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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
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:
NAME OF EACH
EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
------------------- -----------------
Common stock, $1 par value New York Stock Exchange
Pacific Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Pacific Stock Exchange
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 27, 1996, was approximately $2,871,381,513.
Number of shares of common stock, $1 par value, outstanding as of February
27, 1996: 52,798,966.
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 fiscal PARTS I, II
year ended December 30, 1995
(the "1995 Annual Report")
Definitive Proxy Statement for Annual PARTS III, IV
Meeting of Stockholders to be held
April 25, 1996 (the "1996 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 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, 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 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
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.
International operations, principally in Western Europe, constitute a
significant portion of the Company's business. In addition, the Company is
currently expanding operations in Asia Pacific, Latin America and Eastern
Europe. Aside from certain risks normally attending international operations,
such as changes in economic conditions, currency fluctuation, exchange control
regulations and the effect of international relations and domestic affairs of
non-U.S. 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
business risks which would have a material adverse effect on the Company.
The Company manufactures and sells its products from 200 manufacturing
facilities and sales offices located in 33 countries, and employs a total of
approximately 15,500 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 U.S. office products sector are increasingly
concentrated in a small number of major customers, principally discount office
products superstores and distributors (see Note 4 of Notes to Consolidated
Financial Statements on page 47 of the 1995 Annual Report, which is
incorporated by reference). 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 sectors--
Pressure-Sensitive Adhesives and Materials, Office Products, and Converted
Products. The Company's operations within each of these three sectors are
further divided organizationally into various groups, each consisting of
divisions which manufacture products similar in nature or sell to similar
markets.
1
PRESSURE-SENSITIVE ADHESIVES AND MATERIALS SECTOR
These units manufacture and sell Fasson- and Avery-brand pressure-sensitive
base materials generally in unconverted form, and include Materials North
America, European Operations--Materials, Automotive and Graphic Systems, and
Chemical Divisions. Base materials consist primarily 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, South America,
Australia and Asia Pacific) and European Operations--Materials (including a
unit in 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. Specialty tapes are sold to industrial
and medical converters and original equipment manufacturers, and to
disposable-diaper producers throughout the world. During 1995, the Company
established distribution centers in Mexico, Chile and Brazil.
Automotive and Graphic Systems units manufacture and sell a variety of films
and other products to the worldwide automotive, architectural, printing and
graphics markets. These units sell durable cast and reflective films to the
construction, automotive after-market, fleet transportation, sign and
industrial equipment markets, and retroreflective films for government and
traffic applications. In converted form, these products and the Company's Dry
Paint products, including Avloy and Avcoat products, are supplied to
automotive original equipment manufacturers. In addition, these units sell
specialty print-receptive films to the industrial label and office products
markets, metallic dispersion products to the packaging industry and
proprietary woodgrain film laminates for housing exteriors and automotive
applications.
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 SECTOR
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 and ink-jet printer labels and software, binders,
dividers, presentation and organizing systems (including indexing and tabbing
guides), adhesive products, marking devices and numerous other office
products. These units produce the Avery-brand line of stock self-adhesive
products, including copier, laser and ink-jet labels and related software;
laser-printer card and index products; unprinted labels; correction tape; file
folder, color-coding and data-processing labels; notebooks; notebook and
presentation dividers; three-ring binders; sheet protectors; and various vinyl
and heat-sealed products. These operations also manufacture and sell a wide
range of other stationery products, including felt-tip markers, adhesives and
specialty products under brand names such as Avery, Marks-A-Lot and HI-LITER,
and accounting products, note pads and business forms under the Avery and
National brand names.
2
Office products units in the United Kingdom also manufacture and distribute
office products and accessories including plastic desk and office accessories,
computer storage units, filing racks and cabinets, organizers, index systems
and related items, and a wide range of manila files, folders and wallets,
lever arch files, suspension files and project covers under the Myers and
Guidex brand names. Office products units in France produce a line of Doret-
and Cheval-brand binder and document protection products.
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 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.
CONVERTED PRODUCTS SECTOR
Converted products 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 European Operations, Converted and Fastener
Products and Label Ventures businesses. 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 sector directly to manufacturers and
packagers and retailers, as well as through international subsidiaries,
distributors and licensees. The business of these units is not seasonal. In
December 1995, the Company sold certain non-strategic North American label
converting businesses, and reorganized the North American units under
Converted and Fastener Products and Label Ventures businesses.
The European Operations group manufactures and sells a wide range of custom
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.
Its products are sold by subsidiaries located in 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 Converted Products businesses produce custom pressure-sensitive and
heat-transfer labels for the automotive, durable goods, information automation
and consumer packaged goods industries. Custom pressure-sensitive products for
the automotive and durable goods markets are sold directly to a wide range of
industrial users 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. Self-adhesive stamps are also
produced for the U.S. and international postal services by the Label Ventures
businesses. 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, assemble and sell integrated shipping and receiving
systems. Principal markets include apparel, retail and industrial companies
for identification, tracking and control applications principally in North
America, Europe and Asia Pacific. 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 other countries.
These business units usually occupy a solid 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 are probably the most
important factors in developing and maintaining the various units' competitive
position.
