discontinue hedge accounting. For cash flow hedges,
we record gains and losses as components of other comprehensive income and reclassify them into earnings in the same
period during which the hedged transaction affects earnings. In the event that the anticipated transaction is no longer
likely to occur, we recognize the change in fair value of the instrument in current period earnings. We recognize changes
in fair value hedges in current period earnings. We also recognize changes in the fair value of underlying hedged items
(such as recognized assets or liabilities) in current period earnings and offset the changes in the fair value of the
derivative.

In the Consolidated Statements of Cash Flows, hedges are classified in the same category as the item hedged,

primarily in operating activities.

See Note 5, “Financial Instruments,” for more information.

Fair Value Measurements

We define fair value as the price that would be received from selling an asset or paid for transferring a liability in
an orderly transaction between market participants at the measurement date. In determining fair value, we consider the
principal or most advantageous market in which we would transact and the market-based risk measurements or
assumptions that market participants would use in pricing the asset or liability.

We determine fair value based on a three-tier fair value hierarchy, which we use to prioritize the inputs used in
measuring fair value. These tiers consist of Level 1, which are observable inputs such as quoted prices in active markets;
Level 2, which are inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3, which are unobservable inputs in which little or no market data exists, requiring us to develop our own
assumptions to determine the best estimate of fair value.

Revenue Recognition

Substantially all of our revenue is derived from the sale of products. Our Materials Group reportable segment sells
pressure-sensitive label materials, films, performance tapes and fasteners. Our Solutions Group reportable segment sells
a wide variety of branding and information solutions-oriented products, such as tickets, tags, labels (including RFID
inlays), as well as related equipment, services, and supplies, that provide our customers with solutions for them to
optimize branding and engagement with their consumers and enable item visibility and traceability. We recognize
revenue for an amount that reflects the consideration which we expect from the sale of our products when we satisfy a
performance obligation by transferring control of our products to a customer. We consider a number of factors in
determining when we have transferred control to a customer, including the following: (i) our present right to payment;
(ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and
rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Generally, there are no substantive
differences in revenue recognition considerations among our various products. Control generally transfers to a customer
at a point in time upon shipment or delivery, depending on the specific terms of sale with the customer.
54 2023 Annual Report | Avery Dennison Corporation

Our payment terms with customers are generally consistent with those used in the industries and the regions in

which we operate.

We accept sales returns in certain limited circumstances. We record a liability for estimated returns and a
corresponding reduction to sales in the amount we expect to repay or credit customers, which we base on historical
returns and outstanding customer claims. We update our estimates each reporting period.

Sales rebates, discounts and other customer concessions represent variable consideration and are common in the
industries and regions in which we operate, which we account for as a reduction to sales based on estimates at the time
at which products are sold. We base these estimates on our historical experience, as well as current information such as
sales forecasts. We regularly review our estimates and adjust the revenue recognized from sales as necessary as
additional information becomes available.

We exclude sales tax, value-added tax and other taxes we collect from customers from sales. We account for
shipping and handling activities after control of a product is transferred to a customer as fulfillment costs and not as
separate performance obligations. As a practical expedient, we have elected not to disclose the value of unsatisfied
performance obligations for contracts with an expected length of less than one year. We generally expense sales
commissions when incurred because the expected amortization period is one year or less. We record these costs in
“Marketing, general and administrative expense” in the Consolidated Statements of Income.

Research and Development

Research and development costs are related to research, design and testing of new products and applications,

which we expense as incurred.

Long-Term Incentive Compensation

No long-term incentive compensation expense was capitalized in 2023, 2022 or 2021.

Valuation of Stock-Based Awards

We base our stock-based compensation expense on the fair value of awards, adjusted for estimated forfeitures,
amortized on a straight-line basis over the requisite service period for stock options and restricted stock units (“RSUs”).
We base compensation expense for performance units (“PUs”) on the fair value of awards, adjusted for estimated
forfeitures, and amortized on a straight-line basis as these awards cliff-vest at the end of the requisite service period. We
base compensation expense related to market-leveraged stock units (“MSUs”) on the fair value of awards, adjusted for
estimated forfeitures, and amortized on a graded-vesting basis over their respective performance periods.

Compensation expense for awards with a market condition as a performance objective, which includes PUs and

MSUs, is not adjusted if the condition is not met, as long as the requisite service period is met.

We estimate the fair value of stock options as of the date of grant using the Black-Scholes option-pricing model.
This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest
rate and expected option term.

We determine the fair value of RSUs and the component of PUs that is subject to the achievement of a
performance objective using a financial performance condition based on the fair market value of our common stock as of
the date of grant, adjusted for foregone dividends. Over the performance period of the PUs, the estimated number of
shares of our common stock issuable upon vesting is adjusted upward or downward from the target shares at the time of
grant based on the probability of the financial performance objectives established for the award being achieved.

We determine the fair value of stock-based awards that are subject to the achievement of performance objectives
based on a market condition, which includes MSUs and the other component of PUs, using the Monte-Carlo simulation
method, which utilizes multiple input variables,
including expected stock price volatility and other assumptions
appropriate for determining fair value, to estimate the probability of satisfying the target performance objectives
established for the award.

Certain of these assumptions are based on management’s estimates, in consultation with outside specialists.
Significant changes in assumptions for future awards and actual forfeiture rates could materially impact stock-based
compensation expense and our results of operations.

Avery Dennison Corporation | 2023 Annual Report 55

Valuation of Cash-Based Awards

Cash-based awards consist of long-term incentive units (“LTI Units”) granted to eligible employees. We classify
LTI Units as liability awards and remeasure them at each quarter-end over the applicable vesting or performance period.
In addition to LTI Units with terms and conditions that mirror those of RSUs, we also grant certain employees LTI Units
with terms and conditions that mirror those of PUs and MSUs.

Forfeitures

We estimate expected forfeitures in determining the compensation cost to be recognized each period, rather than
accounting for forfeitures as they occur. We record changes in estimated forfeiture rates as cumulative adjustments in the
period estimates are revised.

See Note 12, “Long-term Incentive Compensation,” for more information.

Taxes Based on Income

Because we are subject to income tax in the U.S. and multiple foreign jurisdictions,

judgment is required in
evaluating and estimating our worldwide provision, accruals for taxes, deferred taxes and tax positions. Our provision for
income taxes is determined using the asset and liability approach in accordance with GAAP. Under this approach,
deferred taxes represent the expected future tax consequences of temporary differences between the carrying amounts
and tax bases of assets and liabilities. We record a valuation allowance to reduce our deferred tax assets when
uncertainty regarding their realizability exists. We recognize and measure our uncertain tax positions following the more-
likely-than-not threshold for recognition and measurement for tax positions we take or expect to take on a tax return.

See Note 14, “Taxes Based on Income,” for more information.

Recent Accounting Requirements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance to expand annual and
interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant
segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods
within fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently assessing the
impact of adopting this guidance on our financial statement disclosures.

In December 2023, the FASB issued guidance on improvements to income tax disclosures in the rate reconciliation
and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption
permitted. We are currently assessing the impact of adopting this guidance on our financial statement disclosures.

NOTE 2. BUSINESS ACQUISITIONS

2023 Business Acquisitions

On November 23, 2023, we completed our business acquisition of Silver Crystal Group (“Silver Crystal”), a
Canada- based provider of sports apparel customization and application solutions across in-venue, direct-to-business
and e- commerce platforms. On May 22, 2023, we completed our business acquisition of LG Group, Inc. (“Lion Brothers”),
a Maryland-based designer and manufacturer of apparel brand embellishments. On March 6, 2023, we completed our
business acquisition of Thermopatch, Inc. (“Thermopatch”), a New York-based manufacturer specializing in labeling,
embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. These acquisitions
expanded the product portfolio in our Solutions Group reportable segment.

The acquisitions of Silver Crystal, Lion Brothers and Thermopatch are referred to collectively as the “2023

Acquisitions.”

The aggregate purchase consideration, including purchase consideration payable, for the 2023 Acquisitions was
approximately $231 million. We funded the 2023 Acquisitions using cash and commercial paper borrowings. In addition
to the cash paid at closing, the sellers in one of these acquisitions are eligible for earn-out payments of up to $5 million,
subject to the acquired company achieving certain post-acquisition performance targets. As of the acquisition date, we
included an estimate of the fair value of these earn-out payments in the aggregate purchase consideration.
56 2023 Annual Report | Avery Dennison Corporation

The final allocations of purchase consideration for the 2023 Acquisitions to assets and liabilities are ongoing as we
continue to evaluate certain balances, estimates and assumptions during the measurement period (up to one year from
their respective acquisition date). Consistent with the allowable time to complete our assessment, the valuation of certain
acquired assets and liabilities, including environmental liabilities and income taxes, is currently pending finalization.

The 2023 Acquisitions were not material,

individually or in the aggregate, to the Consolidated Financial

Statements.

2022 Business Acquisitions

In January 2022, we completed our business acquisitions of TexTrace AG (“TexTrace”), a Switzerland-based
technology developer specializing in custom-made woven and knitted RFID products that can be sewn onto or inserted
into garments, and Rietveld Serigrafie B.V. and Rietveld Screenprinting Serigrafi Baski Matbaa Tekstil Ithalat Ihracat
Sanayi ve Ticaret Limited Sirketi (collectively, “Rietveld”), a Netherlands-based provider of external embellishment
solutions and application and printing methods for performance brands and team sports in Europe. These acquisitions
expanded the product portfolio in our Solutions Group reportable segment. The acquisitions of TexTrace and Rietveld are
referred to collectively as the “2022 Acquisitions.”

The aggregate purchase consideration for the 2022 Acquisitions was approximately $35 million. We funded the
2022 Acquisitions using cash and commercial paper borrowings. In addition to the cash paid at closing, the sellers in one
of these acquisitions are eligible for earn-out payments of up to $30 million, subject to the acquired company achieving
certain post- acquisition performance targets. As of the acquisition date, we included an estimate of the fair value of
these earn-out payments in the aggregate purchase consideration.

The 2022 Acquisitions were not material,

individually or in the aggregate, to the Consolidated Financial

Statements.

Vestcom Acquisition

On August 31, 2021, we completed our business acquisition of CB Velocity Holdings, LLC (“Vestcom”), an
Arkansas- based provider of shelf-edge pricing, productivity and consumer engagement solutions for retailers and
consumer packaged goods companies, for purchase consideration of $1.47 billion. We funded this acquisition using cash
and proceeds from both commercial paper borrowings and issuances of senior notes. Refer to Note 4, “Debt,” to the
Consolidated Financial Statements for more information.

Vestcom’s solutions expanded our position in high-value categories and added channel access and data

management capabilities to our Solutions Group reportable segment.

The impact of the Vestcom acquisition was not material to the pro forma net sales or net income of our combined
operations for the periods presented. Post-acquisition net sales and net income related to Vestcom were not material to
the Consolidated Statements of Income for 2021.

Other 2021 Business Acquisitions

On March 18, 2021, we completed our business acquisition of the net assets of ZippyYum, LLC (“ZippyYum”), a
California-based developer of software products used in the food service and food preparation industries. This acquisition
expanded the product portfolio in our Solutions Group reportable segment.

On March 1, 2021, we completed our business acquisition of the issued and outstanding stock of JDC Solutions,
Inc. (“JDC”), a Tennessee-based manufacturer of pressure-sensitive specialty tapes. This acquisition expanded the
product portfolio in our Materials Group reportable segment.

The acquisitions of ZippyYum and JDC are referred to collectively as the “Other 2021 Acquisitions.”

The aggregate purchase consideration for the Other 2021 Acquisitions was approximately $43 million. We funded
the Other 2021 Acquisitions using cash and commercial paper borrowings. In addition to the cash paid at closing, the
sellers in one of these acquisitions are eligible for earn-out payments of up to approximately $13 million subject to the
acquired company’s achievement of certain post-acquisition performance targets. As of the acquisition date, we
estimated the fair value of these earn-out payments to be approximately $12 million, which was included in the
$43 million of aggregate purchase consideration.

Avery Dennison Corporation | 2023 Annual Report 57

The Other 2021 Acquisitions were not material, individually or in the aggregate, to the Consolidated Financial

Statements.

NOTE 3. GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS

Goodwill

Results from our annual goodwill impairment test in the fourth quarter of 2023 indicated that no impairment

occurred during 2023. The assumptions used in our assessment were primarily based on Level 3 inputs.

Changes in the net carrying amount of goodwill for 2023 and 2022 by reportable segment are shown below:

(In millions)
Goodwill as of January 1, 2022

Acquisitions(1)

Acquisition adjustment(2)

Translation adjustments

Goodwill as of December 31, 2022

Acquisitions(3)

Translation adjustments

Materials
Group
$645.5

Solutions
Group
$1,236.0

Total
$1,881.5

16.3

(.5)

(34.9)

16.3

(.5)

(8.1)

1,243.7

1,862.4

135.0

4.2

135.0

16.2

—

—

(26.8)

618.7

—

12.0

Goodwill as of December 30, 2023

$630.7

$1,382.9

$2,013.6

(1)

(2)

(3)

Goodwill acquired related to the 2022 Acquisitions. We expect the recognized goodwill related to the 2022 Acquisitions not to be deductible for
income tax purposes.
Measurement period adjustment related to the finalization of the purchase price allocation for the Vestcom acquisition.
Goodwill acquired related to the 2023 Acquisitions. We expect substantially all of the recognized goodwill related to the 2023 Acquisitions not to be
deductible for income tax purposes.

