Avery Dennison AVY · USD

SEGMENT AND DISAGGREGATED REVENUE INFORMATION Segment ReportingWe have the following reportable segments: •Materials Group — manufactures and sells pressure-sensitive label materials (including label materials with RFID inlays), films for graphic and reflective products, performance tapes and other adhesive products for industrial, medical and other applications, as well as fastener solutions. •Solutions Group — designs, manufactures and sells a wide variety of branding and information solutions, including brand and price tickets, tags and labels (including RFID inlays), and related services, supplies and equipment.Our President and Chief Executive Officer is the chief operating decision maker ("CODM") and is responsible for the allocation of resources and evaluation of performance of our reportable segments. The CODM's oversight includes establishing performance targets to advance our long-term strategy and increase stockholder value, allocating capital to our reportable segments to achieve those targets, developing compensation programs to incentivize segment leaders to achieve those targets, and analyzing key performance metrics to track progress against those targets. The CODM reviews the performance of each segment by comparing each reportable segment’s current period results with its annual operating plan targets, its most recent quarterly forecast, and the prior year to assess how segment results impacted our company’s overall results.Disaggregated Revenue Information Disaggregated revenue information is shown below in the manner that best reflects how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Revenue from our Materials Group reportable segment is attributed to geographic areas based on the location from which products are shipped. Revenue from our Solutions Group reportable segment is shown by product group.(In millions)2025(2)20242023Net sales to unaffiliated customers(1)Materials Group: North America $1,943.1 $1,879.6 $1,846.3 Europe, the Middle East and North Africa 2,146.4 2,091.0 2,007.1 Asia 1,534.3 1,552.7 1,483.7 Latin America 469.5 489.7 474.2 Total Materials Group6,093.3 6,013.0 5,811.3 Solutions Group:Apparel and other1,811.8 1,876.8 1,662.9 Identification Solutions and Vestcom950.4 865.9 890.1 Total Solutions Group2,762.2 2,742.7 2,553.0 Net sales to unaffiliated customers$8,855.5 $8,755.7 $8,364.

COMMITMENTS AND LEASES Supplemental cost information related to leases is shown below. (In millions)202520242023Operating lease costs$77.7 $75.1 $73.6 Lease costs related to finance leases were not material in 2025, 2024 or 2023.Supplemental balance sheet information related to leases is shown below.(In millions)Balance Sheet Location20252024AssetsOperatingOther assets$215.8 $227.5 Finance(1)Property, plant and equipment, net15.9 32.5 Total leased assets$231.7 $260.0 LiabilitiesCurrent:OperatingOther current liabilities$53.1 $49.6 FinanceShort-term borrowings and current portion of long-term debt and finance leases5.2 4.3 Non-current:OperatingLong-term retirement benefits and other liabilities167.6 176.1 FinanceLong-term debt and finance leases11.0 9.1 Total lease liabilities$236.9 $239.1 (1) Finance lease assets are net of accumulated amortization of $16.0 million and $18.7 million as of year-end 2025 and 2024, respectively. Supplemental cash flow information related to leases is shown below. (In millions)202520242023Cash paid for amounts included in measurement of operating lease liabilities$63.8 $61.0 $55.8 Operating lease assets obtained in exchange for operating lease liabilities47.6 93.0 92.4 Cash flows related to finance leases were not material in 2025, 2024 or 2023.Weighted average remaining lease term and discount rate information related to leases as of December 31, 2025 and December 28, 2024 is shown below.20252024Weighted average remaining lease term (in years):Operating6.56.7Finance3.63.6Weighted average discount rate (percentage):Operating4.7 %4.6 %Finance4.7 4.7 Operating and finance lease liabilities by maturity date from December 31, 2025 are shown below.(In millions)Operating LeasesFinance Leases2026$59.7 $6.0 202746.9 5.0 202833.6 3.3 202928.1 2.3 203022.2 1.0 2031 and thereafter66.9 .3 Total lease payments257.4 17.9 Less: imputed interest(36.7)(1.7)Present value of lease liabilities$220.7 $16.2 As of December 31, 2025, we had no significant operating or finance leases that had not yet commenced.