3
ASIA PACIFIC GROUP
The Asia Pacific Group was created in 1994 to strengthen and expand the
Company's presence in the Asia Pacific region. Divisions in the Group are
included in the three industry sectors described above for financial reporting
purposes. Included in the Group are Fasson Australia, which manufactures and
sells pressure-sensitive base materials in Australia and New Zealand; Soabar
Hong Kong, which produces and sells promotional and price marking bar-coded
tags and labels for the Asian garment industry; Avery Dennison Australia,
which manufactures office product labels, variable-information printed labels
and Therimage-brand decorating systems for distribution in the Asia Pacific
region; and Avery China and Avery Korea, which manufacture and distribute
pressure-sensitive base materials principally in their respective countries.
Also included in the Asia Pacific Group are organizations for the distribution
of fasteners, base materials and office products in Southeast Asia and Japan,
including Hong Kong and Singapore. In 1995, the Company constructed a base
materials manufacturing plant, located near Shanghai, China, which began
production in the second half of the year. In 1996, the Company plans to
expand its distribution operations into other Asia Pacific countries.
RESEARCH AND DEVELOPMENT
Many of the Company's current products are the result of its own research
and development efforts. The Company expended $52.7 million, $49.1 million and
$45.5 million in 1995, 1994 and 1993, 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 sectors, and cannot readily be allocated among such
sectors. In addition, many such expenditures are for products and projects at
a relatively early stage of development, and the sector 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 sectors are approximately proportional to the percentages of Company
sales represented by each such sector.
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 sector 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 sectors, except those referred to above.
THREE-YEAR SUMMARY OF SECTOR INFORMATION
The Business Sector Information attributable to the Company's operations for
the three years ended December 30, 1995, which appears in Note 10 of Notes to
Consolidated Financial Statements on pages 51 and 52 of the 1995 Annual
Report, is incorporated herein by reference.
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.
4
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 and Greenfield, Indiana; Rancho
Cucamonga, California; Quakertown, Pennsylvania; Rodange, Luxembourg;
Turnhout, Belgium; Hazerswoude, The Netherlands; and Cramlington, England
facilities, as well as other plants in the United States, Australia, Brazil,
France, Germany, Korea and China.
The Company does not believe that the costs of complying with applicable
laws enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, will
have a material effect upon the capital expenditures, earnings or competitive
position of the Company.
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 30 principal manufacturing facilities ranging in size
from approximately 100,000 square feet to approximately 370,000 square feet
and totaling over 5 million square feet. The following sets forth the
locations of such principal facilities and the business sectors for which they
are presently used:
PRESSURE-SENSITIVE ADHESIVES AND MATERIALS SECTOR
Domestic--Painesville and Fairport, Ohio; Peachtree City, Georgia;
Quakertown, Pennsylvania; Rancho Cucamonga, California;
Greenfield, Fort Wayne, Lowell and Schererville, Indiana.
Foreign--Hazerswoude, The Netherlands; Cramlington, England; Champ-sur-
Drac, France; Turnhout, Belgium; Ajax, Canada; Rodange,
Luxembourg; and Haan, Germany.
OFFICE PRODUCTS SECTOR
Domestic--Torrance, California; Gainesville, Georgia; Rochelle and Rolling
Meadows, Illinois; Chicopee and Springfield, Massachusetts;
Meridian, Mississippi; and Crossville, Tennessee.
Foreign--Bowmanville, Canada; and La Monnerie and Troyes, France.
CONVERTED PRODUCTS SECTOR
Domestic--Philadelphia, Pennsylvania; Framingham, Massachusetts; and
Clinton, South Carolina.
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 Wooburn Green, England;
Leiden, The Netherlands; 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.
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. All
buildings owned or leased are well maintained and of sound construction, and
are considered suitable and generally adequate for the
5
Company's present needs. The Company intends to expand capacity and provide
facilities to meet future increased demand. 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.
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
16 waste disposal or waste recycling sites which are the subject of separate
investigations or proceedings concerning alleged soil and/or groundwater
contamination and for which no settlement of the Company's liability has been
agreed upon. Litigation has been initiated by a governmental authority with
respect to three 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 PRPs 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, including sites in which governmental agencies have designated the
Company as a PRP, 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 the business.
In the opinion of the Company's management, the resolution of these matters
will not materially affect the financial position, results of operations or
liquidity of the Company.
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.