The carrying amounts of goodwill at December 30, 2023 and December 31, 2022 were net of accumulated

impairment losses of $820 million recognized in fiscal year 2009 by our Solutions Group reportable segment.

Indefinite-Lived Intangible Assets

Results from our annual indefinite-lived intangible assets impairment test in the fourth quarter indicated that no
impairment occurred in 2023. The carrying value of indefinite-lived intangible assets resulting from business acquisitions,
consisting of trade names and trademarks, was $155.3 million and $154.7 million at December 30, 2023 and
December 31, 2022, respectively.

Finite-Lived Intangible Assets

In connection with the 2023 Acquisitions, we acquired approximately $94 million of identifiable finite-lived
intangible assets, which consisted of customer relationships, patented and other developed technology, and trade names
and trademarks. We utilized the income approach to estimate the fair value of acquired identifiable intangibles, primarily
using Level 3 inputs. We applied significant judgment in determining the fair value of intangible assets, which included
our estimates and assumptions with respect to estimated future revenue and related profit margins, customer retention
rates, technology migration curves, royalty rates, discount rates and economic lives assigned to the acquired intangible
assets.

58 2023 Annual Report | Avery Dennison Corporation

The table below summarizes the amounts and weighted average useful lives of the intangible assets associated

with the 2023 Acquisitions as of the acquisition date.

Customer relationships

Patented and other developed technology

Trade names and trademarks

Weighted
average
amortization
period
(in years)
11

7

6

Amount
(in millions)
$ 68.8

22.2

3.0

In connection with the 2022 Acquisitions, we acquired approximately $21 million of identifiable finite-lived

intangible assets, which consisted of patented and other developed technology as well as customer relationships.

Refer to Note 2, “Business Acquisitions,” for more information.

The table below sets forth our finite-lived intangible assets resulting from business acquisitions at December 30,

2023 and December 31, 2022, which continue to be amortized.

(In millions)
Customer relationships

Patented and other
developed technology

Trade names and trademarks

Other intangibles

Total

Gross
Carrying
Amount
$ 922.5

278.3

17.4

3.2

2023

Accumulated
Amortization
$383.7

Net
Carrying
Amount
$538.8

Gross
Carrying
Amount
$ 852.2

2022

Accumulated
Amortization
$330.1

130.2

11.7

2.0

148.1

261.9

5.7

1.2

14.4

3.2

104.3

10.3

1.4

Net
Carrying
Amount
$522.1

157.6

4.1

1.8

$1,221.4

$527.6

$693.8

$1,131.7

$446.1

$685.6

Amortization expense for finite-lived intangible assets resulting from business acquisitions was $86.3 million for

2023, $81.8 million for 2022 and $44.6 million for 2021.

We expect estimated amortization expense for finite-lived intangible assets resulting from business acquisitions

for each of the next five fiscal years and thereafter to be as follows:

(In millions)
2024

2025

2026

2027

2028

2029 and thereafter

Estimated
Amortization
Expense
$ 89.7

88.9

85.9

85.4

78.0

265.9

Avery Dennison Corporation | 2023 Annual Report 59

NOTE 4. DEBT

Short-Term Borrowings

We had $112 million and $128 million of outstanding borrowings from U.S. commercial paper issuances as of
December 30, 2023 and December 31, 2022, respectively, with a weighted average interest rate of 5.54% and 4.84%,
respectively.

We have a Euro-Commercial Paper Program under which we may issue unsecured commercial paper notes up to
a maximum aggregate amount outstanding of $500 million. Proceeds from issuances under this program may be used for
general corporate purposes. The maturities of the notes vary, but may not exceed 364 days from the date of issuance.
Our payment obligations with respect to any notes issued under this program are backed by our revolving credit facility
(the “Revolver”). There are no financial covenants under this program. We had balances of $199.2 million and $213.0
million outstanding under this program as of December 30, 2023 and December 31, 2022, respectively, with a weighted
average interest rate of 4.13% and 2.06%, respectively.

Short-Term Credit Facilities

In January 2023, we extended the maturity date of the Revolver by one year to February 13, 2026, and increased
the commitments by $400 million, from $800 million to $1.2 billion. Additionally, we amended the Revolver to replace the
LIBOR benchmark interest rate with Term SOFR, Euribor and SONIA benchmark interest rates. We use the Revolver as a
back-up facility for our commercial paper program and for other corporate purposes.

No balance was outstanding under the Revolver as of December 30, 2023 or December 31, 2022. Commitment

fees associated with the Revolver in 2023, 2022 and 2021 were $1.2 million, $0.9 million and $0.9 million, respectively.

In addition to the Revolver, we have short-term lines of credit available in various countries of approximately $327
million in the aggregate at December 30, 2023. These lines may be cancelled at any time by us or the issuing banks.
Short- term borrowings outstanding under these lines of credit were $1.0 million and $2.4 million at December 30, 2023
and December 31, 2022, respectively, with weighted average interest rates of 2.24% and 0.64%, respectively.

From time to time, we provide guarantees on certain arrangements with banks. Our exposure to these guarantees

is not material.

Long-Term Borrowings

In March 2023, we issued $400 million of senior notes, due March 15, 2033, which bear an interest rate of
5.750% per year, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting
discounts and offering expenses, were $394.9 million, which we used to repay both existing indebtedness under our
commercial paper programs and our $250 million aggregate principal amount of senior notes that matured on April 15,
2023.

In August 2021, we issued $500 million of senior notes, due February 15, 2032, which bear an interest rate of
2.250%, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts
and offering expenses, were $493.7 million. Additionally, in August 2021, we issued $300 million of senior notes, due
August 15, 2024, which we can repay without penalty on or after August 15, 2022 and bear an interest rate of 0.850%,
payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering
expenses, were $298 million. We used the net proceeds from these two debt issuances to finance a portion of the
Vestcom acquisition.

60 2023 Annual Report | Avery Dennison Corporation

Our long-term debt, and related interest rates, at year-end 2023 and 2022 is shown below.

(In millions)
Long-term debt

Medium-term notes:

Series 1995 due 2025

Long-term notes:

Senior notes due 2023 at 3.4%

Senior notes due 2024 at 0.85%

Senior notes due 2025 at 1.25%(1)

Senior notes due 2028 at 4.875%

Senior notes due 2030 at 2.650%

Senior notes due 2032 at 2.25%

Senior notes due 2033 at 6.0%

Senior notes due 2033 at 5.75%

Less amount classified as current

Total long-term debt(2)

2023

2022

$

30.0

$

30.0

—

299.6

552.6

496.7

496.1

495.1

149.2

395.3

249.7

299.0

531.3

496.0

495.5

494.5

149.1

—

(299.6)

(249.7)

$2,615.0

$2,495.4

(1)

(2)

These senior notes are euro-denominated. The face value is €500 million.
Included unamortized debt issuance costs and debt discounts of $11.3 million and $7.4 million, respectively, as of year-end 2023 and $10.5 million
and $7.1 million, respectively, as of year-end 2022.

At year-end 2023 and 2022, our medium-term notes had accrued interest at a weighted average fixed rate of

We expect maturities of our long-term debt for each of the next five fiscal years and thereafter to be as follows:

(In millions)
$ 300.0

583.4

—

—

500.0

1,550.0

2029 and thereafter

Refer to Note 7, “Commitments and Leases,” for information related to finance leases.

Other

The Revolver contains a financial covenant that requires us to maintain a specified ratio of total debt in relation to a
certain measure of income. As of December 30, 2023 and December 31, 2022, we were in compliance with our financial
covenant.

Our total interest costs in 2023, 2022 and 2021 were $126.5 million, $89.8 million and $75.0 million, respectively,
of which $7.5 million, $5.7 million and $4.8 million, respectively, was capitalized as part of the cost of property, plant and
equipment and capitalized software.

The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury
securities or euro government bond securities, as applicable, on notes with similar rates, credit ratings and remaining
maturities. The fair value of short-term borrowings, which includes commercial paper issuances and short-term lines of
credit, approximates their carrying value given their short duration. The fair value of our total debt was $3.11 billion at
December 30, 2023 and $2.85 billion at December 31, 2022. Fair value amounts were determined based primarily on
Level 2 inputs, which are inputs other than quoted prices in active markets that are either directly or indirectly observable.
Refer to Note 1, “Summary of Significant Accounting Policies,” for more information.

Avery Dennison Corporation | 2023 Annual Report 61

7.5%.

Year
2024

2025

2026

2027

2028

NOTE 5. FINANCIAL INSTRUMENTS

As of December 30, 2023, the aggregate U.S. dollar equivalent notional value of our outstanding commodity
contracts and foreign exchange contracts was $5.8 million and $1.34 billion, respectively. Our outstanding foreign
exchange contracts as of December 30, 2023 were recorded in various currencies, primarily the U.S. dollar, euro, Chinese
renminbi, British pound sterling and Hong Kong dollar.

We recognize derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets.
We designate commodity forward contracts on forecasted purchases of commodities and foreign exchange contracts on
forecasted transactions as cash flow hedges. We also enter into foreign exchange contracts to offset certain of our
economic exposures arising from foreign exchange rate fluctuations.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or
loss on the derivative is reported as a component of “Accumulated other comprehensive loss” and reclassified into
earnings in the same period(s) during which the hedged transaction impacts earnings. Gains and losses on these
derivatives, representing either hedge ineffectiveness or hedge components excluded from the assessment of
effectiveness, are recognized in current earnings. Except for the cross-currency swap discussed below, cash flow hedges
were not material in 2023, 2022 or 2021.

Cross-Currency Swap

In March 2020, we entered into U.S. dollar to euro cross-currency swap contracts with a total notional amount of
$250 million to effectively convert our fixed-rate U.S. dollar-denominated debt into euro-denominated debt, including
semiannual interest payments and the payment of principal at maturity. During the term of the contract, which ends on
April 30, 2030, we pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars. These contracts have
been designated as cash flow hedges. The fair value of these contracts was $2.3 million as of December 30, 2023 and
$15.5 million as of December 31, 2022, which were included in “Other Assets” in the Consolidated Balance Sheets. Refer
to Note 9, “Fair Value Measurements,” to the Consolidated Financial Statements for more information.

We recorded no ineffectiveness from our cross-currency swap to earnings during 2023, 2022 or 2021.

Other Derivatives

The following table shows the fair value and balance sheet locations of other derivatives as of December 30, 2023

and December 31, 2022:

(In millions)
Foreign exchange contracts Other current assets
Other current assets
Commodity contracts

Asset
Balance Sheet Location

Liability

2023
$6.3
—

2022 Balance Sheet Location
$4.3 Other current liabilities
— Other current liabilities

$6.3

$4.3

2023
$6.0
—

2022
$9.6
.2

$6.0

$9.8

For other derivative instruments not designated as hedging instruments, the gain or loss is recognized in current

earnings.

62 2023 Annual Report | Avery Dennison Corporation

The following table shows the components of the net gains (losses) recognized in income related to these

derivative instruments:

(In millions)
Foreign exchange contracts

Statements of Income Location
Cost of products sold

Foreign exchange contracts

Marketing, general and administrative expense

2023
$3.4

5.5

$8.9

2022
$ 5.6

(4.3)

$ 1.3

2021
$ 1.4

21.0

$22.4

NOTE 6. PENSION AND OTHER POSTRETIREMENT BENEFITS

Defined Benefit Plans

We sponsor a number of defined benefit plans, the accrual of benefits under some of which has been frozen,
covering eligible employees in the U.S. and certain other countries. Benefits payable to an employee are based primarily
on years of service and the employee’s compensation during the course of his or her employment with our company.

We are also obligated to pay unfunded termination indemnity benefits to certain employees outside the U.S.,
which are subject to applicable agreements, laws and regulations. We have not incurred significant costs related to these
benefits, and, therefore, no related costs have been included in the disclosures below.

Plan Assets

Assets in our non-U.S. plans are invested in accordance with locally accepted practices and primarily include
equity securities, fixed income securities, insurance contracts and cash. Asset allocations and investments vary by country
and plan. Our target plan asset investment allocation for our non-U.S. plans in the aggregate is approximately 26% in
equity securities, 59% in fixed income securities and cash, and 15% in insurance contracts and other investments, subject
to periodic fluctuations among these asset classes.

Fair Value Measurements

The valuation methodologies we use for assets measured at fair value are described below.

Cash is valued at nominal value. Cash equivalents and mutual funds are valued at fair value as determined by
quoted market prices, based upon the net asset value (“NAV”) of shares held at year-end. Pooled funds are structured as
collective trusts, not publicly traded and valued by calculating NAV per unit based on the NAV of the underlying funds/
trusts as a practical expedient for the fair value of the pooled funds. The pooled funds are categorized by the primary
investment strategy which is primarily investments in equity and fixed income securities. The pooled funds categorized as
other investments are primarily investments in real estate funds. Insurance contracts are valued at book value, which
approximates fair value and is calculated using the prior-year balance plus or minus investment returns and changes in
cash flows.

These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective
of future fair values. While we believe these valuation methods are appropriate and consistent with other market
participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.

