Avery Dennison Corp. (NYSE:AVY)(PSE:AVY) Tuesday reported fourth-quarter and year-end records for earnings, sales and returns on investment.

The company also announced the implementation of a major cost reduction program, which will include a one-time restructuring charge in the first quarter of 1999, designed to increase operating efficiencies and improve profitability in 1999 and beyond.

For the fourth quarter:

--   Earnings per share, on a diluted basis, increased to 54 cents per
     share, a record level for the fourth quarter and an increase of
     3.8 percent over the prior-year fourth-quarter earnings of 52
     cents per share.

--   Reported sales grew 5.8 percent to a record $884.6 million from
     $836.4 million a year ago. Excluding the impact of currency,
     sales grew 5.2 percent from the prior-year fourth quarter.

--   Unit volume increased 8.1 percent over the prior year.

In the fourth quarter, sales were up in both the company's Consumer and Converted Products and Pressure-Sensitive Adhesives and Materials sectors in the United States and internationally. International sales growth was especially strong in the quarter.

Financial highlights for the year:

--   Earnings per share, on a diluted basis, increased 11.4 percent to
     $2.15 from $1.93 in 1997, the seventh consecutive year of
     double-digit earnings-per-share growth.

--   Reported sales increased 3.4 percent to a record $3.5 billion
     from $3.3 billion in 1997. Excluding the impact of currency,
     sales grew nearly 5 percent.

--   Unit volume grew 7.4 percent.

--   Return on shareholders' equity reached a new high of 26.7 percent
     from 24.8 percent last year.

--   Return on total capital increased to 19 percent from 18.1 percent
     in 1997.

--   Economic value added increased 20 percent over the prior year to
     $100 million.

"1998 was another record-setting year for Avery Dennison," said Philip M. Neal, president and chief executive officer. "Our successful strategies enabled us to continue to deliver double-digit earnings-per-share growth despite challenging global economic conditions that surfaced in the second half of the year. In addition, sales, profits and returns on investment achieved new all-time highs.

"The company's continued outstanding results reflect the platform for growth that we have built successfully over the last few years. We have achieved growth in our core markets and expanded into new geographic markets, while enhancing operational excellence and financial strength.

"During the past year, we made important investments around the world to grow our core businesses, underscoring our long-term commitment to worldwide expansion. We opened a major new facility in Germany to produce pressure-sensitive film for rapidly growing European markets.

"We made acquisitions in North America, Latin America and Europe, in addition to our recent joint venture with Zweckform, a leading office products supplier in Germany," Neal said. "In addition, we plan to build a new office products manufacturing facility in Northern Mexico, which will provide more efficient, lower-cost service and distribution to our customers in the Western United States and Latin America."

Avery Dennison also announced plans for a major realignment of the company's cost structure that will streamline operations and further improve profitability. This program will be implemented aggressively, resulting in savings of $15 million to $18 million in 1999. When fully implemented, the realignment is expected to result in annualized cost savings of $58 million to $62 million.

The restructuring will result in a one-time pretax charge to first-quarter 1999 earnings of $60 million to $65 million, or 40 cents to 42 cents per diluted share on an after-tax basis. The restructuring charge will include severance costs, related asset write-offs and other one-time expenses.

The company will close eight facilities around the world in the company's Consumer and Converted Products and Pressure-Sensitive Adhesives and Materials sectors. As a result, approximately 1,500 positions will be eliminated, or approximately 9 percent of the company's total workforce.

"Avery Dennison has consistently delivered superior returns and earnings growth," said Neal. "We expect this major realignment to position the company for double-digit earnings growth in 1999 and beyond, before the effects of the one-time charge."

Avery Dennison develops, manufactures and markets innovative self-adhesive solutions for consumer products and label systems.

Based in Pasadena, the company makes a wide range of products for consumer and industrial markets, including Avery-brand office products, Fasson-brand self-adhesive materials, peel-and-stick postage stamps, battery labels, automated retail tag and labeling systems, and specialty tapes and chemicals.

Approximately 16,100 employees in 200 manufacturing and sales facilities produce and sell Avery Dennison products in 89 countries.

Forward-Looking Statements

Certain information presented in this news release may constitute "forward-looking" statements. These statements 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 availability of raw materials, foreign exchange rates, worldwide economic conditions, fluctuations in consumer demand affecting production and inventory levels at customer companies and other matters referred to in the company's SEC filings.

