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Lehman Brothers Industrial Select ConferenceFebruary 12, 2008

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Dean ScarboroughPresident and Chief Executive Officer Tuesday, February 12, 2008

Lehman Brothers Industrial Select Conference

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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Pressure-sensitive (“self-stick”) technology

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Pressure-sensitive Materials

52%

Retail Information Services

24%

Office and Consumer Products

15%

Other Specialty Converting

9%

Overview of Today’s Portfolio… by segment

2007 Proforma Revenue By Segment, with Annualized Paxar Sales

(after intercompany eliminations)

2007 Net Sales (as reported) = $6.3 billion


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Overview of Today’s Portfolio… by region

* “Other” includes Canada, Australia, and South Africa

2007 Proforma Revenue By Region, with Annualized Paxar Sales

(before intergeographic eliminations)

Eastern Europe

Western Europe

Latin America

Other*

Asia U.S.

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Full Year 2007 Overview

• Reported sales up 13%, driven primarily by the Paxaracquisition and currency translation

• Total sales up approximately 1% on an organic basis– Soft market conditions in several key segments

(particularly in second half of the year)– Inventory reductions by Office Products customers– Competitive price environment for the roll materials

business in North America and Europe

• Continued strength in emerging markets, particularly for materials businesses in China, India, and the ASEAN region


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Full Year 2007 Overview (continued)

• Completion of Paxar acquisition– Expansion of core business with above-average

top-line growth potential– Identification of $115 to $125 mil. in annual cost

synergies when integration is complete

• Solid progress against productivity initiatives– Restructuring actions taken in 2007 to drive

annualized cost savings of $45 to $50 million (in addition to acquisition integration savings)

– Further restructuring actions underway– Ramp-up of Enterprise Lean Sigma program to drive

ongoing productivity improvement

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Strategic priorities for 2008

1. Capture Paxar integration synergies… begin to deliver on RIS growth promise

2. Change 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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Market Position / Advantages

Global market share leader for PS label materials

Proprietary product technology and know-how… innovation leader

Superior product breadth and quality

Global scale advantages… R&D, raw material sourcing, global customers

Regional scale advantages… superior service (Exact, Next Day Delivery, Fasson Optimum Performance), low cost manufacturing

Pressure-sensitive Materials

2007 Financial Snapshot

Sales $3.5 bil.

Organic Sales Growth 2.8%

Operating Margin(1) 9.5%

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

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PSM Strategy

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

Roll Materials Group

2007 revenues by geography, before intergeographiceliminations

* “Other” includes Canada, Australia, and South Africa

U.S.

Western Europe

Eastern Europe

Asia

Other*Latin America


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PSM Strategy (continued)

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

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Competitive advantage drives superior performance

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2003 2004 2005 2006 2007AVY PSM BMS PS Sector UPM Label Mat'ls

Operating Margin*AVY PSM Segment vs. Peers

* Excluding restructuring charges


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Market Position / AdvantagesLargest global supplier in highly fragmented market (tickets, labels, and related products for retail supply chain)Strong relationships with major retailers and brand ownersGeographic reach… proximity to apparel manufacturersSuperior product quality• Data mgmt and global

image/color control systemsSuperior service• Design expertise• Fast, reliable sampling and

order fulfillment

Retail Information Services


Sales $1.2 bil.

Organic Sales Growth 0.5%


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

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RIS Strategy

• Apparel sourcing continues to shift to lowest labor cost countries – proximity to manufacturers is key to success

• Expect to continue gaining share through global quality (data integrity, color consistency) and speed

• Key growth initiatives:– Digital printing– Packaging– RFID– Heat transfer

• Paxar acquisition – a perfect fit


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Paxar acquisition drives value in two ways

• Enhanced top-line growth potential– Increased our presence (more than doubled RIS

sales) in the expanding, highly fragmented, retail information and brand identification market

– Combined complementary strengths– Improved ability to meet customer demands for

product innovation, quality, and speed of service

• $115 to $125 mil. of cost synergies– Similar infrastructure – areas of overlap include

SG&A (e.g., corporate overhead, back office support) and production

– Proven track record with acquisition integration on global scale… high degree of confidence in ability to quickly achieve the savings

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Office and Consumer Products


Sales $1.0 bil.

Organic Sales Change (6.6)%


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

Market Position / Advantages

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

Proprietary products

Ubiquitous software templates and other consumer use “enablers”

Powerful consumer brand

Preferred supplier


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OCP Strategy

• Focus on core products, growth projects with rapid payback– “Product renovation” to maintain / grow share vs.

private label offerings

• Expand operating margin– Mix improvement– Ongoing restructuring and productivity improvement

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RFID remains a top growth opportunity

Carton and pallet tagging

Item-level tagging…apparel, airline baggage, pharma, 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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RFID remains a top growth opportunity (cont.)

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2008 Earnings Outlook: Key Considerations

• Positive factors contributing to our outlook:– Modest organic sales growth (1% to 3%), reflecting economic

uncertainty– 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 offset raw material inflation– Reduced loss from building RFID business ($10 mil.)– Currency translation benefit of 2% to 3% to top-line (E.P.S. benefit

of ~ $0.08)

• Offsetting factors vs. 2007:– Higher interest ($20 to $30 mil.) and stock option expense (~ $10

mil.)– Raw material inflation (1.5% to 2.0% before cost-outs, or approx.

