AVERY DENNISON CORPORATION - 10-K Annual Report

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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(MARK ONE)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934

FOR THE FISCAL YEAR ENDED JANUARY 1, 1994

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 95-1492269
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation
or organization)

150 NORTH ORANGE GROVE BOULEVARD, 91103
PASADENA, CALIFORNIA (Zip Code)
(Address of principal executive
offices)

Registrant's telephone number, including area code (818) 304-2000
Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
Common stock, $1 par value REGISTERED
New York Stock Exchange
Pacific Stock Exchange

Preferred Share Purchase Rights New York Stock Exchange
Pacific Stock Exchange

Dennison 8 1/4% Sinking Fund New York Stock Exchange
Debentures due 1996

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

Not applicable.

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 X No .

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

The aggregate market value of voting stock held by non-affiliates as of
February 25, 1994, was approximately $1,591,700,480.

Number of shares of common stock, $1 par value, outstanding as of February
25, 1994: 56,230,429.
The following documents are incorporated by reference into the Parts of this
report below indicated:

DOCUMENT INCORPORATED BY REFERENCE INTO:

Annual Report to Shareholders for PARTS I, II
fiscal year ended January 1, 1994 (the
"1993 Annual Report")
Definitive Proxy Statement for Annual PARTS III, IV
Meeting of Stockholders to be held
April 28, 1994 (the "1994 Proxy
Statement")

PART I

ITEM 1. BUSINESS

Avery Dennison Corporation ("Registrant") was incorporated in 1977 in the
state of Delaware as Avery International Corporation, the successor corporation
to a California corporation of the same name which was incorporated in 1946. In
1990, Registrant merged one of its subsidiaries into Dennison Manufacturing
Company ("Dennison"), as a result of which Dennison became a wholly owned
subsidiary of Registrant, and in connection with which Registrant's name was
changed to Avery Dennison Corporation. The discussion below includes Dennison
units and operations as if Dennison had been a subsidiary of Registrant for all
relevant periods.

The principal business of Registrant and its subsidiaries (Registrant and its
subsidiaries are sometimes hereinafter referred to as the "Company") is the
production of self-adhesive materials. Some are "converted" into labels and
other products through embossing, printing, stamping and die-cutting, and some
are sold in unconverted form as base materials, tapes and reflective sheeting.
The Company also manufactures and sells a variety of office products and other
items not involving pressure-sensitive components, such as notebooks, three-
ring binders, organizing systems, felt-tip markers, glues, fasteners, business
forms, tickets, tags, hot stamping materials, and a diversified line of
labeling systems and imprinting equipment.

A self-adhesive material is one that adheres to a surface by mere press-on
contact. It consists of four elements--a face stock, 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 against
premature contact with other surfaces, and which can also serve as the carrier
for supporting and dispensing individual labels. When the products are to be
used, the release coating and protective backing are removed, exposing the
adhesive, and the label or other device is pressed or rolled into place.

Self-adhesive materials may initially cost more than materials using heat or
moisture activated adhesives, but their use often effects substantial cost
savings because of their easy and instant application, without the need for
adhesive activation. They also provide consistent and versatile adhesion,
minimum adhesive deterioration and are available in a large selection of
materials in nearly any size, shape or color.

Foreign operations, principally in Western Europe, constitute a significant
portion of the Company's business. Aside from certain risks normally attending
foreign operations, such as currency fluctuation, exchange control regulations
and the effect of international relations and domestic affairs of foreign
countries on the conduct of business, the nature of these operations and the
countries in which they are conducted are such as to present no unusual
business risks over those encountered in the Company's domestic activities.

The Company manufactures and sells its products from 200 manufacturing
facilities and sales offices located in 24 countries, and employs a total of
approximately 15,750 persons worldwide.

No material part of the Company's business is dependent upon a single
customer or a few customers and the loss of a particular customer or a few
customers would not have a material adverse effect on the Company's business.
However, sales of the Company's office products segment are increasingly
concentrated in a few major customers, principally discount office products
superstores and distributors. United States export sales are an insignificant
part of the Company's business. Backlogs are not considered material in the
industries in which the Company competes.

The Company's business is separated into three principal industry segments--
Pressure-Sensitive Adhesives and Materials, Office Products, and Product
Identification and Control Systems. The Company's operations within each of
these three segments are further divided organizationally into various groups,
each consisting of two or more divisions which manufacture products similar in
nature or sell to similar markets.

2

PRESSURE-SENSITIVE ADHESIVES AND MATERIALS UNITS

These units manufacture and sell Fasson- and Avery-brand pressure-sensitive
base materials generally in unconverted form, and include Materials North
America, Materials Europe, Automotive and Graphic Systems, Specialty Tape
Divisions and Chemical Divisions. Base materials consist chiefly of papers,
fabrics, plastic films and metal foils which are primed and coated with
Company-developed and purchased adhesives and laminated with specially coated
backing papers and films for protection. They can be sold in roll or sheet form
with either solid or patterned adhesive coatings, and are available in a wide
range of face materials, sizes, thicknesses and adhesive properties. The
business of these units is not seasonal.

Materials North America, including units in Canada, Mexico and the Far East,
and Materials Europe, including units in Latin America, Australia and South
Africa, manufacture and sell a wide range of pressure-sensitive coated papers,
films and foils, in roll and sheet form, to label printers, converters and
merchant distributors for labeling, decorating, fastening, electronic data
processing and special applications, and also provide paper and film stock for
use in a variety of industrial, commercial and consumer applications. Certain
units also manufacture and sell proprietary film face stocks and specialty
insulation paper.

Automotive and Graphic Systems units manufacture and sell proprietary
woodgrain and metallic hotstamp foils for interior decoration in the automotive
industry and decoration in the appliance manufacturing industry, and
proprietary woodgrain film laminate for housing exteriors. These divisions also
design and manufacture pressure-sensitive films for commercial applications
such as computerized sign making, vehicle striping, fleet identification and
architectural graphics. The Automotive units in the United States and Europe
also manufacture and sell pressure-sensitive films for automotive decoration
and protection and instrumentation graphics, as well as double-sided transfer
tapes for automotive bonding applications. Retroflective films are sold for
government and commercial applications, and a specialty metallic dispersion is
manufactured for the packaging industry.

The Specialty Tape Divisions sell specialty tapes and bonding materials to
industrial and medical converters and original equipment manufacturers, and to
diaper producers throughout the world. Major products include single- and
double-coated adhesive films, foils and foams, transfer tapes, specialty
adhesives and release tapes.

The Chemical Divisions produce a range of solvent and emulsion-based acrylic
polymer adhesives, protective coatings and binders for internal uses as well as
for other companies.

The Company competes, both domestically and internationally, with a
relatively small number of medium to large firms. Entry of competitors into the
field of pressure-sensitive adhesives and materials is limited by high capital
requirements and a need for sophisticated technical know-how.

OFFICE PRODUCTS UNITS

Office products units manufacture stock products which are sold primarily
through office products wholesalers and dealers, through mass market channels
of distribution, and through discount office products superstores. The business
of these units is not seasonal, except for certain stationery products sold
through various channels during the back-to-school selling season.

