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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Jan. 01, 2011	Jan. 29, 2011	Jul. 03, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	AVERY DENNISON CORPORATION
Entity Central Index Key	0000008818
Document Type	10-K
Document Period End Date	Jan. 01, 2011
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--01-01
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 3,369,883,051
Entity Common Stock, Shares Outstanding		106,874,924

Consolidated Balance Sheets - USD ($) $ in Millions	12 Months Ended
Consolidated Balance Sheets - USD ($) $ in Millions	Jan. 01, 2011	Jan. 02, 2010
Current assets:
Cash and cash equivalents	$ 127.5	$ 138.1
Trade accounts receivable, less allowances of $51.4 and $56.2 at end of year 2010 and 2009, respectively	996.1	918.6
Inventories, net	519.9	477.3
Current deferred and refundable income taxes	144.7	103.5
Other current assets	163.7	95.7
Total current assets	1,951.9	1,733.2
Property, plant and equipment, net	1,262.9	1,354.7
Goodwill	940.8	950.8
Other intangibles resulting from business acquisitions, net	228.9	262.2
Non-current deferred and refundable income taxes	266.0	236.6
Other assets	448.9	465.3
Total assets	5,099.4	5,002.8
Current liabilities:
Short-term and current portion of long-term debt	381.0	535.6
Accounts payable	748.2	689.8
Accrued payroll and employee benefits	259.7	216.0
Accrued trade rebates	126.0	115.1
Current deferred and payable income taxes	53.2	40.8
Other accrued liabilities	263.7	270.4
Total current liabilities	1,831.8	1,867.7
Long-term debt	956.2	1,088.7
Long-term retirement benefits and other liabilities	541.1	556.0
Non-current deferred and payable income taxes	$ 124.6	$ 127.8
Commitments and contingencies (see Notes 7 and 8)
Shareholders' equity:
Common stock, $1 par value, authorized - 400,000,000 shares at end of year 2010 and 2009; issued - 124,126,624 shares at end of year 2010 and 2009; outstanding - 105,391,940 shares and 105,298,317 shares at end of year 2010 and 2009, respectively	$ 124.1	$ 124.1
Capital in excess of par value	768.0	722.9
Retained earnings	1,727.9	1,499.7
Employee stock benefit trust, 1,784,741 shares and 6,744,845 shares at end of year 2010 and 2009, respectively	(73.2)	(243.1)
Treasury stock at cost, 16,934,943 shares and 12,068,462 shares at end of year 2010 and 2009, respectively	(758.2)	(595.8)
Accumulated other comprehensive loss	(142.9)	(145.2)
Total shareholders' equity	1,645.7	1,362.6
Total liabilities and shareholders' equity	$ 5,099.4	$ 5,002.8

Consolidated Balance Sheets (Parenthetical) - USD ($)	Jan. 01, 2011	Jan. 02, 2010
Current assets:
Allowances for trade accounts receivable	$ 51,400,000	$ 56,200,000
Shareholders' equity:
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	124,126,624	124,126,624
Common stock, shares outstanding	105,391,940	105,298,317
Employee stock benefit trust, shares	1,784,741	6,744,845
Treasury stock, shares	16,934,943	12,068,462

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Dec. 27, 2008
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net sales	$ 6,512.7	$ 5,952.7	$ 6,710.4
Cost of products sold	4,686.7	4,366.2	4,983.4
Gross profit	1,826.0	1,586.5	1,727.0
Marketing, general and administrative expense	1,370.4	1,268.8	1,304.3
Goodwill and indefinite-lived intangible asset impairment charges		832.0
Interest expense	76.6	85.3	115.9
Other expense, net	27.7	191.3	36.2
Income (loss) before taxes	351.3	(790.9)	270.6
Provision for (benefit from) income taxes	34.4	(44.2)	4.5
Net income (loss)	$ 316.9	$ (746.7)	$ 266.1
Per share amounts:
Net income (loss) per common share	$ 3.00	$ (7.21)	$ 2.70
Net income (loss) per common share, assuming dilution	2.97	(7.21)	2.70
Dividends	$ 0.80	$ 1.22	$ 1.64
Average shares outstanding:
Common shares	105.8	103.6	98.4
Common shares, assuming dilution	106.8	103.6	98.7

Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Dec. 27, 2008
Statement [Line Items]
Beginning Balance	$ 1,362.6	$ 1,750.0	$ 1,989.4
Comprehensive income:
Net income (loss)	316.9	(746.7)	266.1
Other comprehensive income (loss):
Foreign currency translation adjustment	18.1	103.4	(177.3)
Effective portion of gains or losses on cash flow hedges, net of tax of $(.6), $2.9 and $1.2) respectively for 2008, 2009 and 2010	2.0	4.8	1.0
Net actuarial loss, prior service cost and net transition asset, net of tax of $(103.5), $6.2 and $(3.3) respectively for 2008, 2009 and 2010	(17.8)	29.1	(191.0)
Other comprehensive income (loss)	2.3	137.3	(367.3)
Total comprehensive income loss	319.2	(609.4)	(101.2)
Issuance of 6,459,088 shares for treasury in conjunction with HiMEDS conversion		312.9
Issuance of 2,133,656 shares for treasury in conjunction with HiMEDS remarketing	109.3
Repurchase of 195,221 and 2,683,243 shares for treasury respectively for 2008 and 2010, net of shares issued	(108.7)		(9.5)
Stock issued under option plans, including $13.4, $8.2 and $4.4 respectively of tax and dividends paid on stock held in stock trust	52.0	42.8	43.7
Dividends: $1.64, $1.22 and $0.80 respectively per share	(88.7)	(134.9)	(175.0)
ESOP transactions, net		1.2	2.6
Ending Balance	1,645.7	1,362.6	1,750.0
Common stock, $1 par value
Statement [Line Items]
Beginning Balance	124.1	124.1	124.1
Other comprehensive income (loss):
Ending Balance	124.1	124.1	124.1
Capital in excess of par value
Statement [Line Items]
Beginning Balance	722.9	642.9	781.1
Other comprehensive income (loss):
Issuance of 6,459,088 shares for treasury in conjunction with HiMEDS conversion		16.0
Stock issued under option plans, including $13.4, $8.2 and $4.4 respectively of tax and dividends paid on stock held in stock trust	29.8	28.1	36.2
Employee stock benefit trust market value adjustment	15.3	35.9	(174.4)
Ending Balance	768.0	722.9	642.9
Retained earnings
Statement [Line Items]
Beginning Balance	1,499.7	2,381.3	2,290.2
Comprehensive income:
Net income (loss)	316.9	(746.7)	266.1
Other comprehensive income (loss):
Dividends: $1.64, $1.22 and $0.80 respectively per share	(88.7)	(134.9)	(175.0)
Ending Balance	1,727.9	1,499.7	2,381.3
Cost of unallocated ESOP shares
Statement [Line Items]
Beginning Balance	0.0	(1.2)	(3.8)
Other comprehensive income (loss):
ESOP transactions, net		1.2	2.6
Ending Balance	0.0	0.0	(1.2)
Employee stock benefit trust
Statement [Line Items]
Beginning Balance	(243.1)	(246.9)	(428.8)
Other comprehensive income (loss):
Employee stock benefit trust transfer of 686,500 and 4,316,894 shares to treasury, respectively for the year 2009 and 2010	163.0	25.0
Stock issued under option plans, including $13.4, $8.2 and $4.4 respectively of tax and dividends paid on stock held in stock trust	22.2	14.7	7.5
Employee stock benefit trust market value adjustment	(15.3)	(35.9)	174.4
Ending Balance	(73.2)	(243.1)	(246.9)
Treasury stock
Statement [Line Items]
Beginning Balance	(595.8)	(867.7)	(858.2)
Other comprehensive income (loss):
Issuance of 6,459,088 shares for treasury in conjunction with HiMEDS conversion		296.9
Issuance of 2,133,656 shares for treasury in conjunction with HiMEDS remarketing	109.3
Repurchase of 195,221 and 2,683,243 shares for treasury respectively for 2008 and 2010, net of shares issued	(108.7)		(9.5)
Employee stock benefit trust transfer of 686,500 and 4,316,894 shares to treasury, respectively for the year 2009 and 2010	(163.0)	(25.0)
Ending Balance	(758.2)	(595.8)	(867.7)
Accumulated other comprehensive income (loss)
Statement [Line Items]
Beginning Balance	(145.2)	(282.5)	84.8
Other comprehensive income (loss):
Foreign currency translation adjustment	18.1	103.4	(177.3)
Effective portion of gains or losses on cash flow hedges, net of tax of $(.6), $2.9 and $1.2) respectively for 2008, 2009 and 2010	2.0	4.8	1.0
Net actuarial loss, prior service cost and net transition asset, net of tax of $(103.5), $6.2 and $(3.3) respectively for 2008, 2009 and 2010	(17.8)	29.1	(191.0)
Other comprehensive income (loss)	2.3	137.3	(367.3)
Ending Balance	$ (142.9)	$ (145.2)	$ (282.5)

Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Dec. 27, 2008
Comprehensive income:
Tax on effective portion of gains or losses on cash flow hedges	$ 1.2	$ 2.9	$ (0.6)
Tax on net actuarial loss, prior service cost and net transition asset	$ (3.3)	$ 6.2	$ (103.5)
Repurchase of common stock	2,683,243		195,221
Issuance of treasury shares	2,133,656	6,459,088
Tax on stock issued under option plans	$ 4.4	$ 8.2	$ 13.4
Dividends	$ 0.80	$ 1.22	$ 1.64
Capital in excess of par value
Comprehensive income:
Issuance of treasury shares	2,133,656	6,459,088
Tax on stock issued under option plans	$ 4.4	$ 8.2	$ 13.4
Retained earnings
Comprehensive income:
Dividends	$ 0.80	$ 1.22	$ 1.64
Employee stock benefit trust
Comprehensive income:
Shares transferred to treasury from employee stock benefit trust	4,316,894	686,500
Tax on stock issued under option plans	$ 4.4	$ 8.2	$ 13.4
Treasury stock
Comprehensive income:
Repurchase of common stock	2,683,243		195,221
Issuance of treasury shares	2,133,656	6,459,088
Shares transferred to treasury from employee stock benefit trust	4,316,894	686,500
Accumulated other comprehensive income (loss)
Comprehensive income:
Tax on effective portion of gains or losses on cash flow hedges	$ 1.2	$ 2.9	$ (0.6)
Tax on net actuarial loss, prior service cost and net transition asset	$ (3.3)	$ 6.2	$ (103.5)

