Baird_supp

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Robert W. Baird & Co.2008 Growth Stock Conference

Avery DennisonSupplemental MaterialsMay 13, 2008

Forward-Looking StatementsCertain information in this presentation may constitute “forward-looking” statements. These statements and financial or other business targets are subject to certain risks and uncertainties. Actual results and trends may differ materially from historical or expected results depending on a variety of factors, including but not limited to risks and uncertainties relating to investment in development activities and new production facilities; fluctuations in cost and availability of raw materials; ability of the Company to achieve and sustain targeted cost reductions, including synergies expected from the integration of the Paxar business in the time and at the cost anticipated; ability of the Company to generate sustained productivity improvement; successful integration of acquisitions; successful implementation of new manufacturing technologies and installation of manufacturing equipment; the financial condition and inventory strategies of customers; customer and supplier concentrations; changes in customer order patterns; loss of significant contract(s) or customer(s); timely development and market acceptance of new products; fluctuations in demand affecting sales to customers; impact of competitive products and pricing; selling prices; business mix shift; credit risks; ability of the Company to obtain adequate financing arrangements; fluctuations in interest rates; fluctuations in pension, insurance and employee benefit costs; impact of legal proceedings, including the Australian Competition and Consumer Commission investigation into industry competitive practices, and any related proceedings or lawsuits pertaining to this investigation or to the subject matter thereof or of the concluded investigations by the U.S. Department of Justice (“DOJ”), the European Commission, and the Canadian Department of Justice (including purported class actions seeking treble damages for alleged unlawful competitive practices, which were filed after the announcement of the DOJ investigation), as well as the impact of potential violations of the U.S. Foreign Corrupt Practices Act based on issues in China; changes in governmental regulations; changes in political conditions; fluctuations in foreign currency exchange rates and other risks associated with foreign operations; worldwide and local economic conditions; impact of epidemiological events on the economy and the Company’s customers and suppliers; acts of war, terrorism, natural disasters; and other factors.

The Company believes that the most significant risk factors that could affect its ability to achieve its stated financial expectations in the near-term include (1) the impact of economic conditions on underlying demand for the Company’s products; (2) the degree to which higher raw material and energy-related costs can be passed on to customers through selling price increases, without a significant loss of volume; (3) the impact of competitors’ actions, including pricing, expansion in key markets, and product offerings; (4) potential adverse developments in legal proceedings and/or investigations regarding competitive activities, including possible fines, penalties, judgments or settlements; and (5) the ability of the Company to achieve and sustain targeted cost reductions, including expected synergies associated with the Paxar acquisition.

Use of Non-GAAP Financial MeasuresThis presentation contains certain non-GAAP measures as defined by SEC rules. As required by these rules, we have provided a reconciliation of non-GAAP measures to the most directly comparable GAAP measures, included in the Appendix section of this presentation.

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2008 Growth Stock Conference

> Slowdown in U.S. retail environment drove sales declines (organic basis) for both RIS and Office Products

– Office Products customers reduced inventories… current levels approximately 15-20% lower than same time last year

> Volume growth trend in roll materials improved vs. Q4, both in NA and Europe, but Graphics and Reflective declined

> PSM margins negatively impacted by pricing, weaker product mix, and raw material inflation

> Actions underway to weather the storm and position Company for economic rebound:

– Implementing price increases in Roll Materials (worldwide) and Office Products– Executing Paxar integration– Driving increased productivity across organization– Protecting investment in key growth programs (RFID, emerging markets, RIS,

other)– Increasing focus on free cash flow… trimming capital/IT budgets and reducing

working capital

Remain committed to achieving original 2008 cash flow target

Challenging business conditions continued through Q1… actions underway to improve results

4




2007 Proforma Revenue By Segment, with Annualized Paxar Sales (after intercompany eliminations)

Who we are… AVY by segment

2007 Net Sales (as reported) = $6.3 billion

Other Specialty Converting9%

Pressure-sensitiveMaterials52%

Retail InformationServices24%

Office and Consumer Products15%

5




Who we are… AVY by region

2007 Proforma Revenue By Region, with Annualized Paxar Sales (before intergeographic eliminations)

* ”Other” includes Canada, Australia and South Africa

U.S.

Western Europe

EasternEurope

Asia

LatinAmerica

Other*

6




Who we are.

> Global market share leader

How we win.

> Innovation

> Product breadth and quality

> Global footprint

> Regional scaleSales $3.5 bil.