DEBTShort-Term Borrowings We had $101.5 million in outstanding borrowings from U.S. commercial paper as of December 31, 2025 with a weighted average interest rate of 3.93% and no outstanding borrowings from U.S. commercial paper as of December 28, 2024.We have a Euro-Commercial Paper Program under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $500 million. Proceeds from issuances under this program may be used for general corporate purposes. The maturities of the notes vary, but may not exceed 364 days from the date of issuance. Our payment obligations with respect to any notes issued under this program are backed by our revolving credit facility (the “Revolver”). There are no financial covenants under this program. Under this program, we had a $415.5 million outstanding balance as of December 31, 2025 with a weighted average interest rate of 2.19% and no outstanding balance as of December 28, 2024.Short-Term Credit FacilitiesIn June 2024, we entered into a Credit Agreement (the "Credit Agreement") related to the Revolver to borrow up to an aggregate of $1.2 billion through its maturity date of June 26, 2029. The Revolver refinanced the prior revolving credit facility under the Fifth Amended and Restated Credit Agreement dated as of February 13, 2020, as amended. Pursuant to the Credit Agreement, the commitments under the Revolver may be increased by up to $600 million, subject to lender approvals and customary requirements. Under certain circumstances, we may request that the commitments under the Revolver be extended for one-year periods in accordance with the terms and conditions of the Credit Agreement. We use the Revolver as a back-up facility for our commercial paper program and for other corporate purposes. No balance was outstanding under the Revolver as of December 31, 2025 or December 28, 2024. Commitment fees associated with revolving credit facilities in 2025, 2024 and 2023 were $1.3 million, $1.5 million and $1.2 million, respectively. In addition to the Revolver, we have short-term lines of credit available in various countries of approximately $222 million in the aggregate at December 31, 2025. These lines may be cancelled at any time by us or the issuing banks. Borrowings under our short-term lines of credit were not material as of December 31, 2025 or December 28, 2024.From time to time, we provide guarantees on certain arrangements with banks.

BUSINESS ACQUISITIONS2025 Business AcquisitionOn October 20, 2025, we completed our business acquisition of W.F. Taylor Holdings, Inc. ("Taylor Adhesives"), a Georgia-based flooring adhesives business, for the purchase price of approximately $390 million. This acquisition expanded the high-value category portfolio in our Materials Group reportable segment.We funded the Taylor Adhesives acquisition using cash and proceeds from our issuance of senior notes in September 2025.The final allocations of purchase consideration to assets and liabilities are ongoing as we continue to evaluate certain balances, estimates and assumptions during the measurement period (up to one year from the acquisition date). Our valuation of certain acquired assets and liabilities is currently pending finalization within the allowable time to complete our assessment.The Taylor Adhesives acquisition was not material to the Consolidated Financial Statements.2023 Business AcquisitionsOn November 23, 2023, we completed our business acquisition of Silver Crystal Group ("Silver Crystal"), a Canada-based provider of sports apparel customization and application solutions across in-venue, direct-to-business and e-commerce platforms. On May 22, 2023, we completed our business acquisition of LG Group, Inc. ("Lion Brothers"), a Maryland-based designer and manufacturer of apparel brand embellishments. On March 6, 2023, we completed our business acquisition of Thermopatch, Inc. ("Thermopatch"), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. These acquisitions expanded the product portfolio in our Solutions Group reportable segment. The acquisitions of Silver Crystal, Lion Brothers and Thermopatch are referred to collectively as the "2023 Acquisitions."The aggregate purchase consideration, including purchase consideration payable, for the 2023 Acquisitions was approximately $231 million. We funded the 2023 Acquisitions using cash and commercial paper borrowings. In addition to the cash paid at closing, the sellers in one of these acquisitions are eligible for earn-out payments of up to $5 million, subject to the acquired company achieving certain post-acquisition performance targets. As of the acquisition date, we included an estimate of the fair value of these earn-out payments in the aggregate purchase consideration.