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Dec. 27, 2008
Operating Activities
Net income (loss)	$ 316.9	$ (746.7)	$ 266.1
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	172.9	187.6	204.6
Amortization	74.7	79.7	73.8
Provision for doubtful accounts	16.3	19.3	17.7
Goodwill and indefinite-lived intangible asset impairment charges		832.0
Asset impairment and net loss on sale and disposal of assets of $2.8, $9.4, and $6.5 in 2010, 2009, and 2008, respectively	5.1	48.0	16.8
Loss from debt extinguishments	4.0	21.2
Stock-based compensation	35.2	25.8	29.0
Other non-cash expense and loss	43.6	22.0	11.3
Other non-cash income and gain	(0.5)	(8.7)	(12.4)
Changes in assets and liabilities and other adjustments, net of the effect of business acquisitions:
Trade accounts receivable	(87.6)	95.7	57.7
Inventories	(35.6)	133.3	16.5
Other current assets	(39.8)	40.6	(30.0)
Accounts payable	76.5	(14.5)	3.4
Accrued liabilities	30.0	(37.9)	(19.2)
Taxes on income	(12.0)	0.3	34.3
Deferred taxes	(48.2)	(91.0)	(114.2)
Other assets	(12.2)	2.3	20.8
Long-term retirement benefits and other liabilities	(52.6)	(40.0)	(36.5)
Net cash provided by operating activities	486.7	569.0	539.7
Investing Activities
Purchase of property, plant and equipment, net	(83.5)	(69.7)	(118.4)
Purchase of software and other deferred charges	(25.1)	(30.6)	(63.1)
Payments for acquisitions			(131.2)
Proceeds from sale (purchase) of investments, net	0.8	(0.5)	17.2
Other		(5.0)	2.0
Net cash used in investing activities	(107.8)	(105.8)	(293.5)
Financing Activities
Net decrease in borrowings (maturities of 90 days or less)	(98.4)	(192.3)	(390.1)
Additional borrowings (maturities longer than 90 days)	249.8		400.1
Payments of debt (maturities longer than 90 days)	(341.2)	(108.3)	(50.7)
Dividends paid	(88.7)	(134.9)	(175.0)
Purchase of treasury stock	(108.7)		(9.8)
Proceeds from exercise of stock options, net	2.5	0.6	2.7
Other	(6.8)	2.2	14.3
Net cash used in financing activities	(391.5)	(432.7)	(208.5)
Effect of foreign currency translation on cash balances	2.0	2.1	(3.7)
(Decrease) increase in cash and cash equivalents	(10.6)	32.6	34.0
Cash and cash equivalents, beginning of year	138.1	105.5	71.5
Cash and cash equivalents, end of year	$ 127.5	$ 138.1	$ 105.5

Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Jan. 01, 2011	Jan. 02, 2010	Dec. 27, 2008
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract]
Impairment charges on sale and disposal of assets	$ 2.8	$ 9.4	$ 6.5

Summary of Significant Accounting Policies

12 Months Ended

Jan. 01, 2011

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Avery Dennison Corporation (the “Company”) is an industry leader that develops innovative identification and decorative solutions for businesses and consumers worldwide. The Company’s products include pressure-sensitive labeling technology and materials; graphics imaging media; retail branding and information solutions; radio-frequency identification (“RFID”) inlays and tags; organization and identification products for offices and consumers; specialty tapes; and a variety of specialized labels for automotive, industrial and durable goods applications.

Principles of Consolidation

The consolidated financial statements include the accounts of majority-owned subsidiaries. Intercompany accounts, transactions and profits are eliminated in consolidation. Investments representing less than 20% ownership are accounted for using the cost method of accounting.

Financial Presentation

Certain prior year amounts have been reclassified to conform to the current year presentation.

Segment Reporting

The Company has determined that it has three reportable segments for financial reporting purposes:


	o	Pressure-sensitive Materials — manufactures and sells pressure-sensitive labeling technology and materials, films for graphic and reflective applications, performance polymers (largely adhesives used to manufacture pressure-sensitive materials), and extruded films
	o	Retail Information Services — designs, manufactures and sells a wide variety of branding and information products and services, including brand and price tickets, tags and labels, and related services, supplies and equipment
	o	Office and Consumer Products — manufactures and sells a variety of office and consumer products, including labels, binders, dividers, sheet protectors, and writing instruments

Certain operating segments are aggregated or combined based on materiality, quantitative factors, and similar qualitative economic characteristics, including primary products, production processes, customers, and distribution methods. Operating segments that do not exceed the quantitative thresholds or are not considered for aggregation are reported in a category entitled “other specialty converting businesses,” which is comprised of several businesses that produce specialty tapes and highly engineered labels, including RFID inlays and labels and other converted products.

In 2010, the Pressure-sensitive Materials segment contributed approximately 56% of the Company’s total sales, while the Retail Information Services and Office and Consumer Products segments contributed approximately 23% and 13%, respectively, of the Company’s total sales. The other specialty converting businesses contributed the remaining 8% of the Company’s total sales. Of the Company’s total sales in 2010, international and domestic operations generated approximately 68% and 32%, respectively. Refer to Note 12, “Segment Information,” for further information.

Fiscal Year

Normally, each fiscal year consists of 52 weeks, but every fifth or sixth fiscal year consists of 53 weeks. The Company’s 2010 and 2008 fiscal years consisted of 52-week periods ending January 1, 2011 and December 27, 2008, respectively. The Company’s 2009 fiscal year consisted of a 53-week period ending January 2, 2010, with the extra week reflected in the first quarter.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions for the reporting period and as of the financial statement date. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expense. Actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, deposits in banks, and short-term investments with maturities of three months or less when purchased. The carrying value of these assets approximates fair value due to the short maturity of the instruments. Cash paid for interest and income taxes was as follows:


(In millions)	2010		2009		2008


Interest, net of capitalized amounts	$	69.7	$	78.3	$	114.6
Income taxes, net of refunds		94.5		47.5		77.0

In 2010, 2009, and 2008, non-cash activities included accruals for capital expenditures of approximately $12 million, $8 million, and $5 million, respectively, due to the timing of payments. In 2010, the Company released approximately 4.3 million common shares, totaling $163 million, from the Company’s Employee Stock Benefit Trust (“ESBT”), resulting from the settlement of the Company’s employee benefit obligations. These shares were included as “Treasury Stock at Cost” in the Consolidated Balance Sheets.

Accounts Receivable

The Company records trade accounts receivable at the invoiced amount. The allowance for doubtful accounts represents allowances for customer trade accounts receivable that are estimated to be partially or entirely uncollectible. The customer complaint reserve represents estimated sales returns and allowances. These allowances are used to reduce gross trade receivables to their net realizable values. The Company records these allowances based on estimates related to the following factors:


	o	Customer-specific allowances
	o	Amounts based upon an aging schedule
	o	An estimated amount, based on the Company’s historical experience

No single customer represented 10% or more of the Company’s net sales in, or trade accounts receivable at year end of, 2010 or 2009. However, during 2010, the ten largest customers by net sales represented 12% of the Company’s net sales. As of January 1, 2011, the ten largest customers by trade accounts receivable represented 13% of the Company’s trade accounts receivable. These customers were primarily concentrated in the Office and Consumer Products segment. The Company does not generally require its customers to provide collateral.