Office products units in North America and Europe manufacture and sell a wide
range of products for home, school and office uses, including pressure-
sensitive labels, laser printer labels and software, binders, dividers,
organizing systems (including indexing and tabbing guides), adhesive products,
marking devices and numerous other office products. The Avery and Dennison
Brands Division produces the Avery-brand line of stock self-adhesive products
including copier and laser labels and related software, laser-printer card and
tabbing products, unprinted labels, correction tape, file folder labels, color-
coding labels and data-processing

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labels. This division also manufactures and sells a wide range of stationery
products, including felt-tip markers, adhesives and specialty products under
the Carter's and Dennison brand names, and accounting products, note pads and
business forms under the National brand name. In addition, the division
manufactures and sells file guides and indexing and tabbing business forms, as
well as a similar line of products sold under the PRESaply and Dennison brand
names. The K&M Division manufactures and sells notebooks, three-ring binders,
sheet protectors and various vinyl and heat-sealed products under the K&M-from-
Avery brand name, as well as National-brand binders.

International office products units include Avery Myers Ltd., a United
Kingdom based manufacturer and distributor of office products and accessories
including plastic and metal desk and office accessories, computer storage
units, filing racks and cabinets, organizers, index systems and related items;
Avery Guidex Ltd., a United Kingdom manufacturer and seller of a wide range of
manila files, folders and wallets, lever arch files, suspension files and
project covers; and Cheval and Doret units in France, which produce a line of
binder and document protection products which are substantially similar to
those of the office products units in the United States.

Office products units are generally leaders in most markets in which they
compete even though they must compete with other large manufacturers on a
global basis. Among the principal competitors in the office products business
are Esselte AB, American Brands, Inc. and Minnesota Mining and Manufacturing
Co. The Company believes that its ability to service its customers with an
extensive product line, its channel distribution strength, and its ability to
develop internally and to commercialize successfully new products are probably
the most important factors in developing and maintaining the various units'
competitive position.

PRODUCT IDENTIFICATION AND CONTROL SYSTEMS UNITS

Product identification and control systems units manufacture and sell a wide
range of converted products including labels, tags, fasteners and automated
labeling and imprinting equipment to a wide variety of customers for industrial
and retail applications. They include Converting Europe, the Label Divisions
North America and the Soabar Products and Fastener Divisions. Converted
products include pressure-sensitive base materials, and paper or plastic film
which are converted into labels and other products by embossing, printing,
stamping and die-cutting. These products are sold by units in this segment
directly to manufacturers and packagers, as well as through foreign
subsidiaries, distributors and licensees. The business of these units is not
seasonal.

Converting Europe manufactures and sells a wide range of custom made
pressure-sensitive labels for functional, decorative and information purposes,
and automated label application and imprinting machines to the automotive,
pharmaceutical, cosmetic, durable goods and consumer packaged goods markets.
The group also produces and sells a line of stock self-adhesive products,
including copier and laser labels, unprinted labels, file folder labels, color
coding labels and data processing labels. Its products are sold by subsidiaries
located in Western Europe. This group also furnishes production, merchandising
and technical information to independent licensees operating in several foreign
countries to assist them in converting self-adhesive base materials, and in
selling a product line similar to that of the group's subsidiaries.

The Label Divisions North America produce custom pressure-sensitive and
Therimage-brand heat transfer and in-mold film labels and automated label
application machinery for the automotive, durable goods, cosmetics,
pharmaceutical and consumer packaged goods industries. Custom pressure-
sensitive products similar to those sold by Converting Europe units are sold
directly to a wide range of industrial users in similar markets in North
America, and custom pressure-sensitive labels and specialty forms/label
combination products are sold to the electronic data processing market,
primarily in North America.

Soabar Products and Fastener Divisions design, fabricate and sell a wide
variety of tags and labels and an established line of machines for imprinting,
dispensing and attaching preprinted roll tags and labels. The machine products
are designed for use with tags as a complete system. These units also design,
manufacture

4

and sell integrated shipping and receiving systems, ink jet systems and contact
marking systems. Principal markets include apparel, retail and industrial
companies for identification, tracking and control applications principally in
North America, Europe and the Far East. The Fastener Division produces plastic
tying and attaching products for retail and industrial users. Products are sold
directly to end users and internationally through subsidiaries, as well as
through distributors and licensees in foreign countries.

These business units usually occupy a strong position in most markets in
which they compete, although many face strong local competition. The Company
believes that its diverse technical foundation, including a significant range
of electronic imprinting and data control systems, high speed printers,
automatic labeling systems and fastening devices, as well as its ability to
provide necessary labeling and marking equipment to order, are probably the
most important factors in developing and maintaining the various units'
competitive position.

ASIA PACIFIC GROUP

The newly formed Asia Pacific Group was created to strengthen and expand the
Company's presence in Asia. Included in the group are Fasson Australia, which
manufactures and sells pressure-sensitive base materials in Australia and New
Zealand; Soabar Ticketing Services Division, Hong Kong, which produces and
sells price marking tags and bar coded labels for the Asian garment industry;
Dennison Australia, which manufactures office products labels and Therimage-
brand decorating systems and other control systems products for distribution in
Australia and New Zealand; and Fasson Korea, which distributes pressure-
sensitive base materials principally in Korea. Also included in the Asia
Pacific Group are organizations for the distribution of fasteners, base
materials and office products in Southeast Asia and Japan. Divisions in the
group are included in the three industry segments described above for financial
reporting purposes.

RESEARCH AND DEVELOPMENT

Many of the Company's current products are the result of its own research and
development efforts. The Company expended $45.5 million, $46.7 million and
$48.7 million in 1993, 1992, and 1991, respectively, on research related
activities by operating units and the Avery Research Center (the "Research
Center"), located in Pasadena, California. A substantial amount of the
Company's research and development activities are conducted at the Research
Center. Much of the effort of the Research Center applies to two or more of the
Company's industry segments, and cannot readily be allocated among such
segments. In addition, many such expenditures are for products and projects at
a relatively early stage of development, and the segment in which they will be
utilized cannot be determined at the time the expenditures are made. However,
research and development expenditures which can be identified by Company
industry segments are approximately proportional to the percentages of Company
sales represented by each such segment.

The operating units' research efforts are directed primarily toward
developing new products and processing techniques and improving product
performance, often in close association with customers. The Research Center
supports the units' product development work, and focuses closely on basic
research and development in new adhesives, materials and coating processes.
Research and development generally focuses on projects affecting more than one
industry segment in such areas as printing and coating technologies, and
adhesive, release, coating and ink chemistries.

The loss of any of the Company's individual patents, trademarks or licenses,
or any group of related patents, trademarks or licenses, would not be material
to the business of the Company taken as a whole, nor to any of the Company's
three industry segments, except those referred to above.

THREE YEAR SUMMARY OF SEGMENT INFORMATION

The Business Segment Information attributable to the Company's operations for
the three years ended January 1, 1994, which appears in Note 9 of Notes to
Consolidated Financial Statements on pages 49 through 51 of the 1993 Annual
Report, is incorporated herein by reference.

5

OTHER MATTERS

At present, the Company produces a majority of its self-adhesive materials
using non-solvent technology. However, a significant portion of the Company's
manufacturing process for self-adhesive materials utilizes certain evaporative
organic solvents which, unless controlled, would be emitted into the
atmosphere. Emissions of these substances are regulated by instrumentalities of
federal, state, local and foreign governments. During the past several years,
the Company has made a substantial investment in solvent capture and control
units and solvent-free systems. Installation of these units and systems has
reduced atmospheric emissions and the Company's requirements for solvents.

Major research efforts have been directed toward development of new adhesives
and solvent-free adhesive processing systems. Emulsion and hot-melt adhesives
and solventless silicone systems have been installed at the Company's Peachtree
City, Georgia; Fort Wayne, Indiana; Mentor, Ohio; Rancho Cucamonga, California;
Rodange, Luxembourg and Turnhout, Belgium facilities. The Company has also
added hot-melt capacity in other plants in Massachusetts and Ohio and in
Australia, Brazil, France and Mexico. Some solvent production has also been
converted to emulsion adhesive systems at other plants.