6
EXECUTIVE OFFICERS OF THE REGISTRANT*
SERVED AS FORMER POSITIONS AND
NAME AGE OFFICER SINCE OFFICES WITH REGISTRANT
---- --- ------------- -----------------------
Charles D. Miller 68 May 1965 1964-1983 Various positions of
Chairman and Chief increasing
Executive Officer responsibility
(Also Director of
Registrant)
Philip M. Neal 55 January 1974 1974-1990 Various positions of
President and Chief increasing
Operating Officer responsibility
(Also Director of 1990 Executive Vice President
Registrant)
R. Gregory Jenkins 59 July 1981 1974-1988 Various positions of
Senior Vice President, increasing
Finance and Chief Financial responsibility
Officer
Robert J. Keegan 48 August 1995 **1972-1989 Various positions of
Executive Vice President and increasing
Global Strategy Officer responsibility with
Eastman Kodak Company
**1990-1991 President, Kodak Spain,
Eastman Kodak Company
**1991-1995 Vice President, Consumer
Imaging Business
Manager, Europe, Middle
East, Africa Eastman
Kodak Company
Alan J. Gotcher 46 November 1984 1984-1990 Vice President,
Senior Vice President, Corporate Research
Manufacturing and Technology
Robert G. van Schoonenberg 49 December 1981 None
Vice President, General
Counsel and Secretary
Wayne H. Smith 54 June 1979 None
Vice President and Treasurer
Thomas E. Miller 48 March 1994 1973-1990 Various positions of
Vice President and increasing
Controller responsibility
1990-1993 Assistant Controller
1993-1994 V.P. and Assistant
Controller
Diane B. Dixon 44 December 1985 1982-1985 Director of
Vice President, Corporate Communications
Communications
Susan B. Garelli 44 October 1994 **1987-1991 V.P., Human Resources,
Vice President, Columbia Pictures
Human Resources Entertainment, Inc.
**1991-1993 Senior V.P., Human
Resources and Corporate
Communications, JWP,
Inc.
**1993-1994 Consultant, JWP, Inc.
- -------
* 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.
7
EXECUTIVE OFFICERS OF THE REGISTRANT* (CONTINUED)
SERVED AS FORMER POSITIONS AND
NAME AGE OFFICER SINCE OFFICES WITH REGISTRANT
---- --- ------------- -----------------------
Paul B. Germeraad 48 May 1991 **1989-1991 Director, Flexible
Vice President and Director, Packaging Technical
Corporate Research Group, James River
Corporation
Johan J. Goemans 52 October 1992 1975-1990 Various positions of
Vice President, Management increasing
Information Systems responsibility
1991-1992 Director of Distribution
and Logistics, Fasson
Roll Division U.S.
James L. Fletcher 1988-1991 Senior Manufacturing
Vice President, Customer Systems Consultant
Service and Logistics 1991-1993 V.P., Customer Logistics
Gary A. McCue 59 November 1987 1987-1994 Vice President and
Vice President, Strategic Controller
Value Development 1994 Vice President,
Corporate Value Planning
and Development
Kim A. Caldwell 48 June 1990 1974-1985 Various positions of
Senior Group Vice President, increasing
Worldwide Materials responsibility
1985-1990 Vice President and
General Mgr., Fasson
Roll Div. (U.S.)
Geoffrey T. Martin 41 January 1994 1986-1988 Managing Director, Label
Senior Vice President, Systems
European Operations 1988-1992 V.P. and General
Manager, Label Systems
UK and Ireland
1992-1993 V.P., Office Products
Group Europe
1993-1994 Group Vice President,
Converting and Office
Products Europe
Donald L. Thompson 54 October 1993 1973-1988 Various positions of
Group Vice President, Office increasing
Products responsibility
1988-1993 V.P. and General
Manager, Commercial
Products Division
1993 V.P., Sales and Customer
Operations, North
America
James E. Shaw 64 February 1994 1986-1991 V.P. and General
Group Vice President, Manager, Graphic Systems
Automotive and Graphic Division
Systems 1991-1994 V.P. and General
Manager, Automotive and
Graphic Systems
Divisions
Robert D. Fletcher 60 March 1976 1967-1988 Various positions of
Group Vice President, Asia increasing
Pacific responsibility
1988-1993 Group Vice President,
International Converting
Group
Donald R. McKee 59 December 1995 1971-1989 Various positions of
Group Vice President, increasing
Converted and Fastener responsibility
Products, North America 1989-1993 Vice President and
General Manager, Fasson
Films Division
1993-1995 Vice President and
General Manager, Soabar
Systems Division
1995 Vice President, Soabar
Products and Fastener
Divisions
- -------
* 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.
8
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
1995 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 34 and 35 of Registrant's 1995 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
1995 1994 1993
-------- -------- --------
(DOLLARS IN MILLIONS)
Sales............................................ $3,113.9 $2,856.7 $2,608.7
Cost of sales.................................... 2,156.6 1,948.9 1,790.6
-------- -------- --------
Gross profit..................................... 957.3 907.8 818.1
Marketing, general and administrative expenses... 689.8 691.9 642.7
Net gain on divestitures and restructuring
charges......................................... 1.5 -- --
-------- -------- --------
Earnings before interest and taxes............... 269.0 215.9 175.4
Gross profit (percent)........................... 30.7% 31.8% 31.4%
Earnings before interest and taxes (percent)..... 8.6% 7.6% 6.7%
Sales increased to $3.11 billion in 1995, a 9 percent increase over 1994
sales of $2.86 billion. During the fourth quarter of 1995, the Company sold a
portion of its North American label converting operations. These businesses
accounted for approximately 2 percent of the Company's total sales. Excluding
the impact of business divestitures and changes in foreign currency exchange
rates for 1995, sales increased approximately 7 percent. In 1994, sales
increased 10 percent over 1993 sales of $2.61 billion. Changes in foreign
currency had little effect on 1994 total year sales. Each of the Company's
1995, 1994 and 1993 fiscal years consisted of 52 weeks. The Company's sales
growth rate may moderate during 1996 if there is slower economic growth.