Inventories

Inventories are stated at the lower-of-cost-or-market value and are categorized as raw materials, work-in-progress or finished goods. Cost is determined using the first-in, first-out (“FIFO”) method. Inventory reserves are recorded for matters such as damaged, obsolete, excess and slow-moving inventory. The Company uses estimates to record these reserves. Slow-moving inventory is reviewed by category and may be partially or fully reserved for depending on the type of product and the length of time the product has been included in inventory.

Inventories at end of year were as follows:


(In millions)	2010			2009


Raw materials	$	243.3		$	217.9
Work-in-progress		130.5			119.6
Finished goods		205.3			205.2


Inventories at lower of cost or market (approximates replacement cost)		579.1			542.7
Inventory reserves		(59.2	)		(65.4	)


Inventories, net	$	519.9		$	477.3

Property, Plant and Equipment

Major classes of property, plant and equipment are stated at cost and were as follows:


(In millions)	2010			2009


Land	$	65.1		$	68.4
Buildings and improvements		738.1			764.1
Machinery and equipment		2,325.7			2,334.8
Construction-in-progress		57.3			40.6


Property, plant and equipment		3,186.2			3,207.9
Accumulated depreciation		(1,923.3	)		(1,853.2	)


Property, plant and equipment, net	$	1,262.9		$	1,354.7

Depreciation is generally computed using the straight-line method over the estimated useful lives of the assets ranging from two to forty-five years for buildings and improvements and two to fifteen years for machinery and equipment. Leasehold improvements are depreciated over the shorter of the useful life of the asset or the term of the associated leases. Maintenance and repair costs are expensed as incurred; renewals and betterments are capitalized. Upon the sale or retirement of assets, the accounts are relieved of the cost and the related accumulated depreciation, with any resulting gain or loss included in net income. There were no significant capital lease assets at year end 2010 and 2009.

Software

The Company capitalizes internal and external software costs that are incurred during the application development stage of the software development, including costs incurred for the design, coding, installation to hardware, testing, and upgrades and enhancements that provide additional functionalities and capabilities to the software and hardware of the chosen path. Internal and external software costs during the preliminary project stage are expensed, as are those costs during the post-implementation and/or operation stage, including internal and external training costs and maintenance costs.

Capitalized software, which is included in “Other assets” in the Consolidated Balance Sheet, is amortized on a straight-line basis over the estimated useful life of the software, ranging from two to ten years. Capitalized software costs were as follows:


(In millions)	2010			2009


Cost	$	381.7		$	364.0
Accumulated amortization		(238.7	)		(214.1	)


	$	143.0		$	149.9

Impairment of Long-lived Assets

Impairment charges are recorded when the carrying amounts of long-lived assets are determined not to be recoverable. Impairment is measured by assessing the usefulness of an asset or by comparing the carrying value of an asset to its fair value. Fair value is typically determined using quoted market prices, if available, or an estimate of undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The key estimates applied when preparing cash flow projections relate to revenues, gross margins, economic life of assets, overheads, taxation and discount rates. The amount of impairment loss is calculated as the excess of the carrying value over the fair value. Historically, changes in market conditions and management strategy have caused the Company to reassess the carrying amount of its long-lived assets.

Goodwill and Other Intangibles Resulting from Business Acquisitions

Business combinations are accounted for by the purchase method, and the excess of the acquisition cost over the fair value of net tangible assets and identified intangible assets acquired is considered goodwill. As a result, the Company discloses goodwill separately from other intangible assets. Other identifiable intangibles include customer relationships, patents and other acquired technology, trade names and trademarks, and other intangibles.

The Company’s reporting units for the purpose of performing the impairment tests for goodwill consist of roll materials; retail information services; office and consumer products; graphics and reflective products; industrial products; and business media. In performing the required impairment tests, the Company primarily applies a present value (discounted cash flow) method to determine the fair value of the reporting units with goodwill. The Company performs its annual impairment test of goodwill during the fourth quarter.

Certain factors may result in the need to perform an impairment test prior to the fourth quarter, including significant underperformance of the Company’s business relative to expected operating results, significant adverse economic and industry trends, significant decline in the Company’s market capitalization for an extended period of time relative to net book value, or a decision to divest an individual business within a reporting unit.

The Company estimates the fair value of its reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires the Company to make various assumptions about sales, operating margins, growth rates and discount rates. Assumptions about discount rates are based on a weighted-average cost of capital for comparable companies. Assumptions about sales, operating margins, and growth rates are based on the Company’s forecasts, business plans, economic projections, anticipated future cash flows and marketplace data. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period.

Goodwill impairment is determined using a two-step process. The first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any.

The second step, if necessary, compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess.

See also Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions.”

Foreign Currency

Asset and liability accounts of international operations are translated into U.S. dollars at current rates. Revenues and expenses are translated at the weighted-average currency rate for the fiscal year. Translation gains and losses of subsidiaries operating in hyperinflationary economies, if any, are included in net income in the period incurred. Gains and losses resulting from hedging the value of investments in certain international operations and from translation of balance sheet accounts are recorded directly as a component of other comprehensive income.

Gains and losses resulting from foreign currency transactions are included in income in the period incurred. Transactions in foreign currencies (including receivables, payables and loans denominated in currencies other than the functional currency) decreased net income by $5.8 million and $2.8 million in 2010 and 2009, respectively, and increased net income by $16.1 million in 2008. In 2008, transactions in foreign currencies included a foreign currency net gain related to certain intercompany transactions of approximately $9 million. These amounts exclude the effects from translation of foreign currencies on the Company’s financial statements.

The Company had no operations in hyperinflationary economies in fiscal years 2010, 2009, and 2008.

Financial Instruments

The Company enters into certain foreign exchange hedge contracts to reduce its risk from exchange rate fluctuations associated with receivables, payables, loans and firm commitments denominated in certain foreign currencies that arise primarily as a result of its operations outside the U.S. The Company enters into certain interest rate contracts to help manage its exposure to interest rate fluctuations. The Company also enters into certain natural gas and other commodity futures contracts to hedge price fluctuations for a portion of its anticipated domestic purchases. The maximum length of time for which the Company hedges its exposure to the variability in future cash flows for forecasted transactions is generally 12 to 24 months.