Avery Dennison Corporation | 2023 Annual Report 63

The following table sets forth, by level within the fair value hierarchy (as applicable), non-U.S. plan assets at fair

value:

(In millions)
2023

Cash

Insurance contracts

Pooled funds – real estate investment trusts

Pooled funds – fixed income securities(1)

Pooled funds – equity securities(1)

Pooled funds – other investments(1)

Total non-U.S. plan assets at fair value

2022

Cash

Insurance contracts

Pooled funds – real estate investment trusts

Pooled funds – fixed income securities(1)

Pooled funds – equity securities(1)

Pooled funds – other investments(1)

Total non-U.S. plan assets at fair value

Fair Value Measurements Using
Significant
Other
Observable
Inputs
(Level 2)

Significant
Other
Unobservable
Inputs
(Level 3)

Quoted
Prices in
Active
Markets
(Level 1)

Total

$ —

—

—

$ —

—

—

$ —

42.6

6.4

$ —

37.1

8.3

$

1.3

$ 1.3

—

—

42.6

6.4

389.8

169.4

53.7

$663.2

$

6.4

$ 6.4

—

—

37.1

8.3

335.7

151.9

45.9

$585.3

(1)

Pooled funds that are measured at fair value using the NAV per unit (or its equivalent) practical expedient have not been classified in the fair value
hierarchy. The fair value amounts presented in this table are intended to reconcile to total non-U.S. plan assets.

The following table presents a reconciliation of Level 3 non-U.S. plan asset activity during the year ended

December 30, 2023:

(In millions)
Balance at December 31, 2022

Net realized and unrealized gain (loss)

Purchases

Settlements

Acquisition

Impact of changes in foreign currency exchange rates

Level 3 Assets

Pooled Funds –
Real Estate
Investment
Trusts
$ 8.3

Insurance
Contracts
$37.1

1.3

3.5

(2.8)

1.1

2.4

(2.3)

—

—

—

.4

Total
$45.4

(1.0)

3.5

(2.8)

1.1

2.8

Balance at December 30, 2023

$42.6

$ 6.4

$49.0

64 2023 Annual Report | Avery Dennison Corporation

Plan Assumptions

Discount Rate

In consultation with our actuaries, we annually review and determine the discount rates used to value our pension
and other postretirement obligations. The assumed discount rate for each pension plan reflects market rates for high
quality corporate bonds currently available. Our discount rate is determined by evaluating yield curves consisting of large
populations of high quality corporate bonds. The projected pension benefit payment streams are then matched with bond
portfolios to determine a rate that reflects the liability duration unique to our plans.

We use the full yield curve approach to estimate the service and interest cost components of net periodic benefit
cost for our pension and other postretirement benefit plans. Under this approach, we apply multiple discount rates from a
yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at
the measurement date. We believe that this approach provides a more precise measurement of service and interest cost
by aligning the timing of a plan’s liability cash flows to its corresponding rates on the yield curve.

Long-term Return on Assets

We determine the long-term rate of return assumption for plan assets by reviewing the historical and expected
returns of both the equity and fixed income markets, taking into account our asset allocation, the correlation between
returns in our asset classes, and our mix of active and passive investments. Additionally, we evaluate current market
conditions, including interest rates, and review market data for reasonableness and appropriateness.

Measurement Date

We measure the actuarial value of our benefit obligations and plan assets using the calendar month-end closest to
our fiscal year-end and adjust for any contributions or other significant events between the measurement date and our
fiscal year-end.

Plan Balance Sheet Reconciliations

The following table provides a reconciliation of benefit obligations, plan assets, funded status of the plans and

accumulated other comprehensive loss for our defined benefit plans:

Plan Benefit Obligations

(In millions)
Change in projected benefit obligations

Pension Benefits

2023

U.S.

Non-U.S.

U.S.

Non-U.S.

2022

Projected benefit obligations at beginning of year

$51.8

$586.9

$66.8

$882.4

Service cost

Interest cost

Participant contributions

Amendments

Actuarial (gain) loss

Acquisition

Benefits paid

Settlements

Foreign currency translation

Projected benefit obligations at end of year

Accumulated benefit obligations at end of year

—

2.4

—

—

1.4

—

(6.3)

—

—

$49.3

$49.3

10.5

24.7

4.5

(.1)

51.3

1.2

(25.3)

(.6)

26.8

—

1.2

—

—

(9.1)

—

(7.1)

—

—

$679.9

$628.7

$51.8

$51.8

16.5

10.8

4.6

—

(244.9)

—

(21.3)

(1.0)

(60.2)

$586.9

$540.2

Avery Dennison Corporation | 2023 Annual Report 65

Plan Assets

(In millions)
Change in plan assets

Plan assets at beginning of year

Actual return on plan assets

Acquisition

Employer contributions

Participant contributions

Benefits paid

Settlements

Foreign currency translation

Plan assets at end of year

Funded Status

(In millions)
Funded status of the plans

Other assets

Other accrued liabilities

Long-term retirement benefits and other liabilities(1)

Pension Benefits

2023

2022

U.S.

Non-U.S.

U.S.

Non-U.S.

$ —

$585.3

$ —

$ 874.6

—

—

6.3

—

(6.3)

—

—

54.6

1.1

17.2

4.5

(25.3)

(.6)

26.4

—

—

7.1

—

(7.1)

—

—

(226.5)

—

15.2

4.6

(21.3)

(1.0)

(60.3)

$ —

$663.2

$ —

$ 585.3

Pension Benefits

2023

2022

U.S.

Non-U.S.

U.S.

Non-U.S.

$ —

$ 67.8

$ —

$ 70.0

(6.1)

(43.2)

(.2)

(84.3)

(6.2)

(45.6)

(.4)

(71.2)

Plan assets less than benefit obligations

$(49.3)

$ (16.7)

$(51.8)

$

(1.6)

(1)

In accordance with our funding strategy, we have the option to fund certain of our U.S. liabilities with proceeds from our company-owned life
insurance policies.

Weighted average assumptions used to determine
year-end benefit obligations

Discount rate

Compensation rate increase

Pension Benefits

2023

2022

U.S.

Non-U.S.

U.S.

Non-U.S.

4.86 %

—

3.78 %

2.73

5.06 %

4.36 %

—

2.75

For U.S. and non-U.S. plans combined, the projected benefit obligations and fair values of plan assets for pension
plans with projected benefit obligations in excess of plan assets were $210 million and $76 million, respectively, at year-
end 2023 and $165 million and $42 million, respectively, at year-end 2022.

For U.S. and non-U.S. plans combined, the accumulated benefit obligations and fair values of plan assets for
pension plans with accumulated benefit obligations in excess of plan assets were $162 million and $43 million,
respectively, at year- end 2023 and $132 million and $23 million, respectively, at year-end 2022.

66 2023 Annual Report | Avery Dennison Corporation

Accumulated Other Comprehensive Loss

The following table shows the pre-tax amounts recognized in “Accumulated other comprehensive loss” in the

Consolidated Balance Sheets:

(In millions)
Net actuarial loss

Prior service (credit) cost

Net amount recognized in accumulated other comprehensive loss

Pension Benefits

2023

2022

Non-U.S.
$ 73.2

U.S.
$ 9.1

Non-U.S.
$ 38.2

(3.4)

—

(3.5)

$ 69.8

$ 9.1

$ 34.7

U.S.
$ 9.6

—

$ 9.6

The following table shows the pre-tax amounts recognized in “Other comprehensive loss (income)”:

(In millions)
Net actuarial (gain) loss

Prior service credit

Amortization of unrecognized:

Net actuarial gain

Prior service credit (cost)

Settlements

Net amount recognized in other
comprehensive loss (income)

Plan Income Statement Reconciliations

2023

Pension Benefits
2022

2021

Non-U.S.
$ 32.6

U.S.
$(5.6)

Non-U.S.
$ (.8)

U.S.
$ (.7)

Non-U.S.
$(34.8)

(.1)

—

—

—

(.9)

2.1

.4

.1

(.8)

—

(.1)

(2.5)

.4

.1

(.8)

—

(1.1)

(6.1)

.4

(.5)

U.S.
$ .9

—

(.4)

—

—

$ .5

$ 35.1

$(6.5)

$ (2.8)

$(2.6)

$(41.9)

The following table shows the components of net periodic benefit cost, which are recorded in net income for our

defined benefit plans:

(In millions)
Service cost

Interest cost

Actuarial (gain) loss

Expected return on plan assets

Amortization of actuarial loss

Amortization of prior service (credit) cost

Recognized loss (gain) on settlements

U.S.
$ —

2.4

.5

—

.4

—

—

Net periodic benefit cost (credit)

$3.3

$

2023

Pension Benefits
2022

2021

Non-U.S.
$ 10.5

U.S.
$ —

Non-U.S.
$ 16.5

U.S.
$ —

Non-U.S.
$ 19.0

24.7

—

(33.2)

(2.1)

(.4)

(.1)

(.6)

1.2

(3.5)

—

.8

—

.1

10.8

—

(21.9)

2.5

(.4)

(.1)

1.0

(1.1)

—

.8

—

1.1

8.9

—

(19.8)

6.1

(.4)

.5

$(1.4)

$ 7.4

$ 1.8

$ 14.3

Service cost and components of net periodic benefit cost other than service cost were included in “Marketing,
general and administrative expense” and “Other non-operating expense (income), net” in the Consolidated Statements of
Income, respectively.

Avery Dennison Corporation | 2023 Annual Report 67

The following table shows the weighted average assumptions used to determine net periodic cost:

Discount rate

Expected return on assets

Compensation rate increase

Plan Contributions

2023

U.S.
5.06 %

—

—

Non-U.S.

4.36 %

4.71

2.75

Pension Benefits
2022

U.S.
2.19 %

—

—

Non-U.S.

1.57 %

3.00

2.33

2021

U.S.
2.20 %

—

—

Non-U.S.

1.26 %

2.61

2.15

We make contributions to our defined benefit plans sufficient to meet the minimum funding requirements of
applicable laws and regulations, plus additional amounts, if any, we determine to be appropriate. The following table sets
forth our expected contributions in 2024:

(In millions)
U.S. pension plans

Non-U.S. pension plans

Future Benefit Payments

$

6.3

13.8

The future benefit payments shown below reflect the expected service periods for eligible participants.

(In millions)
2024

2025

2026

2027

2028

2029-2033

Pension
Benefits

U.S.
$ 6.3

Non-U.S.
$ 25.7

6.1

5.9

5.4

4.9

24.8

28.7

29.0

27.7

18.4

157.4

Postretirement Health Benefits

We provide postretirement health benefits to certain of our retired U.S. employees up to the age of 65 under a
cost- sharing arrangement and provide supplemental Medicare benefits to certain of our U.S. retirees over the age of 65.
Our postretirement health benefit plan was closed to new participants retiring after December 31, 2021. Our policy is to
fund the cost of these postretirement benefits from operating cash flows. While we do not intend to terminate these
postretirement health benefits, we may do so at any time, subject to applicable laws and regulations. At year-end 2023,
our postretirement health benefits obligation and related loss recorded in “Accumulated other comprehensive loss” were
approximately $2 million and $10 million, respectively. At year-end 2022, our postretirement health benefits obligation
and related loss recorded in “Accumulated other comprehensive loss” were approximately $2 million and $11 million,
respectively. Net periodic benefit cost was not material in 2023, 2022 or 2021.

Defined Contribution Plans

We sponsor various defined contribution plans worldwide, the largest of which is the Avery Dennison Corporation

Employee Savings Plan (“Savings Plan”), a 401(k) plan for our U.S. employees.

We recognized expense of $30.3 million, $27.3 million and $24.6 million in 2023, 2022 and 2021, respectively,

related to our employer contributions and employer match of participant contributions to the Savings Plan.

Other Retirement Plans

We have deferred compensation plans and programs that permit eligible employees to defer a portion of their
compensation. The compensation voluntarily deferred by the participant, together with certain employer contributions,
68 2023 Annual Report | Avery Dennison Corporation

earns specified and variable rates of return. As of year-end 2023 and 2022, we had accrued $88.2 million and $87.3
million, respectively, for our obligations under these plans. A portion of the interest on certain of our contributions may be
forfeited by participants if their employment terminates before age 55 other than by reason of death or disability.

Our Directors Deferred Equity Compensation Program allows our non-employee directors to elect to receive their
cash compensation in deferred stock units (“DSUs”) issued under our equity plan. Additionally, two legacy deferred
compensation plans had DSUs that were issued under our then-active equity plans. Dividend equivalents, representing
the value of dividends per share paid on shares of our common stock and calculated with reference to the number of
DSUs held as of a quarterly dividend record date, are credited in the form of additional DSUs on the applicable dividend
payable date. DSUs are converted into shares of our common stock, less fractional shares, and issued to the director upon
his or her separation from our Board. Approximately 0.1 million DSUs were outstanding for both year-end 2023 and
2022, with an aggregate value of $19 million and $20 million, respectively.

We hold company-owned life insurance policies, the proceeds from which are payable to us upon the death of
covered participants. The cash surrender values of these policies, net of outstanding loans, which are included in “Other
assets” in the Consolidated Balance Sheets, were $228.4 million and $265.0 million at year-end 2023 and 2022,
respectively.

NOTE 7. COMMITMENTS AND LEASES

Supplemental cost information related to leases is shown below.

(In millions)
Operating lease costs

2023
$73.6

2022
$ 70.8

2021
$ 68.8

Lease costs related to finance leases were not material in 2023, 2022 or 2021.

Supplemental balance sheet information related to leases is shown below.

(In millions)
Assets

Operating

Finance(1)

Total leased assets

Liabilities

Current:

Operating

Finance

Non-current:

Operating

Finance

Total lease liabilities

Balance Sheet Location

2023

2022

Other assets

Property, plant and equipment, net

Other current liabilities

Short-term borrowings and current portion of long-term debt
and finance leases

Long-term retirement benefits and other liabilities

Long-term debt and finance leases

$200.2

29.6

$229.8

$161.7

27.5

$189.2

$ 45.4

$ 42.4

6.3

5.4

152.3

7.0

$211.0

113.6

8.2

$169.6

(1)

Finance lease assets are net of accumulated amortization of $14.6 million and $12.4 million as of December 30, 2023 and December 31, 2022,
respectively.