Gross profit margins for the years ended 1995, 1994 and 1993 were 30.7
percent, 31.8 percent and 31.4 percent, respectively. The decrease during 1995
was primarily due to a shift in product mix, plant and major production line
start-ups, and $1.6 million in expense related to LIFO inventories compared to
a benefit of $400,000 for 1994. Gross profit margins during 1994 improved
compared to 1993 primarily due to productivity improvements throughout the
Company and an improved product mix on increased sales. The gross profit
margin in 1994 increased despite plant start-up costs for a number of large
facilities, rising raw material prices for all business sectors and almost no
benefit from the reduction of LIFO inventories compared to a benefit of $11.4
million in 1993.
Marketing, general and administrative expense as a percent of sales was 22.2
percent in 1995, 24.2 percent in 1994 and 24.6 percent in 1993. The ongoing
improvement during 1995 was primarily attributable to benefits from the
Company's cost reduction programs, a shift in product mix and increased sales.
The improvement in 1994 over 1993 was primarily attributable to cost reduction
efforts throughout the Company on increased sales and was achieved despite
major investments in geographic expansion, business realignment and new
product programs.
Business restructuring actions were taken during the fourth quarter of 1995
resulting in a net pretax gain of $1.5 million. Consistent with the Company's
strategic plan and in order to improve future profitability, the Company took
specific actions to restructure certain operations, including the sale of
certain nonstrategic North
9
American label converting businesses. Certain businesses which no longer met
the Company's strategy for converting technology were sold for $95 million. A
$40.7 million pretax gain on the sale of these businesses was offset by the
Company's current restructuring program, which had an estimated cost of $39.2
million. The restructuring program included the closure of four plants and the
reorganization of certain manufacturing, distribution and administrative
sites. These costs consisted of severance and related costs for approximately
400 positions worldwide ($16.2 million), discontinuance of product lines and
related asset write-offs ($13.1 million), and plant closure and other costs
($9.9 million). The Company's restructuring programs are expected to take
approximately 9 to 18 months to complete and will result in estimated annual
savings of $14 to $17 million when fully implemented. These programs are an
integral part of the Company's ongoing effort to identify opportunities to
improve its administrative and manufacturing cost structures.
Interest expense as a percent of sales was 1.4 percent in 1995, 1.5 percent
in 1994 and 1.7 percent in 1993. Interest expense increased in 1995 due to
higher debt levels but was more than offset by the impact of increased sales.
The decrease in 1994 was due to comparable interest expense on increased
sales.
Income before taxes, as a percent of sales, was 7.2 percent for 1995, 6.1
percent for 1994 and 5.1 percent for 1993. The improvement during 1995 was
primarily due to lower operating and interest expenses as a percent of sales.
The increase in 1994 over 1993 was primarily due to improved gross profit
margins and lower operating expenses as a percent of sales. The effective tax
rate was 36 percent in 1995, 36.7 percent in 1994, and 37 percent in 1993.
1995 1994 1993
------ ------ -----
(IN MILLIONS,
EXCEPT PER SHARE
AMOUNTS)
Net income................................................. $143.7 $109.4 $84.4
Earnings per share......................................... 2.70 1.97 1.46
Average shares outstanding................................. 53.3 55.6 58.0
Net income increased to $143.7 million in 1995 compared to $109.4 million in
1994 and $84.4 million in 1993, reflecting a 31 percent increase over 1994 and
the Company's fifth consecutive year of improved profitability. Earnings per
share reached a record high of $2.70 in 1995 compared to $1.97 in 1994, a 37
percent increase. Excluding the effect of accounting changes, net income for
1993 was $83.3 million, or $1.44 per share. Net income, as a percent of sales,
was 4.6 percent, 3.8 percent and 3.2 percent in 1995, 1994 and 1993,
respectively.
RESULTS OF OPERATIONS BY BUSINESS SECTOR
PRESSURE-SENSITIVE ADHESIVES AND MATERIALS
1995 1994 1993
-------- -------- --------
(IN MILLIONS)
Sales................................................ $1,739.4 $1,538.2 $1,336.9
Income from operations before interest and taxes..... 156.8 150.7 126.4
The pressure-sensitive adhesives and materials sector reported increased
sales and profitability for 1995 compared to 1994. Profitability for the
sector increased during 1995 despite $15.1 million in restructuring charges
taken during the fourth quarter. The U.S. operations reported a significant
increase in sales due to unit volume growth and pricing actions. Profitability
improvement was primarily due to sales growth and lower operating expenses as
a percent of sales, but was partially offset by plant and major equipment
start-up costs for capacity expansion, and the reorganization of certain
manufacturing sites. Sales for the European operations increased significantly
primarily as a result of volume growth from improved economic conditions over
1994, pricing actions and changes in foreign currency rates. Profitability
increased, despite costs taken for restructuring programs, primarily as a
result of sales growth, lower operating expenses as a percent of sales and a
more favorable product mix.