$50 to $55 mil.)– General inflation and reinvestment of savings for growth


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Target: double-digit EPS growth

Good progress in Earnings Per Share

$2.67$2.78

$2.26

$3.72

$3.07

$2.64

$3.06

$3.45

$3.84 $3.91$3.80 to$4.20

$4.15 to $4.55

2003 2004 2005 2006 2007 2008 Guidance

EPS - GAAP EPS - Adjusted*

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 9.5% to 11.5%

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

12.8%

16.0%14.3%

13.0%12.4%

2003 2004 2005 2006 2007 2008Guidance

2010Target

Adjusted Return on Total Capital*

~ 12.5%

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

~ 15%


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Expect significant increase in Free Cash Flow in 2008 and beyond

$ 63.2---Share Repurchase

$ 64.3$60 to $65Payment for software and other deferred charges(2)

(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

53.1%45% to 50%Total debt to total capital at year-end

$171.8~ $180Dividends

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

$190.5 $155 to $160Payment for capital expenditures(1)

$499.4$620 to $670Cash flow from operations

20072008

Guidance(Millions, except as noted)

up ~ 75% in 2008

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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 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Div

iden

ds p

er s

hare

32 consecutive years of dividend increase32 consecutive years of dividend increase

Expect continued increase to dividend

5 year average dividend yield ~ 2.5%... vs. 1.6% for dividend-paying industrial

companies in S&P 500


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Summary

• Short-Term: Challenging market environment –

Accelerate productivity improvement

• Long-Term: Paxar

RFID

Strong core business fundamentals

Focused on long-term value creation… Free Cash Flow and ROTC

APPENDIX

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2008 Guidance

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2008 Earnings and Free Cash Flow Guidance

2008Guidance

Reported (GAAP) Earnings Per Share $3.80 - $4.20

Add Back:Estimated Integration Transition Costs, Restructuring and Asset Impairment Charges* ~ $0.35

Adjusted (non-GAAP) Earnings Per Share $4.15 to $4.55

* Subject to revision as plans are finalized

Capital Expenditures & Investments in Software (ex-integration) ~ $195 mil.

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

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


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Reconciliation of Non-GAAP Financial Measures to GAAP

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($ 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

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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.

32Prior period reported numbers restated to conform with Q4-07 change in inventory accounting methodology and reclassification of units between segments.

($ 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


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Earnings Per Share*, GAAP vs. Adjusted

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* 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.

2003 2004 2005 2006 2007 2008 Guidance

GAAP EPS 2.67 2.78 2.26 3.72 3.07 $3.80 to $4.20

Restructuring costs, asset impairment charges, and other items 0.22 0.27 0.40 0.27 0.49 ~ $0.20

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 $4.15 to $4.55

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) 2,503.2 2,671.1 2,717.5 2,667.5 3,650.8Net Income 267.9 279.0 226.8 373.2 303.5

Addback: After-tax interest expense 42.4 44.0 46.0 45.7 85.1Return on Average Total Capital 12.4% 12.1% 10.0% 15.7% 10.6%

AdjustedAdj. Average Invested Capital (5 point average) 2,503.6 2,690.2 2,752.9 2,695.4 3,684.8Net Income 267.9 279.0 226.8 373.2 303.5

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 -0.8 27.6 119.8 12.5 83.0

Adjusted Return on Average Total Capital 12.4% 13.0% 14.3% 16.0% 12.8%


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Paxar Financial Outlook

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Target Target Est. Pre-Tax TargetPre-Tax Cost Annual E.P.S. Depreciation & EBITDA(1)

Savings Accretion(1) Amortization Accretion2008 $80 – $90 $0.35 – $0.45 ~ $70 $175 – $1902009 $110 – $120 $0.65 – $0.80 ~ $75 $215 – $2352010 $115 – $125 $0.85 – $1.00 ~ $75 $240 – $260

Financing• Weighted average interest expense of 5% based on current short-term rates• Combination of senior notes, mandatory convertibles, and short-term debt (47% floating)• Maintained BBB+ credit rating

Estimated One-Time Cash Integration Costs(2)

Cash Restructuring / Transition Costs(3): $125 – $135Capital / IT Investments: $ 40 – $ 45Total Cash Costs: $165 – $180

(1) Excluding one-time integration costs. Reflects near-term margin compression in base business, offset by lower interest expense than previously assumed, with productivity improvement over time. Assumes 3% to 5% compound annual growth on 2007 sales through 2010, with 2008 range reflecting 1% to 4% top line growth.

(2) Excludes non-cash charges (e.g., asset write-offs) taken to either the P&L or balance sheet(3) Severance, change in control payments, consulting fees, etc.

Paxar Financial Outlook(Millions, except as noted)

Estimated Timing of Cash Outflows

2007 45%2008 35-40%2009 15-20%

Economy & Finance

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