Avery Dennison Revises Outlook for Second Quarter 2003.

Business Editors

PASADENA, Calif.--(BUSINESS WIRE)--June 23, 2003

Avery Dennison Corporation (NYSE:AVY) today announced that, based on sales data for the first two months of the current quarter, revenue for the second quarter of 2003 is now expected to be in the range of $1.20

billion to $1.23 billion. Earnings per share, on a diluted basis, are currently expected to be in the range of $0.68 to $0.72 per share for the second quarter of 2003. The Company had previously announced that diluted earnings per share for the quarter were expected to be in the range of $0.77 to $0.82 per share.

Reported revenue is expected to be 14 percent to 16 percent higher than the second quarter of 2002, driven by acquisitions completed during the past year and favorable currency exchange rates. Excluding the benefit resulting from currency translation, however, revenue growth for the quarter is expected to be approximately 3 percent to 5 percent lower than the Company's previously announced expectations for the second quarter of 2003.

The Company noted that, although top-line results were weak in April and May, the overall level of orders has improved to plan levels during the past two weeks. The Company indicated, however, that it remains too early to predict that operations are now on track relative to previous expectations.

The Company is attributing the slower-than-expected sales growth for the second quarter of 2003 to generally soft economic conditions that have affected most of its businesses and geographic regions. In particular, growth for the Company's pressure-sensitive adhesive materials business in North America has slowed during the current quarter. Already weak market conditions in Avery Dennison's pressure-sensitive adhesive materials business in Europe continued into the current quarter, while operations in Asian markets appear to remain solid. Growth for the Company's retail information services business in Asia slowed in May on weakened apparel sales trends and resulting high inventories at the retail level. Although the Company's office products business continues to show improvement in back-to-school orders, total shipments in the second quarter have not improved measurably relative to first quarter trends.

Avery Dennison said it believes that more than half of the anticipated decline in diluted earnings per share in the second quarter of 2003 is attributable to the slower-than-expected sales growth. The balance is due to higher-than-anticipated spending associated with the Company's growth initiatives, integration costs related to the RVL acquisition, higher bad debt and legal expenses, and other factors, some of which are not expected to repeat during the balance of the year.

The Company said that expectations for sales and diluted earnings per share for the full year of 2003 will be reduced due to the decreased expectations for the second quarter. The Company currently plans to provide revised expectations for the full year of 2003 when it announces its actual financial results for the second quarter on July 22, 2003.

"As always, we are determined to reduce costs in response to economic conditions that are affecting our businesses and we are taking appropriate actions," said Philip M. Neal, chairman and chief executive officer of Avery Dennison. "At the same time, we will continue to fund our previously announced growth initiatives and we are confident that we will achieve a good return on those investments.

"In addition to new cost reduction actions, the integration of acquired Jackstadt operations remains on track, and we continue to expect increased cost savings in the second half of 2003 as a result," said Neal.

Avery Dennison will conduct a brief conference call for investors, equity analysts, portfolio managers and media representatives at 9:00 a.m. (Eastern Time)/6:00 a.m. (Pacific Time) today to discuss these developments.

The conference call will be broadcast live over the Internet at www.investors.averydennison.com, and an audio replay will be available at the same Web site for one week following the conference call.

Avery Dennison is a global leader in pressure-sensitive technology and innovative self-adhesive solutions for consumer products and label materials. Based in Pasadena, Calif., the Company had 2002 sales of $4.2 billion. Avery Dennison develops, manufactures and markets a wide range of products for consumer and industrial markets, including Avery-brand office products and graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, reflective highway safety products, automated retail tag, labeling and branding systems, and specialty tapes and polymers.

Forward-Looking Statements

Certain information presented in this news release may constitute "forward-looking" statements. These statements are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or expected results depending on a variety of factors, including but not limited to price and availability of raw materials; foreign exchange rates; worldwide and local economic conditions; selling prices; impact of legal proceedings, including the U.S. Department of Justice criminal investigation into competitive practices in the label stock industry and any related proceedings or lawsuits pertaining to the subject matter; impact of Severe Acute Respiratory Syndrome (SARS) on the economy, the Company's customers and business; financial condition and inventory strategies of customers; acceptance of new products; fluctuations in demand affecting sales to customers; and other matters referred to in the Company's SEC filings.