Organic Sales Growth 2.8%

Operating Margin(1) 9.5%

Pressure-sensitive Materials (PSM)

(1) Excluding restructuring charges and other items – see Appendix, “Reconciliation of Non-GAAP Financial Measures to GAAP”

2007 FINANCIAL SNAPSHOT

7




> Expand in faster-growing international markets by leveraging global and regional scale advantages

Roll Materials2007 revenues by geography, before intergeographic eliminations

PSM: How do we grow?

* ”Other” includes Canada, Australia and South Africa

U.S.

Western Europe

EasternEurope

Asia

LatinAmerica

Other*

8




> Drive increased PS penetration of food and beverage segments (shift from glue-applied labels) through product innovation and marketing


9





> Drive share gain in durable goods applications

10




Transition to pressure-sensitive materials drives a better than 6% total applied cost advantage in labeling for breweries

Total Applied Cost Comparison

… while achieving:

> Premium brand image

> Design flexibility

> Functionality

> Ease of product changeover

Glue- Applied

Pressure- Sensitive

Cost down more than 6%...

Material Process Costs Tooling Other Costs

11




Pressure-sensitive penetration of prime label (brand ID) segments is still less than 25 percent in North America

Projected Market Growth('07 - '10 CAGR)

PS

Pen

etra

tion

North American Prime Label (Brand ID) Segments

Household

Food

Pharma Wine

Personal Care

BeerOther Beverage

Spirits

0%

20%

40%

60%

80%

0% 1% 2% 3% 4% 5% 6% 7% 8%

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• Drive growth in underpenetrated segments (food, beverage, household)

GrowthHow can we help you grow?

ProductivityHow can we help you become more cost effective?

InnovationHow can we help you look to the future?

• Lean and Six Sigma process improvement • Expanded service programs

• Continual product re-engineering• Specialty application development

Joint partnership with customers drives growth

13




Graphics and Reflective… > $600 mil. business with solid growth drivers

> Emerging markets

> Wide-format digital printers

> Differentiation through innovation, quality, and service

14




0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2005 2006 2007 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08

AVY PSM Segment BMS PS Segment UPM Label Materials Segment

Operating Margin* | AVY PSM Segment vs. Peers

* Excluding restructuring charges

Sustainable competitive advantages drive superior profitability and returns vs. peers

15




Major initiatives underway to drive future productivity gains for PSM

> Announced price increases

> Product (materials) re-engineering

> Raw materials… strategic sourcing initiatives

> Quakertown scale-up for films

> Coater optimization and shut-downs

> Enterprise Lean Sigma

16




(1) Excluding restructuring charges, integration transition costs, and other items – see Appendix, “Reconciliation of Non-GAAP Financial Measures to GAAP”

Retail Information Services (RIS)

Sales $1.2 bil.

Organic Sales Growth 0.5%



Who we are.

> Largest global supplier in retail tag, ticketing, brand and product identification

How we win.

> Global scale, local presence

> Comprehensive product range that offers global consistency

> Strong relationships with major retailers and brand owners

> Unparalleled ability to support, create and inspire

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Global Footprint

18




Benefits of Paxar acquisition

Enhanced the Company’s top-line growth potential> More than doubled sales in segment with above-average

growth potential> Combined complementary strengths> Improved ability to meet customer demands for product

innovation, quality, and speed of service

$115 to $125 mil. of cost synergies> Elimination of headquarters, costs of running public company

(~ $25 mil.)> “Front-end” (e.g., sales, product development) redundancies

(~ $15 mil.)> In-sourcing of supplies, procurement savings

(~ $25 mil.)> Rationalization of production facilities and related overhead

($50 to $60 mil.)

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Q4’07 - Q4’08Transfer production lines to more cost-effective locations

CompletedIntegrate Korea, Singapore and Thailand

Procurement / in-sourcing related projects (~ $25 mil. of savings):

Restructuring actions approved to-date (~ $85 mil. of savings)

Q3’07 - Q2’08Absorb third party or Paxar in-house laminates into Roll Materials Division

End of ‘08Close Paxar manufacturing unit in Germany

End of ‘08Other

Q3’07 - Q3’08Execute procurement actions to leverage scale

By Q2’08Restructure Mexico, El Salvador and Dominican Republic

CompletedConsolidate sales force

CompletedClose former Paxar corporate headquarters

Integration update: actions taken or underway

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Integration cost synergies create path to substantial margin improvement over medium-term