10
The pressure-sensitive adhesives and materials sector reported significant
sales and profitability improvements for 1994 compared to 1993. The U.S.
operations reported a significant sales increase due to improved economic
conditions in major markets, and revenue and unit volume growth as a result of
new products and pricing actions. Solid profitability improvement was
primarily due to sales growth and cost reduction programs. Improved economic
conditions, pricing actions, and volume growth led to a significant sales
increase for the European operations. The sales growth, coupled with
productivity improvements and cost reduction programs, resulted in significant
profitability increases for the European operations. The Company experienced
no significant adverse effects from the Mexican currency devaluation during
1994.
OFFICE PRODUCTS
1995 1994 1993
------ ------ ------
(IN MILLIONS)
Sales..................................................... $897.5 $842.4 $792.9
Income from operations before interest and taxes.......... 75.2 67.7 59.3
The office products sector reported solid sales and profitability growth for
1995 compared to 1994. Sector profitability during 1995 was impacted by $15.6
million in restructuring charges recorded during the fourth quarter. The U.S.
operations reported increased sales and profitability for 1995. Significant
sales growth for Avery-brand labels and indexes were partially offset by the
elimination of lower margin business. Profitability increased for the U.S.
operations due to successful new products, an improved product mix and cost
reduction actions, including the consolidations of distribution warehouses and
sales forces in the U.S. The European operations reported significant sales
growth due to new products, improved economic conditions and changes in
foreign currency rates. A more favorable product mix coupled with cost
reduction actions taken in previous years led to significant profitability
increases in Europe over 1994.
The office products sector reported solid sales and profitability growth for
1994 compared to 1993. In the U.S., sales and profitability increased
primarily as a result of successful new products and promotional programs and
an improved product mix. Profitability improved at the U.S. operations despite
significantly lower benefits from the reduction of LIFO inventories in 1994
compared to 1993 and higher costs related to the consolidations of
distribution warehouses and sales forces. The European office products
businesses reported significantly improved profitability on decreased sales
compared to 1993. Decreased sales were primarily due to the effects of non-
core product pruning and the weak French economy in early 1994. Profitability
improved significantly, primarily as a result of cost reduction actions taken
in previous years and an improved product mix, and was achieved despite costs
related to continuous business improvement programs.
CONVERTED PRODUCTS
1995 1994 1993
------ ------ ------
(IN MILLIONS)
Sales..................................................... $611.7 $576.5 $541.4
Income from operations before interest and taxes.......... 68.5 31.9 23.1
The converted products sector reported increased sales for 1995 compared to
1994. Profitability during 1995 included a $40.7 million gain from the sale of
certain nonstrategic North American label converting operations, offset by
$8.5 million in restructuring charges taken in early December. Excluding the
net gain on sale and other restructuring actions, the U.S. converting
operations reported increased sales and decreased profitability for 1995. New
products, an improved European economy and changes in foreign currency rates
increased sales for the international converting businesses, while an improved
product mix and lower operating expenses as a percent of sales resulted in
significantly higher profitability.
The converted products sector reported significant profitability
improvements on solid sales growth for 1994 compared to 1993. Profitability
increased despite costs incurred to improve operations and significantly lower
11
benefits from the reduction of LIFO inventories in 1994 compared to 1993.
Sales for the Soabar and fastener businesses increased due to improving retail
and apparel markets and new products. Profitability was up significantly
primarily due to increased sales, coupled with the elimination of unprofitable
product lines and lower operating expenses as a result of cost reduction
actions. The international converting businesses reported modest sales growth
and decreased profitability for 1994. The effects of an improved European
economy on sales was partially offset by sales lost from the elimination of
unprofitable lines of business and costs incurred to improve operations. The
U.S. label businesses reported a solid increase in sales and significant
profitability gains due primarily to increased sales to the automotive,
durable and consumer goods markets and lower operating expenses as a percent
of sales.
FINANCIAL CONDITION
Average working capital, excluding short-term debt, as a percent of sales
was 9.6 percent in 1995, 10 percent in 1994 and 12.3 percent in 1993. The
decrease was primarily due to higher sales and an increase in current
liabilities. Average inventory turnover was 9.0 turns in 1995, 9.3 turns in
1994 and 8.7 in 1993; the average number of days sales outstanding in accounts
receivable was 55 days in 1995 and 1994, compared to 57 days in 1993.
Net cash flow from operating activities was $187.9 million in 1995 and $265
million in 1994. The decrease was primarily due to a change in working capital
requirements which were partially offset by the increase in net income.
Total debt increased $28.7 million to $449.4 million compared to year end
1994. Total debt to total capital was 35.5 percent at year end 1995 compared
to 36.6 percent at year end 1994. Long-term debt as a percent of total long-
term capital decreased to 29 percent from 32.3 percent at year end 1994.
During 1995, the Company issued $100 million in principal amount of medium-
term notes which have an average interest rate of 7.3 percent and maturities
ranging from 2005 to 2025. A portion of the medium-term notes was used to
retire short-term debt.
Shareholders' equity increased to $815.8 million from $729 million at year
end 1994. During 1995, the Company repurchased 852,000 shares of common stock
at a cost of $35.1 million. The cost of treasury stock held, net of shares
reissued under the Company's stock option and incentive plans, at year end
1995 increased $26.5 million to $279.9 million from year end 1994. In January
1995, the Board of Directors authorized the repurchase of an additional five
million shares of the Company's outstanding common stock for an aggregate of
15.2 million shares authorized for repurchase. As of year end 1995, a
cumulative 10.8 million shares of common stock had been purchased under this
authorization.