For information regarding the Company's potential responsibility for cleanup
costs at certain hazardous waste sites, see "Legal Proceedings" (Part I, Item
3) and "Management's Discussion and Analysis of Financial Condition and Results
of Operations" (Part II, Item 7).

ITEM 2. PROPERTIES

The Company operates 27 principal manufacturing facilities ranging in size
from approximately 100,000 square feet to approximately 800,000 square feet and
totaling over 5,500,000 square feet. The following sets forth the locations of
such principal facilities and the business segments for which they are
presently used:

PRESSURE-SENSITIVE ADHESIVES AND MATERIALS UNITS

Domestic--Painesville and Fairport, Ohio; Peachtree City, Georgia;
Quakertown, Pennsylvania; Rancho Cucamonga, California; Fort Wayne
and Schererville, Indiana.

Foreign--Hazerswoude, Holland; Cramlington, England; Champ-sur-Drac, France;
Turnhout, Belgium; Ajax, Canada; and Rodange, Luxembourg.

OFFICE PRODUCTS UNITS

Domestic--Torrance, California; Gainesville, Georgia; Rochelle and Rolling
Meadows, Illinois; Chicopee and Springfield, Massachusetts;
Meridian, Mississippi; and Crossville, Tennessee.

Foreign--Bowmanville, Canada; West Midlands, England; La Monnerie and Troyes,
France.

PRODUCT IDENTIFICATION AND CONTROL SYSTEMS UNITS

Domestic--Philadelphia, Pennsylvania; and Framingham, Massachusetts.

In addition to the Company's principal manufacturing facilities described
above, the Company's principal facilities include its corporate headquarters
facility in Pasadena, California, offices located in Leiden, Holland; Concord,
Ohio and Framingham, Massachusetts and the Research Center, located in
Pasadena, California.

All of the Company's principal properties identified above are owned in fee
except the Torrance, California; Rolling Meadows, Illinois; Springfield,
Massachusetts; Ajax, Canada; and small portions of the Framingham,
Massachusetts; and La Monnerie, France facilities, all of which are leased.

6

All of the buildings comprising the facilities identified above were
constructed after 1954 except parts of the Framingham, Massachusetts plant and
office complex, construction of the first portion of which was completed in
1893 and which has been enlarged on several occasions thereafter; and the West
Midlands, England plant building which was constructed in 1938. All buildings
owned or leased are well maintained and of sound construction, and are
considered suitable and adequate for the Company's presently foreseeable needs.
Owned buildings and plant equipment are insured against major losses from fire
and other usual business risks. The Company knows of no material defects in
title to, or encumbrances on, any of its properties except for mortgage liens
against the Meridian, Mississippi; La Monnerie and Troyes, France and Turnhout,
Belgium plants and three other facilities not listed separately above, and
except that certain long-term liabilities of the Company are collateralized by
the Company's corporate headquarters.

ITEM 3. LEGAL PROCEEDINGS

The Company, like other U.S. corporations, has periodically received notices
from the U.S. Environmental Protection Agency ("EPA") and state environmental
agencies alleging that the Company is a potentially responsible party ("PRP")
for past and future cleanup costs at hazardous waste sites. The Company has
been designated by the EPA and/or other responsible state agencies as a PRP at
seventeen waste disposal or waste recycling sites which are the subject of
separate investigations or proceedings concerning alleged soil and/or
groundwater contamination. Litigation has been initiated by a governmental
authority with respect to four of these sites, but the Company does not believe
that any such proceedings will result in the imposition of monetary sanctions.
The Company is participating with other PRP's at all such sites, and
anticipates that its share of cleanup costs will be determined pursuant to
remedial agreements entered into in the normal course of negotiations with the
EPA or other governmental authorities. The Company has accrued liabilities for
all sites where it is probable that a loss will be incurred and the amount of
the loss can be reasonably estimated. However, because of the uncertainties
associated with environmental assessment and remediation activities, future
expense to remediate the currently identified sites, and sites which could be
identified in the future for cleanup, could be higher than the liability
currently accrued.

The Registrant and its subsidiaries are involved in various other lawsuits,
claims and inquiries, most of which are routine to the nature of their
business. In the Company's opinion, the resolution of these other matters will
not result in any material liability.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.

EXECUTIVE OFFICERS OF THE REGISTRANT*

SERVED AS FORMER POSITIONS AND
NAME AGE OFFICER SINCE OFFICES WITH REGISTRANT
---- --- ------------- -----------------------

Charles D. Miller 66 May 1965 1964-1965 Director of Corporate
Planning
Chairman and Chief 1965-1969 V.P. and General Manager
Executive Officer of Fasson Europe
(Also Director of 1969-1972 Group V.P.--Fasson
Registrant)
1972-1975 Executive V.P.
1975-1977 President and Chief
Operating Officer
1977-1983 President and Chief
Executive Officer
Philip M. Neal 53 January 1974 1974-1975 Controller
President and Chief 1975-1979 V.P. and Controller
Operating Officer 1979-1988 Senior Vice President,
(Also Director of Finance and Chief
Registrant) Financial Officer
1988-1990 Group Vice President,
Materials Group (U.S.)
1990 Executive Vice President

- --------
*All officers are elected to serve a one year term and until their successors
are elected and qualify.

7

EXECUTIVE OFFICERS OF THE REGISTRANT* (CONTINUED)

SERVED AS FORMER POSITIONS AND
NAME AGE OFFICER SINCE OFFICES WITH REGISTRANT
---- --- ------------- -----------------------

R. Gregory Jenkins 57 July 1981 1974-1975 Director of Planning,
Senior Vice President, Avery Label
Finance
and Chief Financial 1975-1977 General Manager, Labeling
Officer Systems, Avery Label
1977-1981 Div. V.P. and General
Manager, Industrial
Products Division, Avery
Label
1981-1987 Group Vice President,
Materials Group (U.S.)
1987-1988 Senior Vice President,
Planning and Technology
Alan J. Gotcher 44 November 1984 1984-1990 Vice President, Corporate
Senior Vice President, Research
Manufacturing and
Technology
Kim A. Caldwell 46 June 1990 1974-1975 Corporate Financial
Senior Group Vice Analyst
President, 1975-1976 Operations Analyst, Custom
Worldwide Materials Industrial West

1976-1977 Sr. Product Mgr. Business
Systems Div.
1977-1978 Manufacturing Mgr.,
Business Systems Div.
1978-1981 General Mgr., Labeling
Systems, Industrial
Products Div.
1981-1985 Dir., Marketing and Sales,
Fasson Roll Div. (U.S.)
1985-1990 Vice President and General
Mgr., Fasson Roll Div.
(U.S.)
Donald L. Thompson 53 October 1993 1973-1974 Manager, Planning, Label
Group Vice President, Division
Office Products 1974-1975 Product Manager, Label
Division
1975-1976 Marketing Manager, Custom
Products
1976-1977 Unit General Manager,
Business Systems East
1977-1978 General Manager, Business
Systems East
1978-1981 General Manager, Stock
Products, Base Materials
1981-1982 Director, Operations,
Soabar
1982-1983 V.P. and General Manager,
Apparel Systems Division,
Soabar
1983-1984 V.P., Director,
Operations-Converting
1984-1986 V.P. and General Manager,
20th Century Plastics
1986-1988 V.P. and General Manager,
Consumer Products Division
1988-1993 V.P. and General Manager,
Commercial Products
Division
1993 V.P., Sales and Customer
Operations, North America

- --------
*All officers are elected to serve a one year term and until their successors
are elected and qualify.