Our Board considers cybersecurity risk as part of its overall risk oversight. In 2025, its Audit Committee was primarily responsible for overseeing our strategies, policies and risk management practices related to cybersecurity and information security, engaging with management, including our Chief Information Security Officer (“CISO”), who reports to our Chief Information Officer (“CIO”), a member of our Company Leadership Team and a direct report of our Chief Executive Officer (“CEO”). During 2025, our CIO and CISO provided semiannual updates on our cybersecurity preparedness to the Audit Committee. These updates covered the overall status of our cybersecurity program, results of risk assessments, the evolving threat landscape, performance against key performance indicators and the progress with strategic information security initiatives. The Audit Committee Chair reported on these matters to our full Board. In addition, management updated the Cybersecurity Advisory Council, composed of members of our Board and management, to obtain additional insights into our cybersecurity risk management, and, if and as needed, to the Audit Committee regarding any significant cybersecurity events, as well as events that may have had lesser potential impact. Effective January 2026, our Board formed a standalone Cybersecurity Committee to be primarily responsible for overseeing our strategies, policies and risk management practices related to cybersecurity and information security and the Cybersecurity Advisory Council ceased operating.Our cybersecurity leadership team ("CSLT") — which includes leaders accountable for security operations, incident response, risk and compliance, data security, application security, digital solutions security, vulnerability management and operational technology security — is responsible for assessing and managing our risks from cybersecurity threats. The CSLT, which is led by our CIO and CISO, is primarily responsible for our overall cybersecurity risk management program and supervises both our internal cybersecurity and information security personnel and the external consultants advising our company on these matters. Our information security management and personnel maintain a variety of technical and managerial security certifications and have broad security experience in manufacturing, finance, software and information technology environments.

CONTINGENCIESLegal ProceedingsWe are involved in various lawsuits, claims, inquiries and other regulatory and compliance matters, most of which are routine to the nature of our business. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future results of operations should our exposure be materially different from our estimates or should we incur liabilities that were not previously accrued. Probable insurance reimbursements are not offset against potential liabilities.Because of the uncertainties associated with claims resolution and litigation, future expenses to resolve legal proceedings could be higher than the liabilities we have accrued. If information were to become available that allowed us to reasonably estimate an amount higher or lower than what we have accrued in the range of potential expenses determined to be probable, we would adjust our accrued liabilities accordingly. Additional lawsuits, claims, inquiries and other regulatory and compliance matters could arise in the future. The range of expenses for resolving any future matters would be assessed as they arise; until then, a range of potential expenses for their resolution cannot be determined. Based upon current information, we believe that the impact of the resolution of legal proceedings would not be, individually or in the aggregate, material to our financial position, results of operations or cash flows.We were party to a patent infringement litigation filed by ADASA Inc. (“Adasa”), an unrelated third party, in 2017 regarding certain RFID products within our Solutions Group reportable segment. We recorded a contingent liability in the amount of $26.6 million related to this matter in 2021. We increased our contingent liability to $82.9 million as of December 30, 2023, reflecting our best estimate of the anticipated judgment following a July 2023 jury retrial that affirmed the patent's validity.On April 25, 2024, we entered into a Settlement Agreement, License and Mutual Release with Adasa pursuant to which, among other things, (i) we agreed to pay $75.