Supplemental cash flow information related to leases is shown below.

(In millions)
Cash paid for amounts included in measurement of operating
lease liabilities

Operating lease assets obtained in exchange for operating lease
liabilities

2023

2022

2021

$55.8

$ 60.5

$ 54.2

92.4

37.2

58.0

Cash flows related to finance leases were not material in 2023, 2022 or 2021.

Avery Dennison Corporation | 2023 Annual Report 69

Weighted average remaining lease term and discount rate information related to leases as of December 30, 2023

and December 31, 2022 is shown below.

2023

2022

Weighted average remaining lease term (in years):

Operating

Finance

Weighted average discount rate (percentage):

Operating

Finance

7.1

3.1

4.1 %

4.2

Operating and finance lease liabilities by maturity date from December 30, 2023 are shown below.

(In millions)
2024

2025

2026

2027

2028

2029 and thereafter

Total lease payments

Less: imputed interest

Present value of lease liabilities

Operating
Leases
$ 50.3

41.0

32.4

23.0

15.1

69.5

231.3

(33.6)

$197.7

5.9

2.7

3.2 %

2.8

Finance
Leases
$ 6.9

3.5

1.9

1.3

.6

.6

14.8

(1.5)

$13.3

As of December 30, 2023, we had no significant operating or finance leases that had not yet commenced.

NOTE 8. CONTINGENCIES

Legal Proceedings

We are involved in various lawsuits, claims, inquiries and other regulatory and compliance matters, most of which
are routine to the nature of our business. When it is probable that a loss will be incurred and where a range of the loss
can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range
cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future
results of operations should our exposure be materially different from our estimates or should we incur liabilities that
were not previously accrued. Potential insurance reimbursements are not offset against potential liabilities.

We are currently party to a litigation in which ADASA Inc. (“Adasa”), an unrelated third party, alleged that certain
of our RFID products within our Solutions Group reportable segment infringed its patent. The case was filed on
October 24, 2017 in the United States District Court in the District of Oregon (Eugene Division) and is captioned ADASA
Inc. v. Avery Dennison Corporation. We recorded a contingent liability in the amount of $26.6 million related to this
matter in the second quarter of 2021 based on a jury verdict issued on May 14, 2021.

During the fourth quarter of 2021, the first instance judgment associated with the jury verdict was issued. This
resulted in additional potential liability for the RFID tags sold during the period from the jury verdict to the issuance of the
first instance judgment, a higher royalty imposed by the judge applicable to tags sold after the judgment and a royalty on
additional late-disclosed tags, as well as sanctions, prejudgment interest, costs, and attorneys’ fees. In addition, Adasa
was awarded an ongoing royalty on in-scope tags sold after October 14, 2021. On October 22, 2021, we appealed the
judgment to the United States Court of Appeals for the Federal Circuit (“CAFC”).

70 2023 Annual Report | Avery Dennison Corporation

During the fourth quarter of 2022, the CAFC issued its opinion, reversing the grant of summary judgment of
validity as to anticipation and obviousness, vacating the sanctions ruling, and remanding the case for retrial with respect
to validity for anticipation and obviousness over the prior art. The CAFC affirmed subject-matter eligibility and damages if
liability is determined on retrial. On remand, the trial court was required to reconsider the amount of sanctions consistent
with the CAFC’s instruction to limit sanctions to the late-disclosed tags. With continued evaluation of the matter and our
defenses, as well as consultation with our outside counsel, we believed that Adasa’s patent was invalid and that the
sanctions sought by Adasa were unreasonable. In addition, we believed that there were appealable grounds in the
CAFC’s decision; as a result, we sought U.S. Supreme Court review on February 27, 2023.

After the U.S. Supreme Court denied our writ of certiorari petition on May 30, 2023, the trial court’s retrial began
on July 10, 2023. On July 18, 2023, the jury in the retrial issued a verdict that Adasa’s patent is valid. Although the court
had not issued its judgment, including its decision on sanctions, we increased our contingent liability to reflect our best
estimate of the anticipated judgment to $80.4 million as of July 1, 2023, with an expectation to continue adjusting our
accrual quarterly, as appropriate. As of December 30, 2023 our contingent liability was $82.9 million. We have grounds
to appeal and plan to appeal any judgment based on the jury verdict; therefore, we classified the total contingent liability
as non-current due to the time expected for this matter to be fully resolved.

A hearing took place on October 24, 2023 before the district court on the pending sanctions decision and certain

post- trial motions. We determined that no additional adjustment to our accrual was required as a result of the hearing.

On January 23, 2024, the district court issued two orders relating to Adasa’s original and supplemental bill of
taxable costs, which did not have an impact on the liability we recorded as of December 30, 2023. On January 25, 2024,
the district court issued a revised sanction order lowering the sanction against us from approximately $20 million to
approximately $5.2 million, based on a royalty of $0.0025/late-reported tag, which was consistent with the amount we
had accrued. In February 2024, the district court issued decisions denying our motion for judgment as a matter of law and
our motion for a new trial. We plan to appeal these recent decisions.

We have largely completed our migration to alternative encoding methods for our RFID tags.

Because of the uncertainties associated with claims resolution and litigation, future expenses to resolve legal
proceedings could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate a range
of potential expenses. If information were to become available that allowed us to reasonably estimate a range of potential
expenses determined to be probable in an amount higher or lower than what we have accrued, we would adjust our
accrued liabilities accordingly. Additional lawsuits, claims, inquiries, and other regulatory and compliance matters could
arise in the future. The range of expenses for resolving any future matters would be assessed as they arise; until then, a
range of potential expenses for their resolution cannot be determined. Based upon current information, we believe that
the impact of the resolution of legal proceedings would not be, individually or in the aggregate, material to our financial
position, results of operations or cash flows.

Environmental Expenditures

Environmental expenditures are generally expensed. When it is probable that a loss will be incurred and where a
range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate
within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these matters
could affect future results of operations should our exposure be materially different from our estimates or should we incur
liabilities that were not previously accrued. Potential insurance reimbursements are not offset against potential liabilities.
We review our estimates of the costs of complying with environmental laws related to remediation and cleanup of
various sites,
including sites in which governmental agencies have designated us as a potentially responsible party
(“PRP”). However, environmental expenditures for newly acquired assets and those that extend or improve the economic
useful life of existing assets are capitalized and amortized over the shorter of the estimated useful life of the acquired
asset or the remaining life of the existing asset.

As of December 30, 2023, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or
other responsible state agencies as a PRP at eleven waste disposal or waste recycling sites that are the subject of
separate investigations or proceedings concerning alleged soil and/or groundwater contamination. No settlement of our
liability related to any of these sites has been agreed upon. We are participating with other PRPs at these sites and
anticipate that our share of remediation costs will be determined pursuant to agreements that we negotiate with the EPA
or other governmental authorities.

Avery Dennison Corporation | 2023 Annual Report 71

These estimates could change as a result of changes in planned remedial actions, remediation technologies, site
conditions, the estimated time to complete remediation, environmental laws and regulations, and other factors. Because
of the uncertainties associated with environmental assessment and remediation activities, our future expenses to
remediate these sites could be higher than the liabilities we have accrued; however, we are unable to reasonably estimate
a range of potential expenses determined to be probable. If information were to become available that allowed us to
reasonably estimate a range of potential expenses in an amount higher or lower than what we have accrued, we would
adjust our environmental liabilities accordingly. In addition, we may be identified as a PRP at additional sites in the future.
The range of expenses for remediation of any future-identified sites would be addressed as they arise; until then, a range
of expenses for their remediation cannot be determined.

The activity related to our environmental liabilities in 2023 and 2022 is shown below:

(In millions)
Balance at beginning of year

Charges, net of reversals

Payments

Balance at end of year

2023
$24.3

2.5

(2.3)

$24.5

2022
$21.9

4.4

(2.0)

$24.3

Approximately $11 million and $9 million, respectively, of this balance was classified as short-term and included in

“Other current liabilities” in the Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022.

NOTE 9. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

Assets and liabilities carried at fair value, measured on a recurring basis, as of December 30, 2023, were as

follows:

(In millions)
Assets

Investments

Derivative assets

Bank drafts

Cross-currency swap

Liabilities

Derivative liabilities

Contingent consideration liabilities

Fair Value Measurements Using

Quoted
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Other
Unobservable
Inputs
(Level 3)

Total

$37.8

$19.6

$18.2

$ —

6.3

5.3

2.3

$ 7.6

10.0

—

5.3

—

$ 1.6

—

6.3

—

2.3

$ 6.0

—

—

—

—

$ —

10.0

72 2023 Annual Report | Avery Dennison Corporation

Assets and liabilities carried at fair value, measured on a recurring basis, as of December 31, 2022 were as

follows:

(In millions)
Assets

Investments

Derivative assets

Bank drafts

Cross-currency swap

Liabilities

Derivative liabilities

Contingent consideration liabilities

Fair Value Measurements Using
Quoted
Prices in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Other
Unobservable
Inputs
(Level 3)

Total

$31.3

$

22.6

$

4.3

3.2

15.5

$12.2

$

6.0

—

3.2

—

.3

—

8.7

4.3

—

15.5

$ —

—

—

—

$ 11.9

$ —

—

6.0

Investments included fixed income securities (primarily U.S. government and corporate debt securities) measured
at fair value using quoted prices/bids and a money market fund measured at fair value using NAV. As of December 30,
2023, investments of $2.7 million and $35.1 million were included in “Cash and cash equivalents” and “Other current
assets,” respectively, in the Consolidated Balance Sheets. As of December 31, 2022, investments of $0.7 million and
$30.6 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the Consolidated
Balance Sheets. Derivatives that are exchange-traded are measured at fair value using quoted market prices and
classified within Level 1 of the valuation hierarchy. Derivatives measured based on foreign exchange rate inputs that are
readily available in public markets are classified within Level 2 of the valuation hierarchy. Bank drafts (maturities greater
than three months) are valued at face value due to their short-term nature and were included in “Other current assets” in
the Consolidated Balance Sheets.

Contingent consideration liabilities relate to estimated earn-out payments associated with certain acquisitions
completed in 2023, 2022 and 2021, which are subject to the acquired companies achieving certain post-acquisition
performance targets. These liabilities were recorded based on the expected payments and have been classified as
Level 3. Activity related to contingent consideration in 2023 and 2022 was immaterial.

In addition to the investments described above, we hold venture investments that had a total carrying value of
approximately $71 million and $70 million as of December 30, 2023 and December 31, 2022, respectively, which was
included in “Other assets” in the Consolidated Balance Sheets. We recognized no net gains or losses on these
investments in 2023 and recognized net gains of $13.5 million and $23.0 million in 2022 and 2021, respectively, in
“Other expense (income), net” in the Consolidated Statements of Income.

NOTE 10. NET INCOME PER COMMON SHARE

Net income per common share was computed as follows:

(In millions, except per share amounts)
(A) Net income

(B) Weighted average number of common shares outstanding

Dilutive shares (additional common shares issuable under stock-
based awards)

(C) Weighted average number of common shares outstanding,

assuming dilution

Net income per common share (A) ÷ (B)

Net income per common share, assuming dilution (A) ÷ (C)

2023
$503.0

80.7

2022
$757.1

81.6

2021
$740.1

82.9

.4

.6

.9

81.1

$ 6.23

$ 6.20

82.2

$ 9.28

$ 9.21

83.8

$ 8.93

$ 8.83

Avery Dennison Corporation | 2023 Annual Report 73

Certain stock-based compensation awards were excluded from the computation of net income per common share,
assuming dilution, because they would not have had a dilutive effect. Stock-based compensation awards excluded from
the computation totaled 0.1 million shares for 2023 and were not significant in 2022 or 2021.

NOTE 11. SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION

Common Stock and Share Repurchase Program

Our Amended and Restated Certificate of Incorporation authorizes five million shares of $1 par value preferred
stock (of which no shares are outstanding), with respect to which our Board may fix the series and terms of issuance, and
400 million shares of $1 par value voting common stock.

From time to time, our Board authorizes the repurchase of shares of our outstanding common stock. Repurchased
shares may be reissued under our long-term incentive plan or used for other corporate purposes.
In 2023, we
repurchased approximately 0.8 million shares of our common stock at an aggregate cost of $137.5 million. In 2022, we
repurchased approximately 2.2 million shares of our common stock at an aggregate cost of $379.5 million.

In April 2022, our Board authorized the repurchase of shares of our common stock with a fair market value of up to
$750 million, excluding any fees, commissions or other expenses related to such purchases and in addition to any amount
outstanding under our previous Board authorization. Shares of our common stock in the aggregate amount of $592.8
million as of December 30, 2023 remained authorized for
this Board authorization. Board
authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.

repurchase under

Treasury Shares Reissuance

We fund a portion of our employee-related costs using shares of our common stock held in treasury. We reduce
capital in excess of par value based on the grant date fair value of vesting awards and record net gains or losses
associated with using treasury shares to retained earnings.