On the date the Company enters into a derivative contract, it determines whether the derivative will be designated as a hedge. Those derivatives not designated as hedges are recorded on the balance sheets at fair value, with changes in the fair value recognized in earnings. Those derivatives designated as hedges are classified as either (1) a hedge of the fair value of a recognized asset or liability or an unrecognized firm commitment (a “fair value” hedge); or (2) a hedge of a forecasted transaction or the variability of cash flows that are to be received or paid in connection with a recognized asset or liability (a “cash flow” hedge). The Company generally does not purchase or hold any foreign currency, interest rate or commodity contracts for trading purposes.

The Company assesses, both at the inception of the hedge and on an ongoing basis, whether hedges are highly effective. If it is determined that a hedge is not highly effective, the Company prospectively discontinues hedge accounting. For cash flow hedges, the effective portion of the related gains and losses is recorded as a component of other comprehensive income, and the ineffective portion is reported in earnings. Amounts in accumulated other comprehensive income (loss) are reclassified into earnings in the same period during which the hedged forecasted transaction is consummated. In the event the anticipated transaction is no longer likely to occur, the Company recognizes the change in fair value of the instrument in current period earnings. Changes in fair value hedges are recognized in current period earnings. Changes in the fair value of underlying hedged items (such as recognized assets or liabilities) are also recognized in current period earnings and offset the changes in the fair value of the derivative.

In the Statements of Cash Flows, hedge transactions are classified in the same category as the item hedged, primarily in operating activities.

See also Note 5, “Financial Instruments.”

Fair Value Measurements

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability.

The Company determines fair value based on a three-tier fair value hierarchy, which it uses to prioritize the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions to determine the best estimate of fair value.

Revenue Recognition

Sales are recognized when persuasive evidence of an arrangement exists, pricing is determinable, delivery has occurred based on applicable sales terms, and collection is reasonably assured. Sales terms are generally free on board (f.o.b.) shipping point or f.o.b. destination, depending upon local business customs. For most regions in which the Company operates, f.o.b. shipping point terms are utilized and sales are recorded at the time of shipment, because this is when title and risk of loss are transferred. In certain regions, notably in Europe, f.o.b. destination terms are generally utilized and sales are recorded when the products are delivered to the customer’s delivery site, because this is when title and risk of loss are transferred. Furthermore, sales, provisions for estimated returns, and the cost of products sold are recorded at the time title transfers to customers and when the customers assume the risks and rewards of ownership. Actual product returns are charged against estimated sales return allowances.

Sales rebates and discounts are common practice in the industries in which the Company operates. Volume, promotional, price, cash and other discounts and customer incentives are accounted for as a reduction to gross sales. Rebates and discounts are recorded based upon estimates at the time products are sold. These estimates are based upon historical experience for similar programs and products. The Company reviews such rebates and discounts on an ongoing basis and accruals for rebates and discounts are adjusted, if necessary, as additional information becomes available.

Advertising Costs

Advertising costs included in “Marketing, general and administrative expense” were approximately $39 million in 2010, $24 million in 2009, and $23 million in 2008. The Company’s policy is to expense advertising costs as incurred.

Research and Development

Research and development costs are related to research, design and testing of new products and applications and are expensed as incurred. Research and development expense was $95.6 million in 2010, $90.7 million in 2009, and $94 million in 2008.

Pension and Postretirement Benefits

Assumptions used in determining projected benefit obligations and the fair value of plan assets for the Company’s pension plans and other postretirement benefit plans are evaluated by management in consultation with outside actuaries. In the event that the Company determines that changes are warranted in the assumptions used, such as the discount rate, expected long-term rate of return, or health care costs, future pension and postretirement benefit expenses could increase or decrease. Due to changing market conditions or changes in the participant population, the actuarial assumptions that the Company uses may differ from actual results, which could have a significant impact on the Company’s pension and postretirement liability and related cost. Refer to Note 6, “Pension and Other Postretirement Benefits,” for further information on such assumptions.

Product Warranty

The Company provides for an estimate of costs that may be incurred under its basic limited warranty at the time product revenue is recognized. These costs primarily include materials and labor associated with the service or sale of the product. Factors that affect the Company’s warranty liability include the number of units installed or sold, historical and anticipated rate of warranty claims on those units, cost per claim to satisfy the Company’s warranty obligation and availability of insurance coverage. Because these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. The Company’s liability associated with product warranty was $1.7 million and $2 million at year end 2010 and 2009, respectively.

Stock-Based Compensation

The Company’s stock-based compensation expense is the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period. The fair value of the Company’s stock option awards is estimated as of the date of grant using the Black-Scholes option-pricing model. This model requires input assumptions for the Company’s expected dividend yield, expected stock price volatility, risk-free interest rate and the expected option term.

The fair value of certain stock-based awards that are subject to performance metrics based on market conditions is determined using the Monte-Carlo simulation model, which utilizes multiple input variables, including expected volatility assumptions and other assumptions appropriate for determining fair value to estimate the probability of satisfying the market condition target stipulated in the award.

The Company uses the short-cut method to calculate the historical pool of windfall tax benefits related to employee stock-based compensation awards. In addition, the Company elected to follow the tax ordering laws to determine the sequence in which deductions and net operating loss carryforwards are utilized, as well as the direct-only approach to calculating the amount of windfall or shortfall tax benefits.

See also Note 9, “Shareholders’ Equity and Stock-Based Compensation.”

Environmental Expenditures

Environmental expenditures are generally expensed. However, environmental expenditures for newly acquired assets and those which extend or improve the economic useful life of existing assets are capitalized and amortized over the remaining asset life. During each annual reporting period, the Company reviews its estimates of costs of compliance with environmental laws related to remediation and cleanup of various sites, including sites in which governmental agencies have designated the Company as a potentially responsible party. When it is probable that obligations have been incurred and where a range of the cost of compliance or remediation can be 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. Potential insurance reimbursements are not offset against potential liabilities, and such liabilities are not discounted. Refer to Note 8, “Contingencies,” for further information.