8

EXECUTIVE OFFICERS OF THE REGISTRANT* (CONTINUED)

SERVED AS FORMER POSITIONS AND
NAME AGE OFFICER SINCE OFFICES WITH REGISTRANT
---- --- ------------- -----------------------

Geoffrey T. Martin 39 January 1994 1986-1988 Managing Director, Label
Systems
Group Vice President, 1988-1992 V.P. and General Manager,
Converting and Office Label Systems UK
Products Europe and Ireland
1992-1993 V.P., Office Products
Group Europe
James E. Shaw 62 February 1994 1986-1991 V.P. and General Manager,
Graphic Systems Division
Group Vice President, 1991-1994 V.P. and General Manager,
Automotive and Automotive and Graphic
Graphic Systems Systems Divisions
Robert D. Fletcher 58 March 1976 1967-1970 Director of Marketing,
Avery Label
Group Vice President, 1970-1976 V.P. and General Manager,
Asia Pacific Avery Label (North
America)
1976-1988 Group Vice President,
Label Group
1988-1993 Group Vice President,
International Converting
Group
Bent Lindner 50 December 1991 1981-1989 General Manager,
Group Vice President, Label Systems, Denmark
Materials Europe 1989-1991 V.P., General Manager,
Label Systems (France)
Teresa E. McCaslin 44 August 1989 **1984-1989 Vice President--Human
Vice President, Resources and
Human Resources Administration, Grow
Group, Inc.
Wayne H. Smith 52 June 1979 None
Vice President and
Treasurer
Gary A. McCue 57 November 1987 1987-1994 Vice President and
Controller
Vice President,
Corporate Value
Planning and
Development
Robert G. van 47 December 1981 None
Schoonenberg
Vice President, General
Counsel and Secretary
Diane B. Dixon 42 December 1985 1982-1985 Director of Communications
Vice President,
Corporate
Communications

- --------
*All officers are elected to serve a one year term and until their successors
are elected and qualify.
**Business experience prior to service with Registrant.

9

EXECUTIVE OFFICERS OF THE REGISTRANT* (CONTINUED)

SERVED AS FORMER POSITIONS AND
NAME AGE OFFICER SINCE OFFICES WITH REGISTRANT
---- --- ------------- -----------------------

Thomas E. Miller 46 March 1994 1973-1977 Division Accountant,
Vice President Graphic Arts Division
and Controller 1977 Finance Manager, Graphic
Arts Division
1977-1979 Product Manager, Film &
Specialty, Fasson
1979-1980 Manager, Marketing
Development, Materials
Group
1980-1982 Financial Manager,
Specialty Division
1982-1984 Manager, Financial
Planning & Analysis
1984-1987 Director, Financial
Planning & Analysis
1987-1989 Group Finance Director,
Avery Label Group
1989-1990 Assistant Controller,
Business Operations
1990-1993 Assistant Controller
1993-1994 V.P. and Assistant
Controller
James L. Fletcher 52 June 1993 1988-1991 Senior Manufacturing
Systems Consultant
Vice President, 1991-1993 V.P., Customer Logistics
Customer
Service and Logistics
Paul B. Germeraad 46 May 1991 **1989-1991 Director, Flexible
Vice President and Packaging Technical Group,
Director, Corporate James River Corporation
Research
Johan J. Goemans 50 October 1992 1975-1978 Systems Development
Vice President, Manager, Fasson Europe
Management
Information Systems 1978-1981 Manager, Factory
Information Systems,
Fasson Europe
1981-1984 Director of MIS, Fasson
Europe
1984-1990 Director of MIS, Materials
Group U.S.
1991-1992 Director of Distribution
and Logistics, Fasson Roll
Division U.S.

- --------
*All officers are elected to serve a one year term and until their successors
are elected and qualify.
**Business experience prior to service with Registrant.

10

PART II

ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The information called for by this item appears on page 56 of Registrant's
1993 Annual Report and is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

Selected financial data for each of Registrant's last five fiscal years
appears on pages 30 and 31 of Registrant's 1993 Annual Report and is
incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

Sales decreased less than 1 percent in 1993 to $2.61 billion from $2.62
billion in 1992; sales during 1992 reflected a 3 percent increase from l991
sales of $2.55 billion. Excluding the impact of changes in foreign currency,
1993 sales increased 2 percent over 1992 and 1992 sales increased 2 percent
over l991. However, the foreign currency effect in 1992 was offset by the
impact of divestitures and discontinued products. The Company's 1993 and 1992
fiscal years had 52 weeks compared to 53 weeks in 1991.

Gross profit margins for the years ended 1993, 1992 and 1991 were 31.4
percent, 32.0 percent and 31.3 percent, respectively. During 1993, gross
margins were negatively affected by lower average selling prices, increased
promotional spending and incentives for U.S. office products, lower benefits
from the reduction of LIFO inventories and negative currency effects within
Europe. The improvement in 1992 over 1991 was primarily the result of improved
profit margins in the pressure-sensitive adhesives and materials businesses.

Marketing, general and administrative expense as a percent of sales was 24.6
percent in 1993, 25.4 percent in 1992 and 25.7 percent in 1991. The decrease in
1993 was primarily due to cost reduction efforts throughout the Company. The
decrease in 1992 from 1991 was primarily due to cost reduction efforts by our
European businesses and lower marketing expense as a percent of sales.

As a result of the above, operating profit as a percent of sales during 1993
increased to 6.7 percent compared to 6.6 percent and 5.6 percent in 1992 and
1991, respectively. Interest expense as a percent of sales was 1.7 percent in
1993, 1.6 percent in 1992 and 1.5 percent in 1991. The increase in interest
expense during 1993 compared to 1992 was entirely due to higher interest rates
in Brazil. During 1992, interest expense increased over 1991 due to higher
interest rates in Brazil and lower capitalized interest due to decreased
capital spending.

The effective tax rate was 37 percent in 1993, 38.5 percent in 1992 and 39.9
percent in 1991. The lower effective tax rates during 1993 and 1992 were
primarily due to the composition of net foreign taxable income. Income before
taxes as a percent of sales was 5.1 percent in 1993, 5.0 percent in 1992 and
4.1 percent in 1991.

During the first quarter of 1993, the Company adopted three accounting
standards issued by the Financial Accounting Standards Board; the result was to
increase net income by $1.1 million, or $.02 per share. The implementation of
Statement of Financial Accounting Standard ("SFAS") No. 109 relating to
accounting for income taxes resulted in a one-time cumulative increase in net
income of $16.3 million, or $.28 per share. However, this increase was offset
by the adoption of SFAS No. 106, accounting for postretirement benefits, and
SFAS No. 112, accounting for postemployment benefits. The implementation of
SFAS No. 106 resulted in a cumulative charge of $23 million ($14.2 million, net
of tax, or $.24 per share), and the implementation of SFAS No. 112 resulted in
a cumulative charge of $1.5 million ($1 million, net of tax, or $.02 per
share).

11

Net income was $84.4 million, or $1.46 per share, in 1993. Excluding the
cumulative effects of changes in accounting principles, net income was $83.3
million, or $1.44 per share, compared to $80.1 million, or $1.33 per share, in
1992. Net income was $63 million, or $1.02 per share, in 1991. The improvement
in earnings per share for 1993 was primarily the result of lower operating
expenses, a lower tax rate, and fewer shares outstanding. Net income as a
percent of sales was 3.2 percent in 1993, 3.1 percent in 1992 and 2.5 percent
in 1991 .