Accumulated Other Comprehensive Loss

The changes in “Accumulated other comprehensive loss” (net of tax) for 2023 and 2022 were as follows:

(In millions)
Balance as of January 1, 2022

Other comprehensive income (loss) before
reclassifications, net of tax

Reclassifications to net income, net of tax

Net current-period other comprehensive income
(loss), net of tax

Balance as of December 31, 2022

Other comprehensive income (loss) before
reclassifications, net of tax

Reclassifications to net income, net of tax

Net current-period other comprehensive income
(loss), net of tax

Balance as of December 30, 2023

Foreign
Currency
Translation
$(217.4)

Pension and
Other
Postretirement
Benefits
$(60.4)

Cash Flow
Hedges
$(5.1)

(96.6)

—

(96.6)

$(314.0)

(14.6)

—

(14.6)

$(328.6)

6.3

2.8

9.1

$(51.3)

(25.2)

(1.0)

(26.2)

$(77.5)

4.9

1.5

6.4

$ 1.3

(7.0)

3.7

(3.3)

$(2.0)

Total
$(282.9)

(85.4)

4.3

(81.1)

$(364.0)

(46.8)

2.7

(44.1)

$(408.1)

74 2023 Annual Report | Avery Dennison Corporation

The following table sets forth the income tax (benefit) expense allocated to each component of other

comprehensive income (loss):

(In millions)
Foreign currency translation:

Translation gain (loss)

Pension and other postretirement benefits:

Net gain (loss) recognized from actuarial gain/loss and prior
service cost/credit

Reclassifications to net income

Cash flow hedges:

Gain (loss) recognized on cash flow hedges

Reclassifications to net income

2023

$ 1.2

(8.2)

(.3)

(2.2)

1.2

2022

2021

$(7.0)

$(23.2)

.5

1.1

1.6

.4

8.5

1.6

1.7

(.5)

Income tax (benefit) expense allocated to components of other
comprehensive income (loss)

$(8.3)

$(3.4)

$(11.9)

NOTE 12. LONG-TERM INCENTIVE COMPENSATION

Stock-Based Awards

Stock-Based Compensation

We grant our annual stock-based compensation awards to eligible employees in March and non-employee
directors in May. Certain awards granted to retirement-eligible employees one year or more before their retirement date
vest upon retirement; these awards are accounted for as fully vested one year from the date of grant.

Our 2017 Incentive Award Plan (the “Equity Plan”), a long-term incentive plan for employees and non-employee
directors, allows us to grant stock-based compensation awards – including stock options, RSUs, PUs, MSUs and DSUs –
or a combination of these and other awards. Under the Equity Plan, 5.4 million shares are available for issuance, and each
full value award is counted as 1.5 shares for purposes of the number of shares authorized for issuance. Full value awards
include RSUs, PUs and MSUs.

Stock-based compensation expense and the related recognized tax benefit were as follows:

(In millions)
Stock-based compensation expense

Tax benefit

2023
$ 22.3

2.4

2022
$ 47.4

6.7

2021
$ 37.2

4.6

This expense was included in “Marketing, general and administrative expense” in the Consolidated Statements of

Income.

As of December 30, 2023, we had approximately $35 million of unrecognized compensation expense related to
unvested stock-based awards, which is expected to be recognized over the remaining weighted average requisite service
period of approximately two years.

Stock Options

Stock options may be granted to employees and non-employee directors at no less than 100% of the fair market
value of our common stock on the date of the grant and generally vest over a four-year period. Options expire ten years
from the date of grant.

The fair value of stock options is estimated as of the date of grant using the Black-Scholes option-pricing model.
This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest
rate and the expected option term. The following assumptions are used in estimating the fair value of granted stock
options:

Risk-free interest rate is based on the 52-week average of the Treasury-Bond rate that has a term corresponding

to the expected option term. For 2023, it was 3.84%.

Avery Dennison Corporation | 2023 Annual Report 75

Expected stock price volatility represents an average of the implied and historical volatility. For 2023,

it was

23.90%.

Expected dividend yield is based on the current annual dividend divided by the 12-month average of our monthly

stock price prior to grant. For 2023, it was 1.84%.

Expected option term is determined based on historical experience under our stock option and incentive plans. For

2023, it was 6.31 years.

The weighted average grant date fair value per share for stock options granted in 2023 was $47.65. No stock

options were granted in fiscal years 2022 or 2021.

The following table summarizes information related to stock options:

Outstanding at December 31, 2022

Granted

Outstanding at December 30, 2023

Options vested and expected to vest at
December 30, 2023

Options exercisable at December 30, 2023

Number of
options
(in thousands)
141.1

Weighted
average
exercise price
$ 73.96

63.0

204.1

192.6

141.1

190.54

$109.92

105.10

$ 73.96

Weighted
average
remaining
contractual life
(in years)
3.42

Aggregate
intrinsic value
(in millions)
15.1

$

4.36

4.36

2.42

$

18.7

18.7

$

18.1

The total intrinsic value of stock options exercised was $3.5 million in 2021. We received approximately $1 million
in 2021 from the exercise of stock options, and the tax benefit associated with these exercised options was $0.9 million.
The stock option exercises in 2022 were immaterial and there were no stock option exercises in 2023. The intrinsic value
of a stock option is based on the amount by which the market value of our stock exceeds the exercise price of the option.

Performance Units (“PUs”)

PUs are performance-based awards granted to eligible employees under the Equity Plan. PUs are payable in
shares of our common stock at the end of a three- or four-year cliff vesting period provided that the designated
performance objectives are achieved at the end of the period. Over the performance period, the estimated number of
shares of our common stock issuable upon vesting is adjusted upward or downward based on the probability of achieving
the performance objectives established for the award. The actual number of shares issued generally ranges from 0% to
200% of the target shares at the time of grant; however the shares issued for certain special PU awards can range up to
300% of the target shares at time of grant. The weighted average grant date fair value for PUs was $180.12, $163.97
and $191.86 in 2023, 2022 and 2021, respectively.

The following table summarizes information related to awarded PUs:

Unvested at December 31, 2022

Granted at target

Adjustment for above-target performance(1)

Vested

Forfeited/cancelled

Unvested at December 30, 2023

Number of
PUs
(in thousands)
372.7

85.0

58.2

(201.9)

(13.3)

300.7

Weighted
average
grant-date
fair value
$147.45

180.12

112.51

112.51

174.50

$174.54

(1)

Reflects adjustments for the vesting of PUs based on above-target performance for the 2020-2022 performance period.

The fair value of vested PUs was $22.7 million in 2023, $20.2 million in 2022 and $19.2 million in 2021.

76 2023 Annual Report | Avery Dennison Corporation

Market-Leveraged Stock Units (“MSUs”)

MSUs are performance-based awards granted to eligible employees under our equity plans. MSUs are payable in
shares of our common stock over a four-year period provided that the designated performance objective is achieved as of
the end of each vesting period. MSUs accrue dividend equivalents during the vesting period, which are earned and paid
only at vesting provided that, at a minimum, threshold-level performance is achieved. The number of shares earned is
based upon our absolute total shareholder return at each vesting date and can range from 0% to 200% of the target
amount of MSUs subject to vesting. Each of the four vesting periods represents one tranche of MSUs and the fair value of
each of these four tranches was determined using the Monte-Carlo simulation model, which utilizes multiple input
variables, including expected stock price volatility and other assumptions, to estimate the probability of achieving the
performance objective established for the award. The weighted average grant date fair value for MSUs was $192.53,
$141.80 and $216.06 in 2023, 2022 and 2021, respectively.

The following table summarizes information related to awarded MSUs:

Unvested at December 31, 2022

Granted at target

Adjustments for above-target performance(1)

Vested

Forfeited/cancelled

Unvested at December 30, 2023

Number of
MSUs
(in thousands)
208.5

82.3

35.9

(118.9)

(12.3)

195.5

Weighted
average
grant-date
fair value
$145.86

192.53

125.18

135.77

166.45

$167.16

(1)

Reflects adjustments for the vesting of MSUs based on above-target performance for each of the tranches of awards vesting in 2023.

The fair value of vested MSUs was $16.1 million in 2023, $19.9 million in 2022 and $17.8 million in 2021.

Restricted Stock Units (“RSUs”)

RSUs are service-based awards granted to eligible employees and non-employee directors under our equity plans.
RSUs granted to employees generally vest ratably over a period of three or four years. RSUs granted to non-employee
directors generally vest in one year. The vesting of RSUs is subject to continued service through the applicable vesting
date. If that condition is not met, unvested RSUs are generally forfeited. The weighted average grant date fair value for
RSUs was $175.88, $168.34 and $196.26 in 2023, 2022 and 2021, respectively.

The following table summarizes information related to awarded RSUs:

Unvested at December 31, 2022

Granted

Vested

Forfeited/cancelled

Unvested at December 30, 2023

Number of
RSUs
(in thousands)
59.8

38.1

(18.1)

(13.3)

66.5

Weighted
average
grant-date
fair value
$159.23

175.88

148.26

159.43

$171.68

The fair value of vested RSUs was $2.7 million, $2.8 million and $2.7 million in 2023, 2022 and 2021, respectively.

Cash-Based Awards

Long-Term Incentive Units (“LTI Units”)

LTI Units are cash-based awards granted to employees under our long-term incentive unit plan. LTI Units are
service-based awards that generally vest ratably over a four-year period. The settlement value equals the number of
Avery Dennison Corporation | 2023 Annual Report 77

vested LTI Units multiplied by the average of the high and low market prices of our common stock on the vesting date.
The compensation expense related to these awards is amortized on a straight-line basis and the fair value is remeasured
using the estimated percentage of units expected to be earned multiplied by the average of the high and low market
prices of our common stock at each quarter-end.

We also grant cash-based awards in the form of performance and market-leveraged LTI Units to eligible
employees. Performance LTI Units are payable in cash at the end of a three-year cliff vesting period provided that certain
performance objectives are achieved at the end of the performance period. Market-leveraged LTI Units are payable in
cash and vest ratably over a period of four years. The number of performance and market-leveraged LTI Units earned at
vesting is adjusted upward or downward based upon the probability of achieving the performance objectives established
for the respective award and the actual number of units issued can range from 0% to 200% of the designated target units
subject to vesting. Performance and market-leveraged LTI Units are remeasured using the estimated percentage of units
expected to be earned multiplied by the average of the high and low market prices of our common stock at each quarter-
end over their respective performance periods. The compensation expense related to performance LTI Units is amortized
on a straight-line basis over their respective performance periods. The compensation expense related to market-
leveraged LTI Units is amortized on a graded-vesting basis over their respective performance periods.

The compensation expense related to LTI Units was $16.3 million in 2023, $11.5 million in 2022 and $21.3 million
in 2021. This expense was included in “Marketing, general and administrative expense” in the Consolidated Statements
of Income. The total recognized tax benefit related to LTI Units was $3.9 million in 2023, $2.7 million in 2022 and
$5.1 million in 2021.

NOTE 13. COST REDUCTION ACTIONS

Restructuring Charges

We have plans that provide eligible employees with severance benefits in the event of an involuntary termination.
We calculate severance using the benefit formulas under the applicable plans. We record restructuring charges from
qualifying cost reduction actions for severance and other exit costs (including asset impairment charges and lease and
other contract cancellation costs) when they are probable and estimable.

2023 Actions

In the third quarter of 2023, we approved a restructuring plan (the “2023 Plan”) to further optimize the European
footprint of our Materials Group reportable segment by reducing operations in a manufacturing facility in Belgium. The
cumulative charges associated with the 2023 Plan consisted of severance and related costs for the reduction of
approximately 210 positions as well as asset impairment charges. During 2023 we recorded $30.4 million in
restructuring charges related to the 2023 Plan. The activities related to the 2023 Plan are expected to be substantially
completed by mid-2025.

We recorded $49.0 million in restructuring charges, net of reversals, related to other 2023 actions (collectively
with the 2023 Plan, “2023 Actions”). These charges consisted of severance and related costs for the reduction of
approximately 1,450 positions and asset impairment charges at numerous locations across our company.

2019/2020 Actions

During 2022, we recorded $7.3 million in restructuring charges, net of reversals, related to our 2019/2020 actions.
These charges consisted of severance and related costs for the reduction of approximately 830 positions and asset
impairment charges at numerous locations across our company, reflecting actions in both our reportable segments. The
actions in our Materials Group reportable segment were primarily associated with consolidations of its operations in North
America and its graphics business in Europe, in part in response to the pandemic. The actions in our Solutions Group
reportable segment were primarily related to global headcount and footprint reduction, with some actions accelerated
and expanded in response to the pandemic. Our activities related to our 2019/2020 actions began in the fourth quarter of
fiscal year 2019 and continued through fiscal year 2022.

Accruals for severance and related costs and lease cancellation costs were included in “Other current liabilities”
and “Long-term retirement benefits and other liabilities” in the Consolidated Balance Sheets. Asset impairment charges
were based on the estimated market value of the assets, less selling costs, if applicable. Restructuring charges were
included in “Other expense (income), net” in the Consolidated Statements of Income.
78 2023 Annual Report | Avery Dennison Corporation

During 2023, restructuring charges and payments were as follows:

(In millions)
2023 Actions

Severance and related costs

Asset impairment charges

2019/2020 Actions

Severance and related costs

Total

Accrual at
December 31,
2022

Charges,
Net of
Reversals

Cash
Payments

Non-cash
Impairment

Foreign
Currency
Translation

Accrual at
December 30,
2023

$ —

—

5.1

$ 5.1

$72.1

8.3

(1.0)

$79.4

$(45.1)

$ —

$

—

(8.3)

(4.1)

—

$(49.2)

$ (8.3)

$

.7

—

—

.7

$ 27.7

—

—

$ 27.7

During 2022, restructuring charges and payments were as follows:

(In millions)
2019/2020 Actions

Severance and related costs

Asset impairment charges

Total

Accrual at
January 1,
2022

Charges,
Net of
Reversals

Cash
Payments

Non-cash
Impairment

Foreign
Currency
Translation

Accrual at
December 31,
2022

$11.5

—

$11.5

$ 7.2

$(13.4)

$ —

.1

—

$ 7.3

$(13.4)

$

(.1)

(.1)

$

$

(.2)

—

(.2)

$

5.1

—

$

5.1

The table below shows the total amount of restructuring charges incurred by reportable segment and Corporate.