* Excluding restructuring charges, integration transition costs, and other items –see Appendix, Reconciliation of Non-GAAP Financial Measures to GAAP”

IncrementalSynergies

IncrementalGoodwillAmortizationand Corp. Fee

Other Productivity,Net of Incremental Investments & Cost Inflation

(Incl. Paxar prior to acquisition)

Adjusted RIS Operating Margin*

6%

6% -1% 12% +

2007 Combined 2009/2010

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RIS growth through innovation

> Digital Printing Services

> Heat Transfer

> Packaging

> RFID Applications

22




Office and Consumer Products (OCP)

(1) Excluding restructuring charges and other items – see Appendix, “Reconciliation of Non-GAAP Financial Measures to GAAP”

Sales $1.0 bil.

Organic Sales Change (6.6)%



Who we are.

> Global leader in key Printable Media categories (labels, index dividers)

How we win.

> Proprietary products

> Ubiquitous software templates and other consumer-use “enablers”

> Powerful consumer brand

> Preferred supplier

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OCP: Key Strategic Priorities

Focus on core products, growth projects with rapid payback

> “Product renovation” to maintain / grow share vs. private label offerings

Maintain / expand margin and ROTC

> Product mix improvement

> Price increases to offset raw material inflation

> Enterprise Lean Sigma

> Capital investment substantially below D&A

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Renovation example: Labels

Objective: Deliver consumer preferred, IP-protected, value-added product that drives sales growth

Strategy: Optimize products by application (addressing, return addressing, shipping and filing/identification)

ClearEasy Peel

WhiteEasy Peel

TrueBlockShipping and Filing

InternetShipping

Larger ReturnAddress

Q4 2005 Q4 2006 Q4 2008Q2 2006 Q4 2007 Q4 2009

RepositionableNext GenEasy Peel

Q4 2008

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ELS continues to drive operational transformation for Office Products North America

Reduction in supply chain costs

Improved service, quality, and safety record

Improved capital efficiency and ROTC

2008 est. vs. ’01/’02

39%

51%

Supply chain headcount

Direct labor costs

2.2 pts to 97.8%

85%

Service – line fill rate

Defects per million

Plant/DC square footage

Fixed assets

ROTC 12.6 pts.

35%

36%

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RFID

Carton and pallet tagging

Item-level tagging…

apparel, airline baggage,

pharmaceutical, etc.

AD-220/AD-221 AD-420/AD-421 AD-612 AD-622 AD-812/AD-811 AD-820/AD-821

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$2.67$2.78

$2.26

$3.72

$3.07

$2.64

$3.06

$3.45

$3.84$3.91 $3.60 to

$3.90

$4.00 to $4.30

2003 2004 2005 2006 2007 2008 Guidance(revised)

EPS - GAAP EPS - Adjusted*

Target: > 12% compound annual growth through 2010

Earnings Per Share, Fully Diluted

* Excludes restructuring charges, gains on sale of assets, and other items – see Appendix for detail.

Projecting 5 year CAGR in adjusted EPS of 8.7% to 10.2% through 2008

What does it mean for investors? Long-term earnings growth…

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12.8%

16.0%

14.3%

13.0%12.7%

2003 2004 2005 2006 2007 2008 Guidance 2010 Target

~ 12.0%

15%

Adjusted Return on Total Capital*

* Excludes restructuring charges, gains on sale of assets, and other items – see Appendix for detail.

Improvement in returns temporarily halted by acquisition effect… expect to resume progress in ‘09

What does it mean for investors? Improving returns…

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(Millions, except as noted)

2008 Guidance(revised) 2007

Cash flow from operations $600 to $640 $499.4

Payment for capital expenditures(1) $135 to $140 $190.5 Payment for software and other deferred charges(2) $55 to $60 $ 64.3

Free Cash Flow(3) $400 to $450 $244.6

Dividends ~ $180 $171.8

Share Repurchase --- $ 63.2Total debt to total capital at year-end 45% to 50% 53.1%

What does it mean for investors? Increase in free cash flow…

Free cash flow up ~ 75% in 2008; current FCF Yield ~ 9%

(1) 2008 Guidance includes $5 - $10 mil. in capital investments related to Paxar integration(2) 2008 Guidance includes $15 - $20 mil. in software investments related to Paxar integration(3) Cash flow from operations less payment for capital expenditures, software and other deferred charges