The return on average shareholders' equity was 18.6 percent in 1995, 14.8
percent in 1994 and 11 percent in 1993. The improvements during 1995 and 1994
were primarily due to a significant increase in profitability and the
Company's share repurchase program. The return on average total capital for
those three years was 14.4 percent, 12.1 percent and 9.3 percent,
respectively. The increases during 1995 and 1994 were primarily due to
profitability improvements and more effective utilization of the Company's
assets.
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 16 waste sites
in which the Company has no ownership interest. Litigation has been initiated
by a governmental authority with respect to three of these sites, but the
Company does not believe that any such proceedings will result in the
imposition of monetary sanctions. 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
assessments 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.
12
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.
The Company's 1995 restructuring program included the sale of certain
nonstrategic North American label converting businesses. Sale proceeds of $95
million are being used for general corporate purposes, including funding
capital spending, debt repayment, share repurchase and profit improvement
programs. The restructuring programs had an estimated cost of $39.2 million,
of which $24.5 million remained accrued at year end, related primarily to
employee severance and plant closure costs. Total cash expenditures for the
restructuring program are estimated at $19.7 million. By year end 1995,
approximately $1.5 million had been paid, primarily for employee severance and
related costs.
The Company continues to expand its operations in Asia Pacific, Latin
America and Europe. The Company's future results are subject to changes in
economic conditions and the impact of fluctuations in foreign currency
exchange and interest rates. To manage its exposure to these fluctuations, the
Company may enter into currency and interest rate contracts, where
appropriate.
Capital expenditures increased to $190.3 million in 1995 from $163.3 million
in 1994. In 1995, capital spending was directed primarily to the pressure-
sensitive adhesives and materials businesses. Capital expenditures for 1996
are expected to be approximately $225 million.
The annual dividends per share increased to $1.11 in 1995 from $.99 in 1994
and $.90 in 1993.
During 1995, the Company experienced moderate increases in raw materials
prices. These inflationary pressures are expected to decrease in 1996 and
should be substantially offset by pricing actions and productivity
improvements.
FUTURE ACCOUNTING REQUIREMENTS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121 on accounting for the impairment
of long-lived assets and for long-lived assets to be disposed of. SFAS No. 121
requires the Company to review the carrying amounts of its long-lived assets
and certain identifiable intangible assets for impairment. If it is determined
the carrying amount of the asset is not recoverable, the Company is required
to recognize an impairment loss. The accounting standard will be implemented
during the first quarter of 1996; however, the loss, if any, has not yet been
determined.
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 40
through 52, and in the Report of Independent Certified Accountants on page 53
of Registrant's 1995 Annual Report and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
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 1996 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 page 15 of the 1996 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 23 of the 1996 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) Reports on Form 8-K: There were no reports on Form 8-K filed for the
three months ended December 30, 1995.
(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 1995 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
By: /s/ R. Gregory Jenkins
----------------------------------
R. Gregory Jenkins
Senior Vice President, Finance and
Chief Financial Officer
Dated: March 28, 1996
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 28, 1996
____________________________________ Officer; Director
Charles D. Miller
/s/ Philip M. Neal President and Chief March 28, 1996
____________________________________ Operating Officer; Director
Philip M. Neal
/s/ R. Gregory Jenkins Senior Vice President, March 28, 1996
____________________________________ Finance and Chief Financial
R. Gregory Jenkins Officer (Principal Financial
Officer)
/s/ Thomas E. Miller Vice President and March 28, 1996
____________________________________ Controller (Principal
Thomas E. Miller Accounting Officer)
15
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Dwight L. Allison, Jr. Director March 28, 1996
____________________________________
Dwight L. Allison, Jr.