(In millions)
Restructuring charges by reportable segment and Corporate

Materials Group

Solutions Group

Corporate

Total

NOTE 14. TAXES BASED ON INCOME

Taxes based on income were as follows:

(In millions)
Current:

U.S. federal tax

State taxes

Foreign taxes

Deferred:

U.S. federal tax

State taxes

Foreign taxes

2023

2022

2021

$ 52.4

$ (1.0)

$

23.2

3.8

7.9

.8

5.0

7.6

1.0

$ 79.4

$

7.7

$ 13.6

2023

2022

2021

$ 42.5

$ 29.4

$ 7.3

9.0

160.8

212.3

(29.0)

(3.5)

11.9

(20.6)

8.8

177.7

215.9

5.8

.9

19.6

26.3

5.3

229.9

242.5

(1.1)

(5.3)

12.5

6.1

Provision for income taxes

$191.7

$242.2

$248.6

Avery Dennison Corporation | 2023 Annual Report 79

The principal items accounting for the difference between taxes computed at U.S. federal statutory rate and taxes

recorded were as follows:

(In millions)
Tax provision computed at U.S. federal statutory rate(1)

2023
$145.9

2022
$209.9

2021
$208.5

Increase (decrease) in taxes resulting from:

State taxes, net of federal tax benefit

Foreign earnings taxed at different rates(1)

GILTI high-tax exclusion election, net(2)

Valuation allowance

U.S. federal research and development tax credits

Tax contingencies and audit settlements

Other items, net

Provision for income taxes

2.6

50.4

(10.0)

2.6

(8.3)

11.9

(3.4)

11.8

51.7

(11.9)

(5.0)

(6.5)

(4.3)

(3.5)

4.5

72.7

(22.8)

(4.8)

(6.2)

3.9

(7.2)

$191.7

$242.2

$248.6

(1)

(2)

All years included certain U.S. international tax provisions and foreign earnings taxed in the U.S., net of credits.
In 2023, we recognized $4.4 million from our current year GILTI exclusion election and $5.6 million related to the election made on our 2022 U.S.
federal tax return. In 2022, we recognized $11.9 million of benefit related to a GILTI exclusion election made on our 2021 U.S. federal tax return. In
2021, we recognized $14.1 million and $8.7 million of benefit related to GILTI exclusion elections made on our amended 2018 and originally filed 2020
U.S. federal tax returns, respectively.

Income before taxes from our U.S. and foreign operations was as follows:

(In millions)
U.S.

Foreign

Income before taxes

2023
$187.2

507.5

$694.7

2022
$232.4

766.9

$999.3

2021
$ 88.0

904.6

$992.6

Our effective tax rate was 27.6%, 24.2% and 25.0% for fiscal years 2023, 2022 and 2021, respectively.

Our 2023 provision for income taxes included (i) $16.4 million of net tax charge related to the tax on global
intangible low-taxed income (“GILTI”) of our foreign subsidiaries after benefiting from our current year exclusion election,
as well as the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from
foreign-derived intangible income (“FDII”); (ii) $14.7 million of return-to-provision benefit primarily related to our GILTI
exclusion election and benefits from additional foreign tax credits recognized under temporary relief granted by the
Internal Revenue Service (“IRS”) in July 2023, upon completion of our 2022 U.S. federal tax return, (iii) $10.5 million of tax
charge related to non- deductible expenses resulting from the impact of the Argentine peso remeasurement loss; and
(iv) $9.5 million of net tax charge primarily from the recognition of uncertain tax positions in certain foreign jurisdictions,
partially offset by decreases in certain tax reserves as a result of closing tax years.

Our 2022 provision for income taxes included (i) $18.8 million of net tax charge related to the tax on GILTI of our
foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the
benefit from FDII; (ii) $17.3 million of return-to-provision benefit, including $11.9 million related to a GILTI exclusion
election and a lower net tax charge from other international inclusion items upon completion of our 2021 U.S. federal tax
return, and (iii) $4.3 million of net tax benefit primarily from decreases in certain tax reserves, including interest and
penalties, as a result of closing tax years and the settlement of certain foreign tax audits.

Our 2021 provision for income taxes included (i) $28.5 million of net tax charge related to the tax on GILTI of our
foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the
benefit from FDII; (ii) $14.1 million of return-to-provision benefit related to a GILTI exclusion election made on our
amended 2018 U.S. federal tax return; and (iii) $11.3 million of return-to-provision benefit, including $8.7 million related
to a GILTI exclusion election and a higher FDII deduction on our 2020 U.S. federal tax return.

80 2023 Annual Report | Avery Dennison Corporation

Deferred Taxes

Deferred taxes reflect the temporary differences between the amounts at which assets and liabilities are recorded
for financial reporting purposes and the amounts utilized for tax purposes. The primary components of the temporary
differences that gave rise to our deferred tax assets and liabilities were as follows:

(In millions)
Accrued expenses not currently deductible

Net operating loss carryforwards

Tax credit carryforwards

Capitalized research expenses

Stock-based compensation

Pension and other postretirement benefits

Inventory reserve

Lease liabilities

Other assets

Valuation allowance

Total deferred tax assets(1)

Depreciation and amortization

Repatriation accrual

Foreign operating loss recapture

Lease assets

Total deferred tax liabilities(1)

Total net deferred tax assets (liabilities)

2023
$ 44.5

138.9

2022
$ 32.3

137.2

9.0

59.9

10.9

34.2

16.4

43.3

27.9

(62.0)

323.0

(317.2)

(24.5)

(3.4)

(43.4)

(388.5)

$ (65.5)

9.7

38.6

15.4

31.5

15.6

33.2

21.3

(59.4)

275.4

(296.6)

(12.0)

(3.2)

(33.8)

(345.6)

$ (70.2)

(1)

Reflect gross amounts before jurisdictional netting of deferred tax assets and liabilities.

We assess the available positive and negative evidence to estimate if sufficient future taxable income is expected
to be generated to use existing deferred tax assets. On the basis of our assessment, we record valuation allowances only
with respect to the portion of the deferred tax asset that is not more-likely-than-not to be realized. Our assessment of the
future realizability of our deferred tax assets relies heavily on our forecasted earnings in certain jurisdictions determined
by the manner in which we operate our business and the relevant carryforward periods. Any changes to our operations
may affect our assessment of deferred tax assets considered realizable if the positive evidence no longer outweighs the
negative evidence.

Net operating loss carryforwards of foreign subsidiaries at December 30, 2023 and December 31, 2022 were
$481 million and $463 million, respectively. Tax credit carryforwards of both domestic and foreign subsidiaries at
December 30, 2023 and December 31, 2022 totaled $9 million and $10 million, respectively. If unused, foreign net
operating losses and tax credit carryforwards will expire as follows:

(In millions)

Year of Expiry

2024

2025

2026

2027

2028

2029-2043

Indefinite life/no expiry

Total

Net Operating
Losses(1)

Tax Credits

$

$

2.7

2.8

2.9

3.7

12.6

16.4

439.5

$ 480.6

$

.1

.2

.3

.3

1.2

5.2

1.7

9.0

(1)

Net operating losses are presented before tax effects and valuation allowance.

Avery Dennison Corporation | 2023 Annual Report 81

Certain indefinite-lived foreign net operating losses may require decades to be fully utilized under our current

business model.

At December 30, 2023, we had net operating loss carryforwards in certain states of $429 million before tax
effects. Based on our estimates of future state taxable income, it is more-likely-than-not that the majority of these
carryforwards will not be realized before they expire. Accordingly, a valuation allowance has been recorded on
$402 million of these carryforwards.

As of December 30, 2023, our provision for income taxes did not materially benefit from applicable tax holidays in

foreign jurisdictions.

Unrecognized Tax Benefits

As of December 30, 2023, our unrecognized tax benefits totaled $88 million, $75 million of which, if recognized,
would reduce our annual effective income tax rate. As of December 31, 2022, our unrecognized tax benefits totaled $70
million, $65 million of which, if recognized, would reduce our annual effective income tax rate.

Where applicable, we accrue potential interest and penalties related to unrecognized tax benefits in income tax
expense. The interest and penalties we recognized during fiscal years 2023, 2022 and 2021 were not material,
individually or in aggregate, to the Consolidated Statements of Income. We have $16 million of accrued interest and
penalties, net of tax benefit, in the Consolidated Balance Sheets at December 30, 2023 and December 31, 2022.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is set forth below.

(In millions)
Balance at beginning of year

Additions for tax positions of current year

Additions (reductions) for tax positions of prior years, net

Settlements with tax authorities

Expirations of statutes of limitations

Changes due to translation of foreign currencies

Balance at end of year

2023
$69.5

15.4

8.0

(1.8)

(3.9)

.8

2022
$74.0

6.6

(2.2)

(1.1)

(4.8)

(3.0)

$88.0

$69.5

It is reasonably possible that, during the next 12 months, we may realize a decrease in our uncertain tax positions,

including interest and penalties, of approximately $6 million, primarily as a result of closing tax years.

The amount of income taxes we pay is subject to ongoing audits by taxing jurisdictions around the world. Our
estimate of the potential outcome of any uncertain tax issue is subject to our assessment of the relevant risks, facts, and
circumstances existing at the time. We believe we have adequately provided for reasonably foreseeable outcomes related
to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax
liabilities in the period the assessments are made or resolved, which may impact our effective tax rate. The final
determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our tax
provision for income taxes and the related liabilities. To date, we and our U.S. subsidiaries have completed the IRS’
Compliance Assurance Process through 2021. With limited exceptions, we are no longer subject to income tax
examinations by tax authorities for years prior to 2010.

NOTE 15. SEGMENT AND DISAGGREGATED REVENUE INFORMATION

Segment Reporting

We have the following reportable segments:

• Materials Group – manufactures and sells pressure-sensitive label materials, films for graphic and reflective
products, performance tapes and other adhesive products for industrial, medical and other applications, as
well as fastener solutions.

• Solutions Group – designs, manufactures and sells a wide variety of branding and information solutions,
including brand and price tickets, tags and labels (including RFID inlays), and related services, supplies and
equipment.

82 2023 Annual Report | Avery Dennison Corporation

Intersegment sales are recorded at or near market prices and are eliminated in determining consolidated sales. We
evaluate our performance based on income from operations before interest expense and taxes. Corporate expense is
excluded from the computation of income from operations for the segments.

We do not disclose total assets by reportable segment since we neither generate nor review that information
internally. As our reporting structure is neither organized nor reviewed internally by country, results by individual country
are not provided.

Disaggregated Revenue Information

Disaggregated revenue information is shown below in the manner that best reflects how the nature, amount,
timing and uncertainty of our revenue and cash flows are affected by economic factors. Revenue from our Materials
Group reportable segment is attributed to geographic areas based on the location from which products are shipped.
Revenue from our Solutions Group reportable segment is shown by product group.

(In millions)
Net sales to unaffiliated customers

Materials Group:

U.S.

Europe, the Middle East and North Africa

Asia

Latin America

Other

Total Materials Group

Solutions Group:

Apparel

Identification Solutions and Vestcom

Total Solutions Group

Net sales to unaffiliated customers

2023

2022

2021

$1,687.8

$1,892.1

$1,736.4

2,007.1

1,315.2

474.2

327.0

2,396.2

1,390.3

470.1

346.4

2,261.1

1,471.1

408.6

329.3

5,811.3

6,495.1

6,206.5

1,661.4

891.6

2,553.0

1,851.2

693.0

2,544.2

1,839.1

362.7

2,201.8

$8,364.3

$9,039.3

$8,408.3

Revenue from our Materials Group reportable segment by product group is shown below.

(In millions)
Net sales to unaffiliated customers

Materials Group:

Labels, graphics and reflectives

Tapes and adhesives

Other

Total Materials Group

2023

2022

2021

$5,076.8

$5,725.7

$5,430.4

665.3

69.2

696.3

73.1

703.4

72.7

$5,811.3

$6,495.1

$6,206.5

Our total company revenue by geographic area is shown below. Revenue is attributed to geographic areas based

on the location from which products are shipped.

(In millions)
Net sales to unaffiliated customers

U.S.

Europe, the Middle East and North Africa

Asia

Latin America

Other

2023

2022

2021

$2,578.3

$2,565.9

$2,065.2

2,306.7

2,545.2

582.3

351.8

2,683.6

2,817.2

605.7

366.9

2,541.4

2,914.5

537.6

349.6

Net sales to unaffiliated customers

$8,364.3

$9,039.3

$8,408.3

Avery Dennison Corporation | 2023 Annual Report 83

Net sales to unaffiliated customers in Asia included sales in China (including Hong Kong) of $1.30 billion in 2023,

$1.50 billion in 2022 and $1.68 billion in 2021.

No single customer represented 10% or more of our net sales in year-end 2023, 2022 or 2021. Our ten largest

customers by net sales in the aggregate represented approximately 16% of our net sales during 2023, 2022 and 2021.

Additional Segment Information

Additional financial information by reportable segment and Corporate is shown below.