The return on average shareholders' equity was 11.0 percent in 1993, 9.7
percent in 1992 and 7.7 percent in 1991. The return on average total capital
for those three years was 9.3 percent, 8.3 percent and 6.7 percent,
respectively.

During 1993, the pressure-sensitive adhesives and materials segment reported
solid profitability improvement on a modest increase in sales. The U.S.
operations reported significant sales and profitability growth for the year.
The growth was attributable to successful new product introductions, increased
market share and effective cost reduction programs. Improvements at the U.S.
operations were partially offset by declines at the European materials and
automotive businesses. The negative effects of foreign currency, pricing
pressures and the recessionary European economies adversely impacted the sales
and profitability of the European operations. Sales and profitability for the
pressure-sensitive adhesives and materials segment improved during 1992 over
1991. Primary contributors to the sales and profitability growth for 1992 were
the U.S. and European roll paper and films businesses and specialty tape
businesses, as well as the U.S. marking film business. Additionally, new
product introductions, improved customer service and the bankruptcy of a major
competitor of the European roll business contributed to improved sales during
1992. Profitability increased primarily due to increased worldwide sales and
aggressive cost reduction efforts by the European businesses.

The office products segment reported flat sales and a significant decline in
profitability for 1993 when compared to 1992. In the U.S., increased sales from
market share gains for K&M-brand binders and Avery-brand products were
partially offset by declines at the other U.S. businesses. Profitability in the
U.S. was negatively affected by increased promotional spending and incentives
and lower benefits from the reduction of LIFO inventories. LIFO benefits are
expected to continue to decline in future years. European sales and
profitability declined significantly, particularly in France, due to the
recessionary European economies and the negative effects of foreign currency
translation. During 1992, the office products segment reported increased
profits on slightly increased sales compared to 1991. Increased sales and
profits in the U.S. businesses were offset by lower sales and profits in Europe
and Canada. Our Avery-brand business showed significant improvements in sales
and profitability in 1992 primarily due to increased sales of new products.
Profitability of the Avery and Dennison businesses was also positively affected
by the reduction of LIFO inventories. A fire at the Avery Guidex plant in
England curtailed operations for several weeks during 1992 but did not have a
significant impact on the overall performance of the office products segment.

In 1993, the product identification and control systems segment showed
significant profitability improvement on decreased sales. The elimination of
unprofitable lines of business decreased combined sales for the Soabar tag and
ticketing businesses, while effective cost control measures resulted in
significant combined profitability improvements. The international converting
businesses reported a significant decline in sales due to the recessionary
European economies and the negative effects of foreign currency translation.
However, profitability improved significantly due to effective cost reduction
programs despite the negative effects of foreign currency translation. The
North American label businesses reported flat sales and decreased profitability
for the year. Segment profitability was positively affected in 1993 by a
greater reduction of LIFO inventories than in 1992. However, the benefits from
such reductions are expected to be lower in future years. During 1992, the
product identification and control systems segment reported lower profitability
on slightly decreased sales compared to 1991. A continued weakness in the
domestic apparel and retail markets in 1992 resulted in sales and profitability
declines at the U.S. Soabar businesses despite aggressive downsizing efforts.
These declines were partially offset by solid sales and profitability growth
from our overseas service bureau in

12

Hong Kong. In addition, the positive impact on profitability from the reduction
of LIFO inventories was greater in 1991 than 1992. The label businesses in
North America experienced a slight sales increase and significantly improved
profitability in 1992 along with the fastener business, which also reported
increased sales and profits. The international converting businesses were
negatively affected by the depressed European economies during 1992.

FINANCIAL CONDITION

Average working capital, excluding short-term debt, as a percent of sales was
12.3 percent in 1993, 15.2 percent in 1992 and 16.9 percent in 1991; 1991
excludes the net impact of restructuring costs. The average number of days
sales in receivables was 57 in 1993 and 59 in 1992 and 1991. The average
inventory turnover rate was 8.7 in 1993, compared with 7.5 in 1992 and 6.4 in
1991.

Net cash flow from operating activities was $239.2 million in 1993 and $167.8
million in 1992. The increase in net cash flow was attributable to a continued
reduction in inventory levels and an increase in other accrued liabilities and
net tax liabilities.

Total debt decreased $30 million from year end 1992 even though 2.9 million
shares of treasury stock was purchased for $82.9 million during 1993. During
1993, the Company issued $100 million in principal amount of medium-term notes
which have an average interest rate of 6.6% and maturities ranging from May
2000 through May 2005. Long-term debt as a percent of total long-term capital
increased to 30.2 percent at year end 1993, compared to 29.4 percent at year
end 1992. Total debt to total capital was 35.6 percent at year end 1993
compared to 34.8 percent at year end 1992.

Shareholders' equity decreased to $719.1 million in 1993 from $802.6 million
in 1992 due primarily to the effects of foreign currency translation and the
repurchase of treasury stock as previously discussed.

The Company, like other U.S. corporations, has periodically received notices
from the U.S. Environmental Protection Agency and state environmental agencies
alleging that the Company is a potentially responsible party ("PRP") for past
and future cleanup costs at hazardous waste sites. The Company has received
requests for information, notices and/or claims with respect to 17 waste sites
in which the Company has no ownership interest. Environmental investigatory and
remediation projects are also being undertaken on property presently owned by
the Company. The Company has accrued liabilities for all sites where it is
probable that a loss will be incurred and the amount of the loss can be
reasonably estimated. However, because of the uncertainties associated with
environmental assessment and remediation activities, future expense to
remediate the currently identified sites, and sites which could be identified
in the future for cleanup, could be higher than the liability currently
accrued.

LIQUIDITY AND CAPITAL RESOURCES

In addition to cash flow from operations, the Company has more than adequate
financing arrangements, at competitive rates, to conduct its operations.

Capital expenditures increased to $100.6 million in 1993 from $87.8 million
in 1992. Capital expenditures for 1994 are currently expected to be
approximately $125 million.

Annual dividends per share increased to $.90 in 1993 from $.82 in 1992 and
$.76 in 1991.

The Company believes that whereas costs and expenses rise with inflation, the
effects will be offset by productivity improvements and by increases in prices,
which generally are sufficient to absorb the impact of inflation.

13

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information called for by this item is contained in Registrant's
Consolidated Financial Statements and the Notes thereto appearing on pages 36
through 51 and page 53 of Registrant's 1993 Annual Report and is incorporated
herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information concerning directors called for by this item is incorporated
by reference from pages 2, 3 and 4 of the 1994 Proxy Statement which is to be
filed with the Securities and Exchange Commission pursuant to Regulation 14A
within 120 days of the end of the fiscal year covered by this report.
Information concerning executive officers called for by this item appears in
Part I of this report. The information concerning late filings under Section
16(a) of the Securities Exchange Act of 1934, as amended, is incorporated by
reference from pages 14 and 15 of the 1994 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by items 11, 12 and 13 is incorporated by
reference from pages 5 through 22 (up to the caption "The 1990 Stock Option and
Incentive Plan for Key Employees (Proxy Item 2)") of the 1994 Proxy Statement
which is to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A within 120 days of the end of the fiscal year covered by this
report.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Financial Statements, Financial Statement Schedules and Exhibits

(1) (2) Financial statements and financial statement schedules filed as
part of this report are listed in the accompanying Index to Financial
Statements and Financial Statement Schedules.