Asset Retirement Obligations

The Company recognizes a liability for the fair value of conditional asset retirement obligations based on estimates determined through present value techniques. An asset retirement is ‘conditional’ when the timing and (or) method of settlement of the retirement obligation is conditional upon a future event that may or may not be within the control of the Company. The Company’s asset retirement obligations primarily relate to lease restoration costs. The Company’s estimated liability associated with asset retirement obligations was $8 million and $7.9 million at year end 2010 and 2009, respectively.

Restructuring and Severance Costs

The Company has severance pay plans that provide eligible employees with severance payments in the event of an involuntary termination due to qualifying cost reduction actions. Severance pay is calculated by using a severance benefit formula under the plans. Accordingly, the provisions for such amounts and other related exit costs are recorded when they are probable and estimable. In the absence of a plan or established local practice for overseas jurisdictions, liabilities for severance and related costs are recognized when incurred. See also Note 10, “Cost Reduction Actions.”

Taxes on Income

Deferred tax assets and liabilities reflect temporary differences between the amount of assets and liabilities for financial and tax reporting purposes. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is recorded to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized. Changes in tax laws or accounting standards and methods may affect recorded deferred taxes in future periods.

Income taxes have not been provided on certain undistributed earnings of international subsidiaries because such earnings are considered to be indefinitely reinvested.

When establishing a valuation allowance, the Company considers future sources of taxable income such as “future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards” and “tax planning strategies.” A tax planning strategy is defined as “an action that: is prudent and feasible; an enterprise ordinarily might not take, but would take to prevent an operating loss or tax credit carryforward from expiring unused; and would result in realization of deferred tax assets.” In the event the Company determines that the deferred tax assets will not be realized in the future, the valuation adjustment to the deferred tax assets is charged to earnings in the period in which the Company makes such a determination. The Company has also acquired certain net deferred tax assets with existing valuation allowances. If it is later determined that it is more likely than not that the deferred tax assets will be realized, the Company will release the valuation allowance to current earnings or adjust the purchase price allocation.

The Company calculates its current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified.

Investment tax credits are accounted for in the period earned in accordance with the flow-through method.

The amount of income taxes the Company pays is subject to ongoing audits by federal, state and foreign tax authorities. The Company’s estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. The Company applies a more-likely-than-not threshold for financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The Company records a liability for the difference between the benefit recognized and measured and the tax position taken or expected to be taken on the tax return. To the extent that the Company’s assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. The Company reports tax-related interest and penalties as a component of income tax expense.

The Company does not believe there is a reasonable likelihood that there will be a material change in the tax related balances or valuation allowance balances. However, due to the complexity of some of these uncertainties, the ultimate resolution may be materially different from the current estimate.

See also Note 11, “Taxes Based on Income.”

Net Income (Loss) Per Share

Net income (loss) per common share amounts were computed as follows:


(In millions, except per share amounts)		2010		2009			2008


(A)	Net income (loss) available to common shareholders	$	316.9	$	(746.7	)	$	266.1


(B)	Weighted-average number of common shares outstanding		105.8		103.6			98.4
	Dilutive shares (additional common shares issuable under employee stock-based awards)		1.0		–			.3


(C)	Weighted-average number of common shares outstanding, assuming dilution		106.8		103.6			98.7


Net income (loss) per common share (A) ¸ (B)		$	3.00	$	(7.21	)	$	2.70


Net income (loss) per common share, assuming dilution (A) ¸ (C)		$	2.97	$	(7.21	)	$	2.70

Certain employee stock-based awards were not included in the computation of net income (loss) per common share, assuming dilution, because they would not have had a dilutive effect. Employee stock-based awards excluded from the computation totaled approximately 9 million shares and 10 million shares in 2010 and 2008, respectively.

In 2009, the effect of normally dilutive securities (for example, stock-based awards) was not dilutive because the Company generated a net operating loss. Employee stock-based awards excluded from the computation totaled approximately 11 million shares in 2009.

As further discussed under “Recent Accounting Requirements” below, effective at the beginning of 2009, the Company adopted additional guidance from the Financial Accounting Standards Board (“FASB”) regarding the calculation of earnings per share. This did not have a material impact on net income (loss) per share.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss), foreign currency translation adjustment, net actuarial loss, prior service cost and net transition assets, net of tax, and the gains or losses on the effective portion of cash flow and firm commitment hedges, net of tax, that are currently presented as a component of shareholders’ equity.

The components of accumulated other comprehensive loss (net of tax, with the exception of the foreign currency translation adjustment) were as follows:


(In millions)	2010			2009


Foreign currency translation adjustment	$	187.3		$	169.2
Net actuarial loss, prior service cost and net transition assets, less amortization, net of tax benefits of $152.7 and $149.4 at year end 2010 and 2009, respectively		(321.2	)		(303.4	)
Net loss on derivative instruments designated as cash flow and firm commitment hedges, net of tax benefits of $5.4 and $6.6 at year end 2010 and 2009, respectively		(9.0	)		(11.0	)


Accumulated other comprehensive loss	$	(142.9	)	$	(145.2	)

Cash flow and firm commitment hedging instrument activities in other comprehensive loss, net of tax, were as follows:


(In millions)	2010			2009


Beginning accumulated derivative loss	$	(11.0	)	$	(15.8	)
Net loss reclassified to earnings		12.3			15.2
Net change in the revaluation of hedging transactions		(10.3	)		(10.4	)


Ending accumulated derivative loss	$	(9.0	)	$	(11.0	)

Business Combinations

The Company records the assets acquired and liabilities assumed from acquired businesses at fair value, and the Company makes estimates and assumptions to determine such fair values.