/s/ John C. Argue Director March 28, 1996
____________________________________
John C. Argue
/s/ Joan T. Bok Director March 28, 1996
____________________________________
Joan T. Bok
/s/ Frank V. Cahouet Director March 28, 1996
____________________________________
Frank V. Cahouet
/s/ Richard M. Ferry Director March 28, 1996
____________________________________
Richard M. Ferry
/s/ F. Daniel Frost Director March 28, 1996
____________________________________
F. Daniel Frost
/s/ Peter W. Mullin Director March 28, 1996
____________________________________
Peter W. Mullin
/s/ Sidney R. Petersen Director March 28, 1996
____________________________________
Sidney R. Petersen
/s/ John B. Slaughter Director March 28, 1996
____________________________________
John B. Slaughter
/s/ Lawrence R. Tollenaere Director March 28, 1996
____________________________________
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 portions of
the 1995 Annual
Report to Shareholders of Avery Dennison Corporation:
Report of Independent Certified Public Accountants......... -- 53
Consolidated Balance Sheet at December 30, 1995 and
December 31, 1994......................................... -- 40
Consolidated Statement of Income for 1995, 1994 and 1993... -- 41
Consolidated Statement of Shareholders' Equity for 1995,
1994 and 1993............................................. -- 42
Consolidated Statement of Cash Flows for 1995, 1994 and
1993...................................................... -- 43
Notes to Consolidated Financial Statements................. -- 44-52
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 and 6, all of which is included in the 1995 Annual
Report and incorporated herein by reference, the 1995 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 1995, 1994 and 1993):
II--Valuation and Qualifying Accounts and Reserves...... S-3 --
Consent of Independent Accountants......................... S-4 --
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 1995 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 schedule listed in the index
on page S-1 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
January 30, 1996
S-2
SCHEDULE II--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
--------- -------- ------------ ------------- -------
1995
Allowance for doubtful
accounts............... $18.5 $4.7 $ -- $5.6 $17.6
===== ==== ======= ==== =====
1994
Allowance for doubtful
accounts............... $16.7 $7.5 $ -- $5.7 $18.5
===== ==== ======= ==== =====
1993
Allowance for doubtful
accounts............... $18.4 $7.7 $ -- $9.4 $16.7
===== ==== ======= ==== =====
S-3
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, 33-45376,
33-54411, 33-58921 and 33-63979) 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
30, 1996, which appears on page 53 of the 1995 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 schedule listed in the index on page S-1.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 28, 1996
S-4
AVERY DENNISON CORPORATION
EXHIBIT INDEX
FOR THE YEAR ENDED DECEMBER 30, 1995
----------------
INCORPORATED BY REFERENCE:
ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------
(3.1) Restated Articles of Incorporation.. B Proxy Statement dated
February 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 Office of Delaware Secretary
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 Office of Delaware Secretary
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 Office of Delaware Secretary
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
Secretary of State................. 3.1 Current Report on Form
8-K filed
October 31, 1990
(3.2) By-laws, as amended................. 3(ii) First Quarterly Report
for 1995 on
Form 10-Q
(4.1) Rights Agreement dated as of June
30, 1988........................... 1 Current Report on Form
8-K filed
July 9, 1988
(4.1.1) Amendment to Rights Agreement dated
as of December 9, 1994............. 1 Current Report on Form
8-K filed
December 14, 1994
(4.2) Indenture, dated as of March 15,
1991, between Registrant and
Security Pacific National Bank, as
Trustee (the "Indenture").......... 4 Registration Statement
on Form S-3
(File No. 33-39491)
(4.3) Officers' Certificate establishing a
series of Securities entitled
"Medium-Term Notes" under the
Indenture.......................... 28.1 Current Report on Form
8-K filed
March 25, 1991
(4.4) First Supplemental Indenture, dated
as of March 16, 1993, between
Registrant and BankAmerica National
Trust Company, as successor Trustee
(the "Supplemental Indenture")..... 4.2 Registration Statement
on Form S-3
(File No. 33-59642)
1
ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------
(4.5) Officers' Certificate establishing a
series of Securities entitled
"Medium-Term Notes" under the
Indenture, as amended by the
Supplemental Indenture............. 4.1 Current Report on Form
8-K filed
April 7, 1993
(4.6) Officers' Certificate establishing a
series of Securities entitled
"Medium-Term Notes, Series B" under
the Indenture, as amended by the
Supplemental Indenture ............ 4.1 Current Report on Form
8-K filed
March 29, 1994
(4.7) Officers' Certificate establishing a
series of Securities entitled
"Medium-Term Notes, Series C" under
the Indenture, as amended by the
Supplemental Indenture ............ 4.1 Current Report on Form
8-K filed
May 12, 1995
(10.1) *Amended 1973 Stock Option and Stock
Appreciation Rights Plan for Key
Em- ployees of Avery International
Corporation ("1973 Plan").......... 10.1 1987 Annual Report on
Form 10-K
(10.1.1) *Form of Incentive Stock Option
Agreement for use under 1973 Plan.. 10.1.3 1984 Annual Report on
Form 10-K
(10.1.2) *Form of Non-Qualified Stock Option
Agreement for use under 1973 Plan.. 10.1.4 1987 Annual Report on
Form 10-K
(10.1.3) *Form of coupled Stock Appreciation
Right Agreement for use under 1973
Plan............................... 10.1.5 1985 Annual Report on
Form 10-K
(10.1.4) 1985 U.K. Stock Option Scheme.......