(3) Exhibits filed as a part of this report are listed in the Exhibit
Index, which follows the financial statements and schedules referred to
above. Each management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c)
is identified in the Exhibit Index.

(b) No reports on Form 8-K were filed by Registrant during the fourth quarter
of 1993.

(c) Those Exhibits, and the Index thereto, required to be filed by Item 601
of Regulation S-K are attached hereto.

(d) Those financial statement schedules required by Regulation S-X which are
excluded from Registrant's 1993 Annual Report by Rule 14a-3(b)(1), and which
are required to be filed as financial statement schedules to this report, are
indicated in the accompanying Index to Financial Statements and Financial
Statement Schedules.

14

SIGNATURES

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.

AVERY DENNISON CORPORATION

/s/ R. Gregory Jenkins
By___________________________________
R. Gregory Jenkins
Senior Vice President, Finance
Chief Financial Officer
Dated: March 18, 1994

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 on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Charles D. Miller Chairman and Chief Executive March 18, 1994
- ------------------------------------ Officer; Director
Charles D. Miller

/s/ Philip M. Neal President and Chief
- ------------------------------------ Operating Officer; Director March 18, 1994
Philip M. Neal

/s/ R. Gregory Jenkins Senior Vice President, March 18, 1994
- ------------------------------------ Finance (Principal
R. Gregory Jenkins Financial Officer)

/s/ Thomas E. Miller Vice President and March 18, 1994
- ------------------------------------ Controller (Principal
Thomas E. Miller Accounting Officer)

/s/ R. Stanton Avery Founder and March 18, 1994
- ------------------------------------ Chairman Emeritus; Director
R. Stanton Avery

/s/ H. Russell Smith Chairman of the March 18, 1994
- ------------------------------------ Executive Committee;
H. Russell Smith Director

15

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Dwight L. Allison, Jr. Director March 18, 1994
- ------------------------------------
Dwight L. Allison, Jr.

/s/ John C. Argue Director March 18, 1994
- ------------------------------------
John C. Argue

/s/ Joan T. Bok Director March 18, 1994
- ------------------------------------
Joan T. Bok

/s/ Frank V. Cahouet Director March 18, 1994
- ------------------------------------
Frank V. Cahouet

/s/ Richard M. Ferry Director March 18, 1994
- ------------------------------------
Richard M. Ferry

/s/ F. Daniel Frost Director March 18, 1994
- ------------------------------------
F. Daniel Frost

/s/ Peter W. Mullin Director March 18, 1994
- ------------------------------------
Peter W. Mullin

/s/ Sidney R. Petersen Director March 18, 1994
- ------------------------------------
Sidney R. Petersen

/s/ John B. Slaughter Director March 18, 1994
- ------------------------------------
John B. Slaughter

/s/ Lawrence R. Tollenaere Director March 18, 1994
- ------------------------------------
Lawrence R. Tollenaere

16

AVERY DENNISON CORPORATION

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES

----------------

REFERENCE (PAGE)
----------------------
FORM 10-K ANNUAL
ANNUAL REPORT TO
REPORT SHAREHOLDERS
--------- ------------

Data incorporated by reference from the attached por-
tions of 1993 Annual Report to Shareholders of Avery
Dennison Corporation:
Report of Independent Certified Public Accountants.... -- 53
Consolidated Balance Sheet at January 1, 1994 and Jan-
uary 2, 1993......................................... -- 36
Consolidated Statement of Income for 1993, 1992 and
1991................................................. -- 37
Consolidated Statement of Shareholders' Equity for
1993, 1992 and 1991.................................. -- 38
Consolidated Statement of Cash Flows for 1993, 1992
and 1991............................................. -- 39
Notes to Consolidated Financial Statements............ -- 40-51

Individual financial statements of 50% or less owned entities accounted for by
the equity method have been omitted because, considered in the aggregate or as a
single subsidiary, they do not constitute a significant subsidiary.

With the exception of the consolidated financial statements and the
accountants' report thereon listed in the above index, and the information
referred to in Items 1, 5, 6 and 7, all of which is included in the 1993 Annual
Report and incorporated herein by reference, the 1993 Annual Report is not to be
deemed "filed" as part of this report.

Data submitted herewith:
Report of Independent Certified Public Accountants.... S-2 --
Financial Statement Schedules (for 1993, 1992 and
1991):
V --Property, Plant and Equipment............. S-3 --
VI --Accumulated Depreciation, Depletion, and
Amortization of Property, Plant and
Equipment................................. S-4 --
VIII --Valuation and Qualifying Accounts and
Reserves.................................. S-4 --
IX --Short-term Borrowings..................... S-5 --
X --Supplementary Income Statement
Information............................... S-5 --
Consent of Independent Accountants.................... S-6 --

All other 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.

S-1

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
of Avery Dennison Corporation

Our report on the consolidated financial statements of Avery Dennison
Corporation and subsidiaries has been incorporated by reference in this Form
10-K from page 53 of the 1993 Annual Report to Shareholders of Avery Dennison
Corporation. In connection with our audits of such financial statements, we
have also audited the related financial statement schedules listed in the index
on page S-1 of this Form 10-K.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.

COOPERS & LYBRAND

Los Angeles, California
January 31, 1994

S-2

AVERY DENNISON CORPORATION AND SUBSIDIARIES

SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT

(IN MILLIONS)

BALANCE AT BALANCE
BEGINNING ADDITIONS AT END
OF YEAR AT COST RETIREMENTS OTHER(A) OF YEAR
---------- --------- ----------- -------- --------

1993
Land........................ $ 33.3 $ .5 $ 3.0 $ (2.1) $ 28.7
Buildings................... 351.6 22.4 8.9 (4.2) 360.9
Machinery and equipment..... 948.5 69.9 27.8 (36.8) 953.8
Construction in progress.... 65.8 7.8 .8 (3.5) 69.3
-------- ------ ------ ------ --------
Totals..................... $1,399.2 $100.6 $ 40.5 $(46.6) $1,412.7
======== ====== ====== ====== ========
1992
Land........................ $ 37.1 $ -- $ 3.6 $ (.2) $ 33.3
Buildings................... 356.7 10.9 15.5 (.5) 351.6
Machinery and equipment..... 951.3 86.6 84.0 (5.4) 948.5
Construction in progress.... 75.6 (9.7) -- (.1) 65.8
-------- ------ ------ ------ --------
Totals..................... $1,420.7 $ 87.8 $103.1 $ (6.2) $1,399.2
======== ====== ====== ====== ========
1991
Land........................ $ 31.0 $ 6.6 $ .4 $ (.1) $ 37.1
Buildings................... 325.1 46.2 6.0 (8.6) 356.7
Machinery and equipment..... 913.9 115.9 67.6 (10.9) 951.3
Construction in progress.... 125.7 (46.2) .7 (3.2) 75.6
-------- ------ ------ ------ --------
Totals..................... $1,395.7 $122.5 $ 74.7 $(22.8) $1,420.7
======== ====== ====== ====== ========

- --------
(A) Primarily represents the impact of changes in foreign currency exchange
rates on the reported balances.