The Company utilizes a variety of assumptions and estimates that are believed to be reasonable in determining fair value for assets acquired and liabilities assumed. These assumptions and estimates include estimated discounted cash flow analysis, growth rates, discount rates, current replacement cost for similar capacity for certain assets, market rate assumptions for certain obligations and certain potential costs of compliance with environmental laws related to remediation and cleanup of acquired properties. The Company also utilizes information obtained from management of the acquired businesses and its historical experience from previous acquisitions.

The Company applies significant assumptions and estimates in determining certain intangible assets resulting from the acquisitions (such as customer relationships, patents and other acquired technology, and trademarks and trade names, as well as related applicable useful lives), property, plant and equipment, receivables, inventories, investments, tax accounts, environmental liabilities, stock option awards, lease commitments and restructuring and integration costs. Unanticipated events and circumstances may occur, which may affect the accuracy or validity of such assumptions, estimates or actual results. As such, decreases to fair value of assets acquired and liabilities assumed (including cost estimates for certain obligations and liabilities) are recorded as an adjustment to goodwill indefinitely, whereas increases to the estimates are recorded as an adjustment to goodwill during the purchase price allocation period (generally within one year of the acquisition date) and as operating expenses thereafter.

Recent Accounting Requirements

In December 2010, the FASB issued an amendment to the accounting standards related to goodwill which (1) modifies step one of the goodwill impairment test by requiring entities with reporting units that have a zero or negative carrying value to assess whether it is more likely than not that a goodwill impairment exists, and (2) does not prescribe a specific method of calculating the carrying value of a reporting unit in the performance of step one of the goodwill impairment test. Under the requirements of the amended standards, if the entity concludes that it is more likely than not that a goodwill impairment exists, an entity must perform step two of the goodwill impairment test. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment exists. This amendment will be effective for fiscal years beginning after December 15, 2010. The Company does not expect this amendment to have a material impact on the Company’s financial results of operations and financial condition.

In January 2010, the FASB updated the accounting guidance regarding fair value measurement disclosure. This guidance requires companies to disclose the amount of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers and for any transfers in or out of Level 3 of the fair value hierarchy. In addition, the guidance clarifies certain existing disclosure requirements. This updated guidance was effective at the beginning of 2010 and did not have a material impact on the Company’s disclosures.

In June 2009, the FASB issued changes to consolidation accounting. Among other items, these changes respond to concerns about the application of certain key provisions of previous accounting standards, including those regarding the transparency of the involvement with variable interest entities. The Company adopted these changes at the beginning of 2010. These changes did not have a material impact on the Company’s financial condition, results of operations, cash flows, or disclosures.

In June 2009, the FASB established the FASB Accounting Standards Codification (the “Codification”) as the single source of authoritative non-governmental U.S. GAAP. The Codification was effective for interim and annual periods ending after September 15, 2009. The adoption of the Codification changed the manner in which U.S. GAAP guidance is referenced, but did not have any impact on the Company’s financial condition, results of operations, cash flows, or disclosures.

The FASB issued in May 2009, and amended in February 2010, a new accounting standard on subsequent events. This standard defines what qualifies as a subsequent event — those events or transactions that occur following the balance sheet date, but before the financial statements are issued, or are available to be issued. This standard was effective for interim and annual periods ending after June 15, 2009. The Company adopted this accounting standard in the second quarter of 2009.

In April 2009, the FASB issued changes to disclosure requirements regarding fair value of financial instruments, which require disclosure about fair value of financial instruments, whether recognized or not recognized in the statements of financial position, in interim financial information. These changes also require fair value information to be presented together with the related carrying amount and disclosure regarding the methods and significant assumptions used to estimate fair value. These changes were effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company has included the required disclosures in Note 4, “Debt.”

The FASB issued in December 2007, and amended in April 2009, a revised accounting standard for business combinations. This standard defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. In general, this standard requires the acquiring entity in a business combination to recognize the fair value of all the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date as the fair value measurement point; and modifies the disclosure requirements. This standard applies prospectively to business combinations for which the acquisition date is on or after the first annual reporting period beginning on or after December 15, 2008. The adoption of this standard has not had a material impact on the Company’s financial results of operations and financial condition as there have been no acquisitions since the effective date.

In December 2008, the FASB issued changes to disclosure requirements about postretirement benefit plan assets, which provides additional guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. These changes were effective for financial statements issued for fiscal years ending after December 15, 2009. These changes increased the disclosures in the financial statements related to the assets of the Company’s pension and postretirement benefits plans. These disclosures are included in Note 6, “Pension and Other Postretirement Benefits.”

In August 2008, the FASB issued additional accounting guidance regarding defensive intangible assets. This guidance clarifies that a defensive intangible asset should be accounted for as a separate unit of accounting. This applies to all intangible assets acquired, including intangible assets acquired in a business combination, in situations in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining access to the asset (defensive assets). This guidance was effective for intangible assets acquired on or after the beginning of the first annual reporting period beginning on December 15, 2008. The adoption of this guidance did not have an impact on the Company’s financial results of operations and financial condition as there have been no acquisitions since the effective date.

In June 2008, the FASB issued additional accounting guidance regarding the effect of share-based payments transactions on the computation of earnings per share. This guidance clarifies that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. This guidance was effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years and required retrospective application. The adoption of this guidance did not have a material impact on the Company’s financial results of operations and financial condition as the Company does not have participating securities.

In April 2008, the FASB issued changes to the method for determining the useful life of intangible assets. These changes modified factors that should be considered in developing renewal or extension assumptions used for purposes of determining the useful life of a recognized intangible asset. These changes were intended to improve the consistency between the useful life of a recognized intangible asset for purposes of determining impairment and the period of expected cash flows used to measure the fair value of the asset in a business combination and other U.S. generally accepted accounting principles. These changes were effective for fiscal years beginning after December 15, 2008. The adoption of these changes did not have a material impact on the Company’s financial results of operations and financial condition.

In March 2008, the FASB issued changes to disclosure requirements regarding derivative instruments and hedging activities. These changes were intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. These disclosure requirements apply to all derivative instruments as well as related hedged items, bifurcated derivatives, and non-derivative instruments that are designated and qualify as hedging instruments. Entities with such instruments must provide more robust qualitative disclosures and expanded quantitative disclosures. These changes were effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. The Company has included the required disclosures in Note 5, “Financial Instruments.”