10.1.7 1985 Annual Report on
Form 10-K
(10.1.5) Form of Incentive Stock Option
Agreement for use under U.K. Stock
Option Scheme...................... 10.1.8 1985 Annual Report on
Form 10-K
(10.1.6) Form of Stock Option Agreement for
use under U.K. Stock Option Scheme. 10.1.9 1985 Annual Report on
Form 10-K
(10.2.2) *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
(description)...................... 10.5 1981 Annual Report on
Form 10-K
(10.6) *Executive Financial Counseling
Service (description).............. 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
(10.7.3) *Executive Employment Security
Policy dated November 19, 1987..... 10.7.3 1993 Annual Report on
Form 10-K
2
ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------
(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
(10.9) *Executive Group Life Insurance
Plan............................... 10.9 1982 Annual Report on
Form 10-K
(10.10) *Form of Indemnity Agreements
between Registrant and certain
directors and officers............. 10.10 1986 Annual Report on
Form 10-K
(10.10.1) *Form of Indemnity Agreement between
Registrant and certain directors
and officers....................... 10.10.1 1993 Annual Report on
Form 10-K
(10.11) *Supplemental Executive Retirement
Plan............................... 10.11 1983 Annual Report on
Form 10-K
(10.11.1) *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) *Complete Restatement and Amendment
of Avery Dennison Corporation
Executive Deferred Compensation
Plan............................... 10.12 1994 Annual Report on
Form 10-K
(10.12.1) *Form of Enrollment Agreement for
use under Executive Deferred
Compensation Plan.................. 10.13.2 1985 Annual Report on
Form 10-K
(10.13) *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 Directors ("Director
Plan")............................. 10.15 1987 Annual Report on
Form 10-K
(10.15.1) *Amendment No. 1 to 1988 Stock
Option Plan for Non-Employee
Directors ("Director Plan")........ 10.15.1 1994 Annual Report on
Form 10-K
(10.15.2) *Form of Non-Employee Director Stock
Option Agreement for use under
Director Plan...................... 10.15.2 1994 Annual Report on
Form 10-K
(10.16) *Complete Restatement and Amendment
of Avery Dennison Corporation
Executive Variable Deferred
Compensation Plan.................. 10.16 1994 Annual Report on
Form 10-K
(10.16.1) *Form of Enrollment Agreement for
use under Executive Variable
Deferred Compensation Plan......... 10.16.1 1987 Annual Report on
Form 10-K
(10.17) *Complete Restatement and Amendment
of Avery Dennison Corporation
Directors Deferred Compensation
Plan............................... 10.17 1994 Annual Report on
Form 10-K
(10.17.1) *Form of Enrollment Agreement for
use under Directors Deferred
Compensation Plan.................. 10.17.2 1985 Annual Report on
Form 10-K
3
ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------
(10.18) *Complete Restatement and Amendment
of Avery Dennison Corporation
Directors Variable Deferred
Compensation Plan.................. 10.18 1994 Annual Report on
Form 10-K
(10.18.1) *Form of Enrollment Agreement for
use under Directors Variable
Deferred Compensation Plan......... 10.18.1 1989 Annual Report on
Form 10-K
(10.19) *1990 Stock Option and Incentive
Plan for Key Employees of Avery
International Corporation ("1990
Plan")............................. 10.19 1989 Annual Report on
Form 10-K
(10.19.1) *Amendment No. 1 to 1990 Plan....... 10.19.3 1993 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
(10.19.3) *Form of Non-Qualified Stock Option
Agreement for use under 1990 Plan.. 10.19.3 1994 Annual Report on
Form 10-K
(10.19.4) *Form of Non-Qualified Stock Option
Agreement for use under 1990 Plan
(for LTIP Participants)............ 10.19.4 1994 Annual Report on
Form 10-K
(10.20.1) *1982 Incentive Stock Option Plan of
Dennison Manufacturing Company..... 4.3 Registration Statement
on Form S-8
(File No. 33-35995-01)
(10.20.2) *1985 Incentive Stock Option Plan of
Dennison Manufacturing Company..... 4.4 Registration Statement
on Form S-8
(File No. 33-35995-01)
(10.20.3) *1988 Stock Option Plan of Dennison
Manufacturing Company.............. 4.5 Registration Statement
on Form S-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
Option Plan of Dennison
Manufacturing Company.............. 4.6 Registration Statement
on Form S-8
(File No. 33-35995-01)
(10.27.1) *Amended and Restated Key Executive
Long-Term Incentive Plan ("LTIP").. 10.27.1 1993 Annual Report on
Form 10-K
(10.28) *Complete Restatement and Amendment
of Avery Dennison Corporation
Executive Deferred Retirement Plan. 10.28 1994 Annual Report on
Form 10-K
(10.28.1) *Form of Enrollment Agreement for
use under Executive Deferred
Retirement Plan.................... 10.28.1 1992 Annual Report on
Form 10-K
(10.29) *Executive Incentive Compensation
Plan............................... 10.29 1993 Annual Report on
Form 10-K
4
ORIGINALLY
FILED AS
EXHIBIT EXHIBIT
NO. ITEM NO. DOCUMENT
------- ---- ---------- --------
(10.30) *Senior Executive Incentive 1993 Annual Report on
Compensation Plan.................. 10.30 Form 10-K
(10.31) *Executive Variable Deferred
Retirement Plan.................... 10.31 Registration Statement
on Form S-8
(File No. 33-63979)
- --------
* Management contract or compensatory plan or arrangement required to be filed
as an Exhibit to this Form 10-K pursuant to Item 14(c).
SUBMITTED HEREWITH:
EXHIBIT NO. ITEM
----------- ----
10.27.2 *Second Amended and Restated Key Executive Long-Term Incentive
Plan
10.31.1 *Amended and Restated Executive Variable Deferred Retirement Plan
10.32 *Benefit Restoration Plan
11 Statement re Computation of Net Income Per Share Amounts
13 Portions of Annual Report to Shareholders for fiscal year ended
December 30, 1995
21 List of Subsidiaries
23 Consent of Independent Accountants (see page S-4)
27 Financial Data Schedule
- --------
* 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
[LOGO OF AVERY DENNISON]