(In millions)
Intersegment sales

Materials Group

Solutions Group

Intersegment sales

Income before taxes

Materials Group

Solutions Group

Corporate expense

Interest expense

Other non-operating expense (income), net

Income before taxes

Capital expenditures(1)(2)

Materials Group

Solutions Group

Capital expenditures

Depreciation and amortization expense(1)

Materials Group

Solutions Group

Depreciation and amortization expense

Other expense (income), net by reportable segment

Materials Group

Solutions Group

Corporate

Other expense (income), net

2023

2022

2021

$ 157.1

35.5

$ 192.6

$ 700.9

165.7

(83.7)

(119.0)

30.8

$137.1

37.4

$174.5

$859.3

302.3

(87.6)

(84.1)

9.4

$105.8

37.3

$143.1

$883.3

257.2

(81.8)

(70.2)

4.1

$ 694.7

$999.3

$992.6

$ 117.8

148.7

$ 266.5

$ 127.8

170.6

$ 298.4

$153.5

144.0

$297.5

$135.8

154.9

$290.7

$170.3

96.3

$266.6

$141.9

102.2

$244.1

$ 88.3

$ (13.4)

$ (25.7)

86.3

6.3

7.8

5.0

36.6

(5.3)

$ 180.9

$

(.6)

$

5.6

(1)

(2)

Corporate capital expenditures and depreciation and amortization expense are allocated to the reportable segments based on their percentage of
consolidated net sales.
Capital expenditures for property, plant and equipment included accruals.

84 2023 Annual Report | Avery Dennison Corporation

Other expense (income), net by type were as follows:

(In millions)
Other expense (income), net by type

Restructuring charges:

Severance and related costs

Asset impairment charges and lease cancellation costs

Other items:

Outcomes of legal proceedings, net(1)

Argentine peso remeasurement loss(2)

Transaction and related costs

(Gain) loss on venture investments

(Gain) loss on sales of assets

Gain on sale of product line

Other expense (income), net

2023

2022

2021

$

70.8

$

8.6

64.3

29.9

5.3

1.5

.5

—

$ 180.9

$

7.6

.1

6.3

—

.3

(13.5)

(1.4)

—

(.6)

$

10.5

3.1

(.4)

—

20.9

(23.0)

.2

(5.7)

5.6

$

(1)

(2)

Amount for 2023 included an additional contingent liability related to the Adasa litigation in the amount of $56.3 million. Refer to Note 8,
“Contingencies” for more information regarding the Adasa litigation.
Amount for 2021 included an indirect tax credit based on a Brazilian Federal Supreme Court ruling in the amount of $29.1 million, partially offset by a
contingent liability related to the Adasa litigation in the amount of $26.6 million. Refer to Note 8, “Contingencies” for more information regarding the
Adasa litigation.
The impact of the Argentine peso remeasurement loss prior to the third quarter of 2023 was not material.

Property, plant and equipment, net, in our U.S. and non-U.S. operations were as follows:

(In millions)
Property, plant and equipment, net

U.S.

Non-U.S.

Property, plant and equipment, net

2023

2022

2021

$ 621.2

1,004.6

$1,625.8

$ 589.0

$ 524.0

951.2

953.7

$1,540.2

$1,477.7

Property, plant and equipment, net, located in China (including Hong Kong) was approximately $247 million in

2023, $259 million in 2022 and $290 million in 2021.

NOTE 16. SUPPLEMENTAL FINANCIAL INFORMATION

Inventories

Inventories at year-end were as follows:

(In millions)
Raw materials

Work-in-progress

Finished goods

Inventories

2023
$ 415.4

238.2

267.1

2022
$ 457.6

255.1

297.2

$ 920.7

$1,009.9

Avery Dennison Corporation | 2023 Annual Report 85

Property, Plant and Equipment, Net

Major classes of property, plant and equipment, stated at cost, at year-end were as follows:

(In millions)
Land

Buildings and improvements

Machinery and equipment

Construction-in-progress

Property, plant and equipment

Accumulated depreciation

Property, plant and equipment, net

Software

Capitalized software costs at year-end were as follows:

(In millions)
Cost

Accumulated amortization

Software, net

$

2023
35.9

817.9

2,799.5

317.1

3,970.4

$

2022
29.3

781.0

2,667.8

269.6

3,747.7

(2,344.6)

(2,207.5)

$ 1,625.8

$ 1,540.2

2023
$ 362.4

2022
$ 390.6

(257.9)

(282.3)

$ 104.5

$ 108.3

Software amortization expense was $23.4 million in 2023, $29.5 million in 2022 and $30.1 million in 2021.

Allowance for Credit Losses

Given the short-term nature of trade receivables, our allowance for credit losses is based on the financial condition
of customers, the aging of receivable balances, our historical collections experience, and current and expected future
macroeconomic and market conditions. Balances are written off in the period in which they are determined to be
uncollectible.

The activity related to our allowance for credit losses was as follows:

(In millions)
Balance at beginning of year

Provision for credit losses

Amounts written off

Other, including foreign currency translation

Balance at end of year

The reversal of credit losses was $4.7 million in 2021.

Research and Development

2023
34.4

$

2022
33.0

$

4.4

(6.3)

1.9

6.9

(4.3)

(1.2)

$

34.4

$

34.4

Research and development expense, which was included in “Marketing, general and administrative expense” in

the Consolidated Statements of Income, was as follows:

(In millions)
Research and development expense

2023
$135.8

2022
$ 136.1

2021
136.6

$

86 2023 Annual Report | Avery Dennison Corporation

Supplemental Cash Flow Information

Cash paid for interest and income taxes was as follows:

(In millions)
Interest

Income taxes, net of refunds

Foreign Currency Effects

2023
$109.9

234.9

2022
$ 80.9

204.8

2021
$ 62.8

253.4

Gains and losses resulting from foreign currency transactions are included in income in the period incurred.
Transactions in foreign currencies (including receivables, payables and loans denominated in currencies other than the
functional currency), including hedging impacts, were not material in 2023, 2022 or 2021.

Deferred Revenue

Deferred revenue primarily relates to constrained variable consideration on supply agreements for sales of
products, as well as to payments received in advance of performance under a contract. Deferred revenue is recognized as
revenue as or when we perform under a contract.

The following table shows the amounts and balance sheet locations of deferred revenue as of December 30, 2023

and December 31, 2022:

(In millions)
Other current liabilities

Long-term retirement benefits and other liabilities

Total deferred revenue

December 30, 2023 December 31, 2022
$ 22.2

$ 18.1

1.3

$ 19.4

2.1

$ 24.3

Revenue recognized from amounts included in deferred revenue as of December 31, 2022 was $21.0 million in
2023. Revenue recognized from amounts included in deferred revenue as of January 1, 2022 was $23.5 million in 2022.
Revenue recognized from amounts included in deferred revenue as of January 2, 2021 was $18.4 million in 2021. This
revenue was included in “Net sales” in the Consolidated Statements of Income.

Supplier Finance Programs

We have agreements with third-party financial institutions to facilitate payments to suppliers. These third-party
financial institutions offer voluntary supply chain finance programs that enable certain of our suppliers, at the supplier’s
sole discretion, to sell our payment obligations to a financial institution on terms directly negotiated with the financial
institution. Participating suppliers decide which payment obligations are sold to the financial institution and we have no
economic interest in a supplier’s decision to sell these payment obligations. We make payments to the financial institution
on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. Our
obligations to our suppliers,
including amounts due and scheduled payment dates, are not impacted by suppliers’
decisions to sell amounts under these arrangements. Amounts due under our supply chain finance programs are included
in accounts payable on our Consolidated Balance Sheets and activities related to these programs are presented as
operating activities in our Consolidated Statements of Cash Flows. As of December 30, 2023 and December 31, 2022,
the amounts due to financial institutions for suppliers that participate in these programs were $397.4 million and $430.1
million, respectively.

Avery Dennison Corporation | 2023 Annual Report 87

Item 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

Item 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and
our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures were effective in providing reasonable
assurance that information is recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer as appropriate, to allow for timely decisions regarding required
disclosure.

Management’s Report on Internal Control Over Financial Reporting. We are responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the
Exchange Act). Under the supervision and with the participation of our management, including our Chief Executive Officer
and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based upon the framework in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our
internal control over financial reporting was effective as of December 30, 2023.

The effectiveness of our internal control over financial reporting as of December 30, 2023 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in the Report of Independent
Registered Public Accounting Firm contained in Item 8 of this report.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over
financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

Item 9B.

OTHER INFORMATION

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-

Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fourth quarter of 2023.

Item 9C.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

88 2023 Annual Report | Avery Dennison Corporation

PART III

Item 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information concerning directors and corporate governance required by this Item is incorporated herein by
reference from the definitive proxy statement for our Annual Meeting of Stockholders to be held on April 25, 2024 (our
“2024 Proxy Statement”), which will be filed with the SEC pursuant to Regulation 14A within 120 days of the end of the
fiscal year covered by this report. The information concerning executive officers required by this Item appears, in part, as
referenced below. If applicable,
information concerning any late filings under Section 16(a) of the Exchange Act is
incorporated by reference from our 2024 Proxy Statement.

The information required by this Item concerning our Audit Committee is incorporated by reference from our 2024

Proxy Statement.

Name and Position

Deon M. Stander
President and
Chief Executive Officer

INFORMATION ABOUT OUR EXECUTIVE OFFICERS(1)

Age
55

Executive Officer Since
August 2016

Former Positions within Past Five Years/
Officer Positions with Avery Dennison

2022-2023 President and Chief Operating Officer

2015-2022 Vice President and General Manager, RBIS

2013-2015 Vice President and General Manager,

Global Commercial and Innovation, RBIS

2010-2012 Vice President and General Manager,

Global Commercial, RBIS

Mitchell R. Butier

Executive Chairman

52

March 2007

2022-2023 Chairman and Chief Executive Officer

2019-2022 Chairman, President and Chief Executive

Officer

2016-2019 President and Chief Executive Officer

2015-2016 President and Chief Operating Officer

2014-2015 President, Chief Operating Officer and
Chief Financial Officer

2010-2014

Senior Vice President and Chief Financial
Officer

2007-2010 Vice President, Global Finance and Chief

Accounting Officer

51

March 2017

2017

Vice President and Interim Chief Financial
Officer

2016-2017 Vice President and Treasurer

2011-2016 Vice President, Global Finance, Materials

Group

2020-2022 Vice President and Chief Human
Resources Officer

2018-2020 Vice President, Human Resources, LGM

2015-2018 Vice President, Human Resources, RBIS

Gregory S. Lovins

Senior Vice President and
Chief Financial Officer

Deena Baker-Nel

53

September 2020

Senior Vice President and
Chief Human Resources Officer

Nicholas R. Colisto

Senior Vice President and
Chief Information Officer

57

September 2020

2018-2022 Vice President and Chief Information

Officer

2012-2018

Senior Vice President and Chief
Information Officer, Xylem Inc.

Francisco Melo

President, Solutions Group

50

April 2023

2022-2023

Senior Vice President and General
Manager, Avery Dennison Smartrac

2013-2022 Vice President and General Manager,

Avery Dennison Smartrac

2012-2013 Vice President Global Inventory Accuracy

and Loss Prevention, Information
Solutions Market Development

Avery Dennison Corporation | 2023 Annual Report 89

Name and Position

Age

Executive Officer Since

Former Positions within Past Five Years/
Officer Positions with Avery Dennison

Divina F. Santiago

Vice President, Controller

Ignacio J. Walker

Senior Vice President and
Chief Legal Officer

54

September 2023

2022-2023 Vice President Finance

2008-2022

Senior Director, Finance

47

September 2020

2020-2022 Vice President and Chief Legal Officer

2020

Vice President and Assistant General
Counsel, Americas

2018-2019 Vice President and Assistant General

Counsel

2013-2017 Vice President and Assistant General

Counsel, RBIS

(1)

Executive officers are generally elected on the date of our annual stockholder meeting to serve a one-year term and until their successors are duly
elected and qualified.

Item 11.

EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference from our 2024 Proxy Statement.

Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

The information required by this Item is incorporated by reference from our 2024 Proxy Statement.

Item 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated by reference from our 2024 Proxy Statement.

Item 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated by reference from our 2024 Proxy Statement.

90 2023 Annual Report | Avery Dennison Corporation

Item 15.

EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements, Financial Statement Schedule and Exhibits

PART IV

(1) Financial statements filed as part of this report are listed on the accompanying Index to Financial

Statements.

(2) All financial statement schedules are omitted since the required information is not present or is not
present in amounts sufficient to require submission of the schedule, or because the information
required is included in the consolidated financial statements and notes thereto.

(3) Exhibits filed as a part of this report are listed on the accompanying Exhibit Index. Each management
contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K is
identified as such on the Exhibit Index.

(b) The exhibits required to be filed by Item 601 of Regulation S-K are set forth on the accompanying Exhibit

Index.

AVERY DENNISON CORPORATION

EXHIBIT INDEX

For the Year Ended December 30, 2023

Exhibit No.

Exhibit Name

Originally
Filed as
Exhibit No.