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$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

'75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07

Div

iden

ds p

er s

hare

32 consecutive years of dividend increase32 consecutive years of dividend increase

Current Dividend Yield ~ 3%

What does it mean for investors? Dividend increase…

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Wrap-up: 2008 Priorities

1. Capture Paxar integration synergies… deliver on RIS growth commitment

2. Improve trajectory of PSM business:

> Continued growth in emerging markets

> Investment in new application growth

> Accelerated productivity improvement

> Price increases to offset raw material inflation

3. Continue to renovate core Office Products; manage for margin/cash flow

4. Accelerate Enterprise Lean Sigma efforts Company- wide to improve productivity and enhance product quality and customer service

5. Deliver significant increase in free cash flow

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Wrap-up: Medium-term Financial Targets

(1) Excluding restructuring charges, gains on sale of assets, and other items(2) Cash flow from operations less payment for capital expenditures, software and other deferred

charges

> 30% CAGR through 2010Free Cash Flow (2)

15% by 2010ROTC (1)

> 12% CAGR through 2010Adjusted EPS (1)

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Appendix

35




2008 Guidance(revised)

* Subject to revision as plans are finalized

2008 Earnings and Free Cash Flow Guidance

Add Back:

Estimated Integration Transition Costs, Restructuring and Asset Impairment Charges* ~ $0.40

Adjusted (non-GAAP) Earnings Per Share $4.00 to $4.30

Capital Expenditures and Investments in Software (ex-integration) ~ $170 mil.

Free Cash Flow (before dividends) $400 to $450 mil.

Cash Costs of Paxar Integration (before tax) ~ $ 65 mil.

Reported (GAAP) Earnings Per Share $3.60 to $3.90

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Guidance for adjusted (non-GAAP) earnings per share: $4.00 to $4.30 (from $4.15 to $4.55 previously)

> Performance within range is highly dependent on organic growth and product mix> Midpoint of range assumes no meaningful change in macro-economic environment

over the balance of the yearPositive factors contributing to our outlook:

> Incremental cost synergies from Paxar integration ($60 to $70 mil.)> Restructuring actions already announced ($25 to $30 mil. incremental to 2007)> Other restructuring and ongoing productivity initiatives> Price increases to partially offset raw material inflation> Reduced loss from building RFID business ($10 mil.)> Currency translation benefit of approx. 5% to top-line (E.P.S. benefit of ~ $0.16)> Lower tax rate

Offsetting factors vs. 2007:> Higher interest ($10 to $15 mil.) and equity-based comp expense (~ $10 mil.)> Raw material inflation (~2.5% before cost-outs, or approx. $70 mil.)> General inflation and reinvestment of savings for growth

2008 Earnings Guidance (revised): Key Considerations

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> Reported revenue up 10% to 12%, including approximately 5% benefit from currency, and 7% from acquisitions– Sales roughly flat on an organic basis,

with modest volume growth offset by negative price/mix

> Raw material cost inflation of approximately 2.5% (~ $70 mil.), offset with benefit from global sourcing strategies, material cost-outs, and price increases

> Operating margin of 8.5% to 9.0%

> Interest expense of $115 to $120 mil.> Effective tax rate of 15% to 18% (approx.

20% effective quarterly tax rate in Q2-Q4)

> Negligible change in shares outstanding

Current Assumptions Previous Assumptions> Reported revenue up 9.5% to 12.5%,

including 2% to 3% from currency and 6.5% from acquisitions– Sales up 1% to 3% on an

organic basis

> Approx. 2% ($50-$55 mil.)

> 9% to 10%

> $125 to $135 mil.

> 18% - 20%

> Negligible change

2008 Earnings Guidance (revised): Key Assumptions

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Net sales increased 18.4% over prior year> Net effect of Paxar acquisition was approx. 14%

> Currency added 6% ($0.05 benefit to earnings per share)

> Sales declined approximately 2% on an organic basis

Operating margin before restructuring and asset impairment charges and transition costs associated with the Paxar integration declined by 200 basis points vs. prior year> Decline reflects carryover of 2007 price reductions in the roll materials

business, raw material inflation, negative segment and product mix, as well as reduced fixed cost leverage

> Headwinds also included 50 basis points of margin compression from addition of base Paxar business (margin of base business is lower than Company-average before integration savings)