S-3

AVERY DENNISON CORPORATION AND SUBSIDIARIES

SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT

(IN MILLIONS)

ADDITIONS
BALANCE CHARGED
AT TO COSTS BALANCE
BEGINNING AND AT END
OF YEAR EXPENSES RETIREMENTS OTHER(A) OF YEAR
--------- --------- ----------- -------- -------

1993
Buildings..................... $112.0 $24.6 $ 7.2 $ (2.2) $127.2
Machinery and equipment....... 507.3 59.5 19.8 (20.0) 527.0
------ ----- ----- ------ ------
Totals....................... $619.3 $84.1 $27.0 $(22.2) $654.2
====== ===== ===== ====== ======
1992
Buildings..................... $109.2 $12.7 $ 9.8 $ (.1) $112.0
Machinery and equipment....... 497.3 71.1 57.6 (3.5) 507.3
------ ----- ----- ------ ------
Totals....................... $606.5 $83.8 $67.4 $ (3.6) $619.3
====== ===== ===== ====== ======
1991
Buildings..................... $103.0 $12.1 $ 4.9 $ (1.0) $109.2
Machinery and equipment....... 471.0 71.0 34.1 (10.6) 497.3
------ ----- ----- ------ ------
Totals....................... $574.0 $83.1 $39.0 $(11.6) $606.5
====== ===== ===== ====== ======

- --------
(A) Primarily represents the impact of changes in foreign currency exchange
rates on the reported balances.

SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(IN MILLIONS)

ADDITIONS
---------------------
BALANCE CHARGED DEDUCTIONS--
AT TO COSTS UNCOLLECTIBLE BALANCE
BEGINNING AND FROM ACCOUNTS AT END
OF YEAR EXPENSES ACQUISITIONS WRITTEN OFF OF YEAR
--------- -------- ------------ ------------- -------

1993
Allowance for doubtful
accounts............... $18.4 $ 7.7 $-- $9.4 $16.7
===== ===== ==== ==== =====
1992
Allowance for doubtful
accounts............... $18.4 $ 8.3 $-- $8.3 $18.4
===== ===== ==== ==== =====
1991
Allowance for doubtful
accounts............... $14.8 $10.5 $-- $6.9 $18.4
===== ===== ==== ==== =====

S-4

AVERY DENNISON CORPORATION AND SUBSIDIARIES

SCHEDULE IX--SHORT-TERM BORROWINGS

(IN MILLIONS)

MAXIMUM AVERAGE WEIGHTED
WEIGHTED AMOUNT AMOUNT AVERAGE
BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
END OF INTEREST DURING THE DURING THE DURING THE
YEAR RATE YEAR YEAR(A) YEAR(A)
---------- -------- ----------- ----------- -------------

1993
Short-term borrowings
from banks............ $53.6 7.0% $ 91.1 $61.8 8.7%
===== ==== ====== ===== ====
1992
Short-term borrowings
from banks............ $77.4 11.1% $103.7 $84.5 10.5%
===== ==== ====== ===== ====
1991
Short-term borrowings
from banks............ $77.1 10.9% $139.0 $87.3 10.0%
===== ==== ====== ===== ====

- --------
(A) The average amount of short-term debt outstanding and weighted average
interest rate during the year are based on the average of month-end
balances.

SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION

(IN MILLIONS)

1993 1992 1991
----- ----- -----

Charged to Costs and Expenses:
Maintenance and Repairs..................................... $46.8 $45.4 $44.0

S-5

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statements
of Avery Dennison Corporation on Form S-8 (File Nos. 2-47617, 2-60937, 2-82207,
33-1132, 33-3645, 33-3637, 33-27275, 33-35995-01, 33-41238 and 33-45376) of our
report, which includes an explanatory paragraph regarding the Company's
adoption of the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards ("SFAS") No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", SFAS No. 109,
"Accounting for Income Taxes" and SFAS No. 112, "Employers' Accounting for
Postemployment Benefits" during 1993, dated January 31, 1994, which appears on
page 53 of the 1993 Annual Report to Shareholders and is incorporated by
reference in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the financial statement schedules
listed in the index on page S-1.

COOPERS & LYBRAND

Los Angeles, California
March 17, 1994

S-6

AVERY DENNISON CORPORATION

EXHIBIT INDEX

FOR THE YEAR ENDED JANUARY 1, 1994

----------------

INCORPORATED BY REFERENCE:

ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------

(3.1) Restated Articles of In- Proxy Statement dated February
corporation............ B 28, 1977 for Annual Meeting of
Stockholders March 30, 1977;
located in File No. 0-225 at
Securities and Exchange
Commission, 450 5th St., N.W.,
Washington, D.C.
(3.1.1) Amendment to Certificate
of Incorporation, filed
April 10, 1984 with Of-
fice of Delaware Secre-
tary of State.......... 3.1.1 1983 Annual Report on Form 10-K
(3.1.2) Amendment to Certificate
of Incorporation, filed
April 11, 1985 with Of-
fice of Delaware Secre-
tary of State.......... 3.1.2 1984 Annual Report on Form 10-K
(3.1.3) Amendment to Certificate
of Incorporation filed
April 6, 1987 with Of-
fice of Delaware Secre-
tary of State.......... 3.1.3 1986 Annual Report on Form 10-K
(3.1.4) Amendment to Certificate
of Incorporation filed
October 17, 1990 with
Office of Delaware Sec- 3.1 Current Report on Form 8-K filed
retary of State........ October 31, 1990
(3.2) Bylaws, as amended...... 3.2 1992 Annual Report on Form 10-K
(4.1) Rights Agreement dated
as of June 30, 1 Current Report on Form 8-K filed
1988................... July 9, 1988
(4.2) Indenture, dated as of
March 15, 1991,
between Registrant and
Security Pacific
National Bank, as
Trustee (the "Inden- 4 Registration Statement on Form S-
ture")................. 3 (File No. 33-39491)
(4.3) Officers' Certificate
establishing a series
of Securities entitled
"Medium-Term Notes" un- 28.1 Current Report on Form 8-K filed
der the Indenture...... March 25, 1991
(4.4) First Supplemental In-
denture, dated as of
March 16, 1993, between
Registrant and
BankAmerica National
Trust Company, as suc-
cessor Trustee (the
"Supplemental Inden- 4.2 Registration Statement on Form S-
ture")................. 3 (File No. 33-59642)

- --------
*Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Form 10-K pursuant to Item 14(c).

1

ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------

(4.5) Officers' Certificate
establishing a series
of Securities entitled
"Medium-Term Notes" un-
der the Indenture, as
amended by the Supple- 4.1 Current Report on Form 8-K filed
mental Indenture....... April 7, 1993
(10.1) *Amended 1973 Stock Op-
tion and Stock Appreci-
ation Rights Plan for
Key Employees of Avery
International Corpora-
tion ("1973 Plan")..... 10.1 1987 Annual Report on Form 10-K
(10.1.3) *Form of Incentive Stock
Option Agreement for
use under 1973 Plan.... 10.1.3 1984 Annual Report on Form 10-K
(10.1.4) *Form of Non-Qualified
Stock Option Agreement
for use under 1973
Plan................... 10.1.4 1987 Annual Report on Form 10-K
(10.1.5) *Form of coupled Stock
Appreciation Right
Agreement for use under
1973 Plan.............. 10.1.5 1985 Annual Report on Form 10-K
(10.1.6) 1985 U.K. Stock Option
Scheme................. 10.1.7 1985 Annual Report on Form 10-K
(10.1.7) Form of Incentive Stock
Option Agreement for
use under U.K. Stock
Option Scheme.......... 10.1.8 1985 Annual Report on Form 10-K
(10.1.8) Form of Stock Option
Agreement for use under
U.K. Stock Option
Scheme................. 10.1.9 1985 Annual Report on Form 10-K
(10.2) *1988 Stock Option and
Stock Appreciation
Rights Plan for Key Em-
ployees of Avery Inter-
national Corporation
("1988 Plan").......... 10.2 1987 Annual Report on Form 10-K
(10.2.1) *Form of Non-Qualified
Stock Option Agreement
for use under 1988
Plan................... 10.2.1 1990 Annual Report on Form 10-K
(10.2.2) *Form of Incentive Stock
Option Agreement for
use under 1988 Plan.... 10.2.2 1991 Annual Report on Form 10-K
(10.3) *Deferred Compensation
Plan for Directors..... 10.3 1981 Annual Report on Form 10-K
(10.5) *Executive Medical and
Dental Plan (descrip-
tion).................. 10.5 1981 Annual Report on Form 10-K
(10.6) *Executive Financial
Counseling Service (de-
scription)............. 10.6 1981 Annual Report on Form 10-K
(10.7.1) *Executive Employment
Security Policy dated
February 1, 1983....... 10.7.1 1982 Annual Report on Form 10-K
(10.7.2) *Executive Employment
Security Policy dated
February 1, 1985....... 10.13 1984 Annual Report on Form 10-K
(10.8.1) *Agreement dated October
24, 1990 with Charles
D. Miller.............. 10.8.1 1990 Annual Report on Form 10-K
(10.8.2) *Agreement dated October
23, 1990 with Philip M.
Neal................... 10.8.2 1990 Annual Report on Form 10-K