                            AVERY DENNISON
                   CONSOLIDATED STATEMENT OF INCOME
                (In millions, except per share amounts)

                           Three Months Ended        Year Ended
                            Jan. 2,   Dec. 27,   Jan. 2,   Dec. 27,
                              1999      1997      1999       1997

Net sales                    $884.6    $836.4   $3,459.9   $3,345.7
Cost of products sold         592.8     560.5    2,315.4    2,263.0
  Gross profit                291.8     275.9    1,144.5    1,082.7
Marketing, general        
  & administrative expense    198.2     186.9      773.2      739.8
Interest expense                9.3       6.4       34.6       31.7
  Income before taxes          84.3      82.6      336.7      311.2
Taxes on income                28.4      28.2      113.4      106.4
  Net income                  $55.9     $54.4     $223.3     $204.8
  Net income per common
   share, assuming dilution   $0.54     $0.52      $2.15      $1.93
Average shares
 outstanding:
  Assuming dilution           102.7     105.5      104.1      106.1
Common shares
 outstanding
 at period end                100.0     102.4      100.0      102.4


                   Supplementary Sector Information

                                                   Operating Margins
                           1998 Sales  %Change    1998   1997    1996

Pressure-sensitive 
 adhesives & materials (PS)  $1,874.1     2.8%    9.1%   9.4%    9.0%
Consumer & converted
 products (CCP)              $1,742.1     4.2%   13.0%  11.3%   10.0%



                            AVERY DENNISON
                 CONDENSED CONSOLIDATED BALANCE SHEET
                             (In millions)

ASSETS                                    Jan. 2,      Dec. 27,
                                            1999         1997
Current assets:
  Cash and cash equivalents            $     18.5  $      3.3
  Trade accounts receivable, net            454.8       457.7
  Inventories, net                          230.6       230.1
  Other current assets                       98.1       102.4
    Total current assets                    802.0       793.5

Property, plant and equipment, net        1,035.6       985.3
Intangibles resulting from
 business acquisitions, net                 145.1       133.7
Other assets                                159.9       134.0
                                       $  2,142.6  $  2,046.5

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short-term and current
   portion of long-term debt           $     71.3  $     43.6
  Accounts payable                          269.8       245.3
  Other current liabilities                 323.2       341.0
    Total current liabilities               664.3       629.9

Long-term debt                              465.9       404.1
Other long-term liabilities                 179.1       175.3
Shareholders' equity:
  Common stock                              124.1       124.1
  Capital in excess of par value            587.5       592.5
  Retained earnings                       1,185.1     1,063.6
  Cumulative translation adjustment          (8.1)      (21.4)
  Cost of unallocated ESOP shares           (18.3)      (23.4)
  Minimum pension liability                    --        (1.1)
  Employee stock benefit trusts            (677.6)     (730.3)
  Treasury stock at cost                   (359.4)     (166.8)
    Total shareholders' equity              833.3       837.2
                                       $  2,142.6  $  2,046.5



                            AVERY DENNISON
             CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
                             (In millions)

                                                     Year Ended
                                                 Jan. 2,   Dec. 27,
                                                  1999       1997
Operating Activities:
Net income                                    $   223.3  $   204.8
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation                                    114.6      105.5
  Amortization                                     12.6       11.3
  Deferred taxes                                   13.8       18.4
Cash provided by operations                       364.3      340.0

Changes in assets and liabilities,
 net of the effect of foreign
 currency translation, business
 divestitures and acquisitions                     58.5       28.4
Net cash provided by operating activities         422.8      368.4

Investing Activities:
Purchase of property, plant and equipment        (159.7)    (177.3)
Net (payments) proceeds from acquisitions,
 sale of assets and business divestitures         (30.9)       4.6
Other                                             (26.9)     (16.3)
Net cash used in investing activities            (217.5)    (189.0)

Financing Activities:
Net increase in long-term debt                     46.1       58.3
Net increase (decrease) in short-term debt         39.3      (73.0)
Dividends paid                                   (101.8)     (86.8)
Purchase of treasury stock                       (192.6)     (99.3)
Proceeds from exercise of stock options            20.7       13.3
Other                                              (2.3)       7.9
Net cash used in financing activities            (190.6)    (179.6)
Effect of foreign currency
 translation on cash balances                       0.5       (0.3)
Increase (decrease) in cash
 and cash equivalents                              15.2       (0.5)
Cash and cash equivalents, beginning of year        3.3        3.8
Cash and cash equivalents, end of year        $    18.5  $     3.3

     CONTACT: Avery Dennison, Pasadena
              Charles E. Coleman, 626/304-2014 (media)
               communications@averydennison.com
              Wayne H. Smith, 626/304-2001 (investors)
               investorcom@averydennison.com
               www.averydennison.com