First Quarter 2008 Overview

39




Annual effective tax rate for 2008 expected to be in the 15%-18% range (down from 18%-20% originally)> Ongoing annual tax rate now expected to be in the 17%-19% range for the

foreseeable future (down from 18%-20% previously), subject to significant volatility from quarter to quarter

> Effective tax rate for the quarter was negative (12.3%), primarily due to recognition of $21 million tax benefit from increased ability to realize deferred tax assets

Reported E.P.S. of $0.69 includes $0.11 of restructuring charges, asset impairment, and transition costs for Paxar integration> $0.06 of transition costs associated with Paxar integration

> $0.05 of restructuring and asset impairment charges

Adjusted E.P.S. of $0.80

First Quarter 2008 Overview (continued)

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PRESSURE-SENSITIVE MATERIALSReported sales of $920 mil., up 7% compared with prior year> Organic sales growth of approx. 1%, slower than Q4 pace

Change in sales for roll materials business by region, adjusted for the effect of currency and intercompany sales:> Europe up at low single digit rate (improved vs. Q4 pace)

> North America declined at low single digit rate (similar to 2H-07)

> Asia growth in mid-teens

> South America roughly comparable to prior year

Graphics & Reflective business down mid-single-digit rate before currency

Excluding restructuring and asset impairment charges, operating margin declined 170 basis points vs. prior year to 8.0%, as the negative effects of pricing and raw material inflation more than offset benefits from restructuring and other productivity initiatives

First Quarter 2008 Segment Overview

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RETAIL INFORMATION SERVICESReported sales of $372 mil., up 138% compared with prior year due to the Paxar acquisition> Organic sales decline of approx. 1%

> Continued weakness of domestic retail apparel market; sales on products destined for European market remained solid

Operating margin before transition costs and restructuring charges declined 330 basis points to 1.0%, as integration synergies (approx. $17 mil.) and other productivity actions were more than offset by the effects of:> Employee-related / raw material cost inflation

> Reduced fixed cost leverage

> Negative price/mix

> Intangible amortization (approx. $6 mil.) and higher corporate cost allocation (approx. $4 mil.) associated with Paxar

First Quarter 2008 Segment Overview (continued)

42




> Targeting up to $125 mil. of annual synergy savings when complete> Realized approx. $17 mil. of savings in Q1, up from $11 mil. in Q4> Over 75% of targeted savings expected to be captured in run rate by

year-end> No change to anticipated cash costs of integration ($165 - $180 mil)> Last piece of permanent financing completed in February

Paxar Integration Update

43




OFFICE AND CONSUMER PRODUCTSReported sales of $194 mil., down 9% compared with prior year> Organic sales decline of approx. 12%, due in part to customer inventory

reductions ($12 mil. estimated impact to net sales)Excluding restructuring charges, operating margin declined 150 basis points to 11.1%, as the benefit of restructuring and other productivity initiatives was more than offset by reduced fixed cost leverageOTHER SPECIALTY CONVERTINGReported sales of $159 mil., comparable to prior year> Organic sales decline of approx. 4%, or roughly comparable to prior year

when adjusted for exit of low margin distribution business

Excluding restructuring charges, operating margin declined 130 basis points to 5.8%, as the benefit of restructuring and other productivity initiatives as well as a reduction in the loss from RFID was more than offset by reduced fixed cost leverage and cost inflation

First Quarter 2008 Segment Overview (continued)

44




Reconciliation of Non-GAAP Financial Measures to GAAP

($ in millions)

PressureSensitiveMaterials

RetailInformation

Services

Office andConsumerProducts

Other SpecialtyConverting Businesses

2006 GAAP Sales $3,236.3 $667.7 $1,072.0 $599.9Impact of 2007 Currency Changes $174.3 $16.7 $25.3 $15.62006 Adjusted Non-GAAP Sales $3,410.6 $684.4 $1,097.3 $615.5

2007 GAAP Sales $3,497.7 $1,174.5 $1,016.2 $619.4Est. Impact of Acq.& Divestitures ($7.8) $486.6 ($9.2) ($1.4)2006 Adjusted Non-GAAP Sales $3,505.5 $687.9 $1,025.4 $620.8

GAAP Sales Growth 8.1% 75.9% -5.2% 3.3%

Organic Sales Growth 2.8% 0.5% -6.6% 0.9%

Organic Sales Growth by Segment: 2007

45

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($ in millions, except as noted) FY 2005 FY 2006 FY 2007

