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Avery Dennison to reduce workforce, divest holdings

December 13, 2005

Company-wide cost reductions announced at the end of October by Avery Dennison Corporation were modified this month by the company’s board of directors. The company plans to reduce the number of positions by approximately 700 to 900 around the world, up from the 500 mentioned earlier. Avery Dennison also will “exit certain businesses to improve the company’s global operating efficiencies and to reduce costs.”

The company anticipates that pretax savings associated with the reduction in positions “and other cost reduction actions are expected to total $80 million to $90 million when fully implemented,” the board reported in a form filed with the US Securities and Exchange Commission (SEC).

According to Charlie Coleman, an Avery Dennison spokesman, the drop in positions “doesn’t mean employees; a number of those positions were already vacant” since April, when the company began limiting hiring. He added that the company “has identified the cuts that we can make, and the majority of those whose jobs were cut were notified back in October and November.” The workforce reductions took place “throughout all business units and geographical regions, from managerial positions to production employees,” he said. Avery Dennison, based in Pasadena, CA, USA, has more than 21,000 employees worldwide.

Dean Scarborough, Avery Dennison’s president and CEO, said in October that the reduction in positions would be “over 500”. At that time he predicted that the pretax savings could be in the range of $40 million to $50 million.

Judy Abelman, communications director for Avery Dennison Fasson Roll North America, said that about 180 positions in that division will be eliminated by the end of 2006 in Canada, Mexico and the United States. Fasson North America also plans to close its pressure sensitive material production plant in Ajax, ON, Canada by the end of next year, she added.

At the board meeting in December, the company restated its intention to divest itself of certain of its businesses. In October, Scarborough had said that the company was “considering a number of divestitures of non-strategic, low-margin businesses, which would reduce annual sales by approximately $70 million, with minimal impact to earnings from operations. Such divestitures, if completed, could result in pre-tax, non-cash charges in excess of $100 million, representing goodwill and other asset write-downs.”

Coleman, the corporate spokesman, said that the names of the companies to be divested have not been disclosed.
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