Filing(1)

2.1

3.1(i)

Agreement and Plan of Merger, dated as of
July 27, 2021, by and among Registrant, CB
Velocity Holdings, LLC, Lobo Merger Sub,
LLC and Charlesbank Equity Fund VIII,
Limited Partnership, as unitholder
representative

Amended and Restated Certificate of
Incorporation, as filed on April 28, 2011
with the Office of Delaware Secretary of
State

3.1(ii)

Amended and Restated Bylaws, effective as
of February 23, 2023

4.1

4.2

4.3

Indenture, dated as of March 15, 1991,
between Registrant and Security Pacific
National Bank, as Trustee (the “1991
Indenture”)

First Supplemental Indenture, dated as of
March 16, 1993, between Registrant and
BankAmerica National Trust Company, as
successor Trustee (the “Supplemental
Indenture”)

Officers’ Certificate establishing a series of
Securities entitled “Medium-Term Notes,
Series C” under the 1991 Indenture, as
amended by the Supplemental Indenture

2.1

Current Report on Form 8-K, filed July 30,
2021

3.1

3.1

4.1

4.4

Current Report on Form 8-K, filed April 29,
2011

Current Report on Form 8-K, filed
February 27, 2023

Registration Statement on Form S-3 (File
No. 33-39491), filed March 19, 1991

Registration Statement on Form S-3 (File
No. 33-59642), filed March 17, 1993

4.1

Current Report on Form 8-K, filed May 12,
1995

Avery Dennison Corporation | 2023 Annual Report 91

Exhibit No.
4.4

Exhibit Name

Indenture, dated as of July 3, 2001,
between Registrant and Chase Manhattan
Bank and Trust Company, National
Association, as trustee (the “2001
Indenture”)

4.5

Officers’ Certificate establishing Securities
entitled “6.000% Notes due 2033” under
the 2001 Indenture

4.6

6.000% Notes Due 2033

4.7

4.8

Indenture, dated as of November 20,
2007,between Registrant and Bank of New
York

Third Supplemental Indenture, dated as of
April 8, 2013, between Registrant and Bank
of NY

4.9

Form of 3.35% Senior Notes due 2023

4.10

4.11

4.12

4.13

4.14

Fourth Supplemental Indenture, dated as of
March 3, 2017, between Registrant and
The Bank of New York Mellon Trust
Company, N.A. (“BNY Mellon”) as Trustee
(including Form of 1.250% Senior Notes
due 2025 on Exhibit A thereto)

Fifth Supplemental Indenture, dated as of
December 6, 2018, between Registrant and
BNY Mellon, as Trustee (including Form of
4.875% Senior Notes due 2028 on Exhibit
A thereto)

Sixth Supplemental Indenture, dated as of
March 11, 2020, between Registrant and
BNY Mellon, as Trustee (including Form of
2.650% Senior Notes due 2030 on
Exhibit A thereto)

Seventh Supplemental Indenture, dated as
of August 18, 2021, between Registrant
and BNY Mellon, as Trustee (including Form
of 0.850% Senior Notes due 2024 on
Exhibit A thereto)

Eighth Supplemental Indenture, dated as of
August 18, 2021, between Registrant and
BNY Mellon, as Trustee (including Form of
2.250% Senior Notes due 2032 on
Exhibit A thereto)

92 2023 Annual Report | Avery Dennison Corporation

Originally
Filed as
Exhibit No.
4.1

Filing(1)

Registration Statement on Form S-3 (File
No. 333-64558), filed July 3, 2001

4.2

4.4

4.2

4.2

4.2

4.2

Current Report on Form 8-K, filed
January 16, 2003

Current Report on Form 8-K, filed
January 16, 2003

Current Report on Form 8-K, filed
November 20, 2007

Current Report on Form 8-K, filed April 8,
2013

Current Report on Form 8-K, filed April 8,
2013

Current Report on Form 8-K, filed March 3,
2017

4.2

Current Report on Form 8-K, filed
December 6, 2018

4.2

Current Report on Form 8-K, filed March 11,
2020

4.2

Current Report on Form 8-K filed on
August 18, 2021

4.3

Current Report on Form 8-K filed on
August 18, 2021

Originally
Filed as
Exhibit No.
4.2

Filing(1)

Current Report on Form 8-K filed on
March 15, 2023

4.15

10.1

2020 Annual Report on Form 10- K, filed
February 25, 2021

Current Report on Form 8-K, filed
January 30, 2023

Exhibit No.
4.15

Exhibit Name
Ninth Supplemental Indenture, dated as of
March 15, 2023, between Registrant and
The Bank of New York Mellon Trust
Company, N.A., as Trustee (including Form
of 5.750% Senior Notes due 2033 on
Exhibit A thereto).

4.16

Description of Securities

Amendment No. 2 to Credit Agreement,
dated as of January 24, 2023, by and
among Avery Dennison Corporation, a
Delaware corporation, as the borrower,
Bank of America, N.A., as the administrative
agent, and the other lenders party thereto.

10.1

10.2*

10.3*

Amended and Restated Supplemental
Executive Retirement Plan (“SERP”)

10.11.1

Quarterly Report on Form 10-Q, filed
August 12, 2009

Complete Restatement and Amendment of
Executive Variable Deferred Compensation
Plan (“EVDCP”)

10.16

1994 Annual Report on Form 10- K, filed
March 30, 1995

10.4*

Amendment No. 1 to EVDCP

10.16.1

1999 Annual Report on Form 10- K, filed
March 30, 2000

10.5*

10.6*

Amended and Restated 2005 Directors
Variable Deferred Compensation Plan

10.18.2

Quarterly Report on Form 10-Q, filed
May 10, 2011

Amended and Restated Stock Option and
Incentive Plan (“Equity Plan”)

A

2012 Proxy Statement on Schedule 14A,
filed March 9, 2012

10.7*

First Amendment to Equity Plan

10.20

10.8*

2017 Incentive Award Plan (“2017 Plan”)

B

10.9*

10.10*

Amended and Restated Annual Incentive
Plan

Complete Restatement and Amendment of
Executive Deferred Retirement Plan
(“EDRP”)

10.1

10.28

10.11*

Amendment No. 1 to EDRP

10.28.1

10.12*

Amendment No. 2 to EDRP

10.28.2

2014 Annual Report on Form 10- K, filed
February 25, 2015

2017 Proxy Statement on Schedule 14A,
filed March 10, 2017

Quarterly Report on Form 10-Q, filed
May 1, 2020

1994 Annual Report on Form 10- K, filed
March 30, 1995

1999 Annual Report on Form 10- K, filed
March 30, 2000

2001 Annual Report on Form 10- K, filed
March 4, 2002

10.13*

2005 Executive Variable Deferred
Retirement Plan, amended and restated

10.1

Quarterly Report on Form 10-Q, filed
May 7, 2013

Avery Dennison Corporation | 2023 Annual Report 93

Exhibit No.
10.14*

Exhibit Name

Amended and Restated Key Executive
Change of Control Severance Plan

Originally
Filed as
Exhibit No.
10.4

Filing(1)

Quarterly Report on Form 10-Q, filed
May 1, 2020

10.15*

Amended and Restated Executive
Severance Plan

10.3

Quarterly Report on Form 10-Q, filed
May 1, 2020

10.16*

Form of Executive Severance Agreement

10.19

10.17*

10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

Amended and Restated Long-Term
Incentive Unit Plan (“LTI Unit Plan”)

Form of Restricted Stock Unit Agreement
under Equity Plan

Form of Performance Unit Agreement under
Equity Plan

Form of Market-Leveraged Stock Unit
Agreement under Equity Plan

Form of Long-Term Incentive Unit
Agreement under LTI Unit Plan

Form of Director Restricted Stock Unit
Agreement under 2017 Plan

Form of Employee Market-Leveraged Stock
Unit Agreement under 2017 Plan

Form of Employee Performance Unit
Agreement under 2017 Plan

Form of Employee Restricted Stock Unit
Agreement under 2017 Plan

Form of Employee Non-Qualified Stock
Option Agreement under 2017 Plan

Offer Letter to Mitchell Butier, dated
February 25, 2016

Offer Letter to Mitchell Butier, dated
May 25, 2023

Offer Letter to Gregory Lovins, dated
July 10, 2017

Offer Letter to Deena Baker-Nel, dated
August 26, 2020

Offer Letter to Ignacio Walker, dated
August 25, 2020

10.2

10.38

10.39

10.40

10.41

10.2

10.3

10.4

10.5

10.6

10.2

10.1

10.1

10.1

10.2

94 2023 Annual Report | Avery Dennison Corporation

2020 Annual Report on Form 10- K, filed
February 25, 2021

Quarterly Report on Form 10-Q, filed
May 1, 2020

2013 Annual Report on Form 10- K, filed
February 26, 2014

2013 Annual Report on Form 10- K, filed
February 26, 2014

2013 Annual Report on Form 10- K, filed
February 26, 2014

2013 Annual Report on Form 10- K, filed
February 26, 2014

Quarterly Report on Form 10-Q, filed
August 1, 2017

Quarterly Report on Form 10-Q, filed
August 1, 2017

Quarterly Report on Form 10-Q, filed
August 1, 2017

Quarterly Report on Form 10-Q, filed
August 1, 2017

Quarterly Report on Form 10-Q, filed
August 1, 2017

Quarterly Report on Form 10-Q, filed
May 3, 2016

Quarterly Report on Form 10-Q, filed
August 1, 2023

Quarterly Report on Form 10-Q, filed
August 1, 2017

Quarterly Report on Form 10-Q, filed
May 3, 2022

Quarterly Report on Form 10-Q, filed
May 3, 2022

Filing(1)

Quarterly Report on Form 10-Q, filed
May 3, 2022

Quarterly Report on Form 10-Q, filed
August 1, 2023

Quarterly Report on Form 10-Q, filed
May 2, 2023

Quarterly Report on Form 10-Q, filed
May 2, 2023

N/A

N/A

Exhibit No.
10.32*

Exhibit Name

Offer Letter to Deon Stander, dated
March 1, 2022

Originally
Filed as
Exhibit No.
10.3

10.33*

10.34*

10.35*

21†

23†

24†

31.1†

31.2†

32.1††

32.2††

Offer Letter to Deon Stander, dated May 25,
2023

Offer Letter to Hassan Rmaile, dated
February 27, 2023

Offer Letter to Francisco Melo, dated
February 27, 2023

List of Subsidiaries

Consent of PricewaterhouseCoopers LLP,
Independent Registered Public Accounting
Firm

10.2

10.1

10.2

N/A

N/A

Power of Attorney (see Signatures – Power
of Attorney)

N/A

N/A

Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

Certification of Chief Executive Officer
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002

Certification of Chief Financial Officer
pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

97†

Policy for Recovery of Erroneously Awarded
Compensation

N/A

N/A

101.INS†††

Inline XBRL Instance Filing – the instance
document does not appear in the Interactive
Data File because its XBRL tags are
embedded within the Inline XBRL
document

101.SCH†††

Inline XBRL Extension Schema Filing

101.CAL†††

Inline XBRL Extension Calculation Linkbase
Filing

N/A

N/A

N/A

N/A

N/A

N/A

101.DEF†††

Inline XBRL Extension Definition Linkbase
Filing

N/A

N/A

101.LAB†††

Inline XBRL Extension Label Linkbase Filing

N/A
Avery Dennison Corporation | 2023 Annual Report 95

N/A

Originally
Filed as
Exhibit No.
N/A

N/A

Filing(1)

Exhibit No.
101.PRE†††

Exhibit Name

Inline XBRL Extension Presentation
Linkbase Filing

104†††

Inline XBRL for the cover page of this
Annual Report on Form 10-K, included as
part of the Exhibit 101 inline XBRL
document set

(1)

*

†
††

†††

Unless otherwise noted, the File Number for all filings is File No. 1-7685.
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K
pursuant to Item 15(b) of Form 10-K.
Filed herewith.
This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being
filed for purposes of Section 18 of the Exchange Act and is not to be incorporated by reference into any filing of
the registrant, whether made before or after the date hereof, regardless of any general incorporation language in
such filing.
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are
deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the
Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act and otherwise are not subject
to liability under those sections.

Item 16.

FORM 10-K SUMMARY

Not applicable.

96 2023 Annual Report | Avery Dennison Corporation

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has

duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

AVERY DENNISON CORPORATION

By:

/s/ Gregory S. Lovins

Gregory S. Lovins
Senior Vice President and Chief Financial Officer

Dated: February 21, 2024

Avery Dennison Corporation | 2023 Annual Report 97

POWER OF ATTORNEY

Each person whose signature appears below does hereby constitute and appoint Gregory S. Lovins and Ignacio J.
Walker, and each of them, with full power of substitution, his or her true and lawful attorney-in-fact to act for him or her
in any and all capacities, to sign this Annual Report on Form 10-K and any or all amendments or supplements thereto,
and to file each of the same, with all exhibits thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in order to effectuate the same as fully, to all
intents and purposes, as he or she could do in person, hereby ratifying and confirming all that said attorneys-in-fact or
substitutes, or any of them, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the Registrant and in the capacities and as of the dates indicated.

Signature

Title

Date

/s/ Deon M. Stander

Deon M. Stander

/s/ Gregory S. Lovins

Gregory S. Lovins

/s/ Divina F. Santiago

Divina F. Santiago

/s/ Mitchell R. Butier

Mitchell R. Butier

/s/ Bradley A. Alford

Bradley A. Alford

/s/ Ken C. Hicks

Ken C. Hicks

/s/ Andres A. Lopez

Andres A. Lopez

/s/ Francesca Reverberi

Francesca Reverberi

/s/ Patrick T. Siewert

Patrick T. Siewert

/s/ Julia A. Stewart

Julia A. Stewart

/s/ Martha N. Sullivan

Martha N. Sullivan

/s/ William R. Wagner

William R. Wagner

President, Chief Executive Officer
and Director
(Principal Executive Officer)

Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)

Vice President, Controller
(Principal Accounting Officer)

February 21, 2024

February 21, 2024

February 21, 2024

Executive Chairman

February 21, 2024

Director

Director

Director

Director

Director

Director

Director

Director

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

February 21, 2024

98 2023 Annual Report | Avery Dennison Corporation