Pressure Sensitive MaterialsNet Sales 3,114.5 3,236.3 3,497.7Operating income, as reported 264.1 301.6 318.7Operating margin, as reported 8.5% 9.3% 9.1%Non-GAAP adjustments:Restructuring costs, asset impairment charges, and other items 23.0 9.3 13.8 Adjusted non-GAAP operating income 287.1 310.9 332.5Adjusted non-GAAP operating margin 9.2% 9.6% 9.5%

Retail Information ServicesNet Sales 630.4 667.7 1,174.5Operating income, as reported 37.7 45.7 -4.0Operating margin, as reported 6.0% 6.8% -0.3%Non-GAAP adjustments:Transition costs, restructuring costs, asset impairment charges, and other items 7.5 11.2 74.2 Adjusted non-GAAP operating income 45.2 56.9 70.2Adjusted non-GAAP operating margin 7.2% 8.5% 6.0%

OPERATING MARGIN BY SEGMENT

Prior period reported numbers restated to conform with Q4-07 change in inventory accounting methodology and reclassification of units between segments.

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($ in millions, except as noted) FY 2005 FY 2006 FY 2007

Office and Consumer ProductsNet Sales 1,136.1 1,072.0 1,016.2Operating income, as reported 161.9 187.4 173.6Operating margin, as reported 14.3% 17.5% 17.1%Non-GAAP adjustments:Restructuring costs, asset impairment charges, and other items 21.8 (2.3) 4.8 Adjusted non-GAAP operating income 183.7 185.1 178.4Adjusted non-GAAP operating margin 16.2% 17.3% 17.6%

Other Specialty Converting BusinessesNet Sales 592.5 599.9 619.4Operating income, as reported 14.9 17.3 25.4Operating margin, as reported 2.5% 2.9% 4.1%Non-GAAP adjustments:Restructuring costs and asset impairment charges 6.2 3.7 4.2 Adjusted non-GAAP operating income 21.1 21.0 29.6Adjusted non-GAAP operating margin 3.6% 3.5% 4.8%

EBIT Impact of RFID (32.5) (31.8) (25.4)Adj non-GAAP operating income ex-RFID 53.6 52.8 55.0Adj non-GAAP operating margin ex-RFID 9.1% 8.8% 9.0%

OPERATING MARGIN BY SEGMENT

Prior period reported numbers restated to conform with Q4-07 change in inventory accounting methodology and reclassification of units between segments.

Earnings Per Share*, GAAP vs. Adjusted

* Prior period reported numbers restated to conform with Q4-07 change in inventory accounting methodology. Historical figures have NOT been adjusted to remove the contribution from businesses subsequently divested or discontinued.

48

2003 2004 2005 2006 20072008 Guidance

(revised)

GAAP EPS 2.67 2.78 2.26 3.72 3.07 $3.60 to $3.90

Restructuring costs, asset impairment charges, and other items 0.22 0.27 0.40 0.27 0.49 ~ $0.25

Loss (income) from discontinued operations (0.25) 0.01 0.65 (0.15) - -

Tax Expense on Repatriated Earnings - - 0.14 - - -

Transition costs associated with the Paxar integration - - - - 0.35 ~ $0.15

Adjusted EPS 2.64 3.06 3.45 3.84 3.91 $4.00 to $4.30

ROTC*, GAAP vs. Adjusted

* Prior period reported numbers restated to conform with Q4-07 change in inventory accounting methodology. Historical figures have NOT been adjusted to remove the contribution from businesses subsequently divested or discontinued.

($ in millions, except as noted) FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

GAAPAverage Invested Capital (5 point average) 2,421.0 2,671.1 2,717.5 2,667.5 3,649.8Net Income 267.4 279.0 226.8 373.2 303.5

Addback: After-tax interest expense 42.4 44.0 46.0 45.7 85.1Return on Average Total Capital 12.8% 12.1% 10.0% 15.7% 10.6%

AdjustedAdj. Average Invested Capital (5 point average) 2,419.9 2,690.2 2,752.9 2,695.4 3,683.8Net Income 267.4 279.0 226.8 373.2 303.5

Addback: After-tax interest expense 42.4 44.0 46.0 45.7 85.1Addback: After-tax transition costs, restructuring costs, asset impairment charges, impact of discontinued ops, and other items -3.0 27.6 119.8 12.5 83.0

Adjusted Return on Average Total Capital 12.7% 13.0% 14.3% 16.0% 12.8%

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Economy & Finance

Baird_supp