FINANCIAL INSTRUMENTS We use various derivative instruments to manage risks in foreign currency exchange rates, commodity prices and interest rates. We recognize derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets.Fair Value Hedges We enter into foreign currency forward contracts to hedge our euro-denominated debt to offset changes in the fair value of the hedged item attributable to foreign currency risk. As of December 31, 2025, the foreign currency forward contracts hedging our €500 million of senior notes due in the third quarter of 2035 and our €500 million of senior notes due in the fourth quarter of 2034 mature in September 2026 and December 2026, respectively.Cash Flow Hedges We entered into U.S. dollar to euro cross-currency swap contracts with a total notional amount of $250 million to effectively convert our fixed-rate U.S. dollar-denominated debt into euro-denominated debt, including semiannual interest payments and the payment of principal at maturity. During the term of the contracts, which end on April 30, 2030, we pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars. We designate commodity forward contracts on forecasted purchases of commodities as cash flow hedges.During 2025 and 2024, we entered into interest rate forward-starting swap contracts that we designated as cash flow hedges that were terminated upon the issuance of our €500 million of senior notes due in the third quarter of 2035 and our €500 million of senior notes due in the fourth quarter of 2034. The resulting gains and losses will be amortized to interest expense over the term of the hedged fixed-rate interest payments. Net Investment HedgesWe enter into foreign currency contracts and zero-cost collars, which are combined as net investment hedges for accounting purposes. The net investment hedges minimize the effect of foreign currency exchange rates on our net investment in certain foreign operations between the sold put strike and bought call strike rates of the contracts. As of December 31, 2025, the notional value of these hedges totaled €1.0 billion, consisting of two €500 million tranches that mature in September 2026 and December 2026.Other Derivative Instruments Our outstanding foreign currency exchange contracts as of December 31, 2025 were recorded in various currencies, primarily the U.S. dollar, Canadian dollar, euro, Chinese renminbi, British pound sterling and Hong Kong dollar.

TAXES BASED ON INCOMETaxes based on income were as follows:(In millions)202520242023Current:U.S. federal tax$45.9 $36.0 $42.5 State taxes11.0 10.6 9.0 Foreign taxes205.3 214.9 160.8 262.2 261.5 212.3 Deferred:U.S. federal tax(17.2)(8.7)(29.0)State taxes(1.3)(3.3)(3.5)Foreign taxes(6.6)(.9)11.9 (25.1)(12.9)(20.6)Provision for income taxes$237.1 $248.6 $191.7 A reconciliation of our provision for income taxes to the amount computed by multiplying the U.S. federal statutory tax rate to income before taxes for the year ended December 31, 2025 is provided below:2025(In millions, except percentages)AmountPercentU.S. federal statutory tax rate$194.3 21.0 %State and local income taxes, net of federal income tax effect(1)7.7 .8 %Foreign tax effectsChina18.0 1.9 %The NetherlandsNontaxable or nondeductible items(9.9)(1.1)%Other5.4 .6 %GermanyChanges in valuation allowances(10.6)(1.1)%Other2.5 .3 %Other foreign jurisdictions44.9 4.9 %Effect of cross-border tax laws(18.1)(2.0)%Tax credits(8.8)(1.0)%Changes in valuation allowances8.3 .9 %Nontaxable or nondeductible items2.9 .3 %Changes in unrecognized tax benefits.5 .1 %Provision for income taxes and effective tax rate$237.1 25.6 %(1) State taxes in California, Illinois, Pennsylvania, Wisconsin, New York and New Jersey made up the majority of the tax effect in this category.A reconciliation of our provision for income taxes to the amount computed by multiplying the U.S. federal statutory tax rate to income before taxes previously disclosed for the years ended December 28, 2024 and December 30, 2023 is provided below:(In millions)20242023Tax provision computed at U.S. federal statutory rate(1)$200.2 $145.9 Increase (decrease) in taxes resulting from:State taxes, net of federal tax benefit2.7 2.6 Foreign earnings taxed at different rates(1)49.5 50.4 Global intangible low-taxed income high-tax exclusion election, net(2)(6.2)(10.0)Valuation allowances15.9 2.6 U.S. federal research and development tax credits(7.7)(8.3)Tax contingencies and audit settlements1.9 11.9 Other items, net(7.7)(3.4)Provision for income taxes$248.6 $191.7 (1) Both years included certain U.S. international tax provisions and foreign earnings taxed in the U.S., net of credits.(2) In 2024, we recognized $6.2 million from our current year global intangible low-taxed income exclusion election. In 2023, we recognized $4.4 million from our 2023 exclusion election and $5.6 million related to the exclusion election made on our 2022 U.S. federal tax return.