- --------
*Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Form 10-K pursuant to Item 14(c).

2

ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------

(10.9) *Executive Group Life
Insurance Plan......... 10.9 1982 Annual Report on Form 10-K
(10.10) *Form of Indemnity
Agreements between Reg-
istrant and certain di-
rectors and officers... 10.10 1986 Annual Report on Form 10-K
(10.11) *Supplemental Executive
Retirement Plan........ 10.11 1983 Annual Report on Form 10-K
(10.11.2) *Amended Letter of Grant
to C.D. Miller under
Supplemental Executive
Retirement Plan........ 10.11.2 1992 Annual Report on Form 10-K
(10.12) *Executive Deferred Com-
pensation Plan......... 10.12 1984 Annual Report on Form 10-K
(10.12.1) *Amendment No. 1 to Ex-
ecutive Deferred Com-
pensation Plan......... 10.13.1 1985 Annual Report on Form 10-K
(10.12.2) *Amendment No. 2 to Ex-
ecutive Deferred Com-
pensation Plan......... 10.12.2 1988 Annual Report on Form 10-K
(10.12.3) *Form of Enrollment
Agreement for use under
Executive Deferred
Compensa-tion Plan..... 10.13.2 1985 Annual Report on Form 10-K
(10.13.2) *Fourth Amended Avery
Dennison Retirement
Plan for Directors..... 10.13.2 1992 Annual Report on Form 10-K
(10.15) *1988 Stock Option Plan
for Non-Employee Direc-
tors ("Director Plan"). 10.15 1987 Annual Report on Form 10-K
(10.15.1) *Form of Non-Qualified
Stock Option Agreement
for use under Director
Plan................... 10.15.1 1987 Annual Report on Form 10-K
(10.16) *Executive Variable De-
ferred Compensa-tion
Plan ("EVDCP")......... 10.16 1988 Annual Report on Form 10-K
(10.16.1) *Amendment No. 1 to
EVDCP.................. 10.16.1 1988 Annual Report on Form 10-K
(10.16.2) *Form of Enrollment
Agreement for use under
EVDCP.................. 10.16.1 1987 Annual Report on Form 10-K
(10.17) *Amended and Restated
Directors Deferred Com-
pensation Plan......... 10.17 1986 Annual Report on Form 10-K
(10.17.1) *Amendment No. 1 to Di-
rectors Deferred Com-
pensation Plan......... 10.17.1 1988 Annual Report on Form 10-K
(10.17.2) *Form of Enrollment
Agreement for use under
Directors Deferred Com-
pensation Plan......... 10.17.2 1985 Annual Report on Form 10-K
(10.18) *Directors Variable De-
ferred Compensation
Plan ("DVDCP")......... 10.18 1989 Annual Report on Form 10-K
(10.18.1) *Form of Enrollment
Agreement for use under
DVDCP.................. 10.18.1 1989 Annual Report on Form 10-K
(10.19) *1990 Stock Option and
Incentive Plan for Key
Employees of Avery In-
ternational Corporation
("1990 Plan").......... 10.19 1989 Annual Report on Form 10-K
(10.19.1) *Form of Non-Qualified
Stock Option Agreement
for use under 1990
Plan................... 10.19.1 1991 Annual Report on Form 10-K
(10.19.2) *Form of Incentive Stock
Option Agreement for
use under 1990 Plan.... 10.19.2 1991 Annual Report on Form 10-K

- --------
*Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Form 10-K pursuant to Item 14(c).

3

ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------

(10.20.1) *1982 Incentive Stock
Option Plan of Dennison 4.3 Registration Statement on Form S-
Manufacturing Company.. 8 (File No. 33-35995-01)
(10.20.2) *1985 Incentive Stock
Option Plan of Dennison 4.4 Registration Statement on Form S-
Manufacturing Company.. 8 (File No. 33-35995-01)
(10.20.3) *1988 Stock Option Plan
of Dennison Manufactur- 4.5 Registration Statement on Form S-
ing Company............ 8 (File No. 33-35995-01)
(10.20.4) *Amendments effective as
of October 16, 1990 to
the 1982 Incentive
Stock Option Plan, 1985
Incentive Stock Option
Plan and 1988 Stock Op-
tion Plan of Dennison 4.6 Registration Statement on Form S-
Manufacturing Company.. 8 (File No. 33-35995-01)
(10.27) *Key Executive Long-Term
Incentive Plan......... 10.27 1991 Annual Report on Form 10-K
(10.28) *Executive Deferred Re-
tirement Plan ("EDRP"). 10.28 1992 Annual Report on Form 10-K
(10.28.1) *Form of Enrollment
Agreement for use under
EDRP................... 10.28.1 1992 Anual Report on Form 10-K

- --------
*Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Form 10-K pursuant to Item 14(c).

4

SUBMITTED HEREWITH:

EXHIBIT NO. ITEM
----------- ----

10.7.3 * Executive Employment Security Policy dated November 19, 1987
10.10.1 * Form of Indemnity Agreement between Registrant and certain
directors and officers
10.16.3 * Amendment No. 2 to Executive Variable Deferred Compensation Plan
10.19.3 * Amendment No. 1 to 1990 Stock Option and Incentive Plan for Key
Employees of Avery Dennison Corporation
10.27.1 * Amended and Restated Key Executive Long-Term Incentive Plan
10.28.2 * Amendment No. 1 to Executive Deferred Retirement Plan
10.29 * Executive Incentive Compensation Plan
10.30 * Senior Executive Incentive Compensation Plan
11 Statement re Computation of Net Income Per Share Amounts.
13 Portion of Annual Report to Shareholders for fiscal year ended
January 1, 1994.
22 List of Subsidiaries.
23 Consent of Independent Accountants (see page S-6).

- --------
*Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Form 10-K pursuant to Item 14(c).

STATEMENT AND AGREEMENT REGARDING
LONG TERM DEBT OF REGISTRANT

Except as indicated above, Registrant has no instrument with respect to long-
term debt under which securities authorized thereunder equal or exceed 10% of
the total assets of Registrant and its subsidiaries on a consolidated basis.
Registrant agrees to furnish a copy of its long-term debt instruments to the
Commission upon request.

5

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