In December 2007, the FASB issued a new accounting standard on non-controlling interests. This standard was effective for fiscal years and interim periods beginning on or after December 15, 2008, with earlier adoption prohibited. This standard requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the statements of operations. This standard also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. The adoption of this standard did not have a material impact on the Company’s financial results of operations and financial condition.

In September 2006, the FASB issued a new accounting standard on fair value measurements, which was effective for fiscal years and interim periods after November 15, 2007. This standard defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. This standard applies to all financial assets and liabilities and to all non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. This standard indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. This standard defines fair value based upon an exit price model. The Company applied the provisions of this standard to assets and liabilities measured on a non-recurring basis as of the beginning of the 2009 fiscal year. The adoption of this standard did not have a significant impact on the Company’s financial results of operations or financial position.

Transactions with Related Persons

From time to time, the Company enters into transactions in the normal course of business with related persons. Management believes that such transactions are on terms that would have been obtained from unaffiliated third persons.

One of the Company’s directors, Peter W. Mullin, is the chairman, chief executive officer and majority stockholder in various entities (collectively referred to as the “Mullin Companies”), which previously provided executive compensation, benefit consulting and insurance agency services. In October 2008, the above described operations of the Mullin Companies were sold to a subsidiary of Prudential Financial, Inc. (“Prudential”). During 2010, the Company paid premiums to insurance carriers for life insurance originally placed by the Mullin Companies in connection with various Company employee benefit plans (however, the interests of the Mullin Companies in this insurance were sold to Prudential in October 2008). Prudential has advised the Company that it earned commissions from such insurance carriers in an aggregate amount of approximately $.4 million, $.4 million, and $.6 million in 2010, 2009, and 2008, respectively, for the placement and renewal of this insurance, in which Mr. Mullin had an interest of approximately $.09 million, $.09 million, and $.3 million in 2010, 2009, and 2008, respectively. Mr. Mullin’s interest in the 2010 and 2009 commissions was determined in accordance with the terms of a commission sharing agreement entered into between Mr. Mullin and Prudential at the time of the sale.

The Mullin Companies own a minority interest in M Financial Holdings, Inc. (“MFH”). Substantially all of the life insurance policies, which the Company originally placed through the Mullin Companies, are issued by insurance carriers that participate in reinsurance agreements entered into between these insurance carriers and M Life Insurance Company (“M Life”), a wholly-owned subsidiary of MFH. Reinsurance returns earned by M Life are determined annually by the insurance carriers and can be negative or positive, depending upon the results of M Life’s aggregate reinsurance pool, which consists of the insured lives reinsured by M Life. The Mullin Companies have advised that in 2010, 2009 and 2008 they participated in net reinsurance gains (without risk of forfeiture) of M Life, of which approximately $.2 million, none and $.2 million, respectively, of such gains were ascribed by M Life to the Company’s life insurance policies referred to above, and in which gains Mr. Mullin had an interest of approximately $.1 million, none and $.1 million, respectively. In addition, the Mullin Companies have advised that in 2010, 2009 and 2008, they also participated in net reinsurance gains of M Life that are subject to risk of forfeiture, of which approximately $.03 million, none and $.05 million, respectively, of such gains were ascribed by M Life to the Company’s life insurance policies, and in which gains Mr. Mullin had an interest of approximately $.02 million, none and $.04 million, respectively.

Acquisitions	12 Months Ended
Acquisitions	Jan. 01, 2011
Acquisitions [Abstract]
ACQUISITIONS	NOTE 2. ACQUISITIONS On April 1, 2008, the Company acquired DM Label Group (“DM Label”). DM Label operations are included in the Company’s Retail Information Services segment.

Goodwill and Other Intangibles Resulting from Business Acquisitions

12 Months Ended

Jan. 01, 2011

Goodwill and Other Intangibles Resulting from Business Acquisitions [Abstract]

GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS

NOTE 3. GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS

Results from the Company’s annual impairment test in the fourth quarter of 2010 indicated that no impairment had occurred in 2010.

In connection with the preparation of its first quarter 2009 financial statements, the Company determined that there was a need to initiate an interim impairment test of goodwill and indefinite-lived intangible assets (“goodwill impairment”). The factors considered included both a sustained decline in the Company’s stock price and a decline in the Company’s 2009 revenue projections for the retail information services reporting unit, following lower than expected revenues in March 2009, which continued in April 2009. The peak season for the retail information services reporting unit has traditionally been March through the end of the second quarter.

The Company’s interim impairment analysis indicated that the fair value of each of the Company’s reporting units exceeded its carrying value, except for the Company’s retail information services reporting unit, which had a fair value less than its carrying value. In evaluating the fair value of the retail information services reporting unit, the Company assumed further declines in revenue for 2009 from 2008, reflecting continued and further weakness in the retail apparel market. The Company then assumed that revenues by 2012 would increase to levels comparable with 2007 (including estimated sales for Paxar Corporation (“Paxar”), a business acquired in 2007, and DM Label, adjusted for foreign currency translation). The Company also assumed a discount rate of 14.5% reflecting the increased uncertainty of global economic conditions in the first three months of 2009.

In the first quarter of 2009, the Company recorded non-cash impairment charges of $832 million for the retail information services reporting unit, of which $820 million was related to goodwill and $12 million was related to indefinite-lived intangible assets. The Company completed its interim goodwill impairment test in the second quarter of 2009, with no additional impairment charge recorded thereafter. Results from the Company’s annual impairment test in the fourth quarter of 2009 indicated that no further impairment had occurred.

The primary factors contributing to the $832 million of non-cash impairment charges relative to the Company’s goodwill impairment test in the fourth quarter of 2008 were the assumed increase in the discount rate, the reduced assumptions for revenue growth through 2013, and the associated cash flow impact from these reduced projections. The change in these factors reflected worsening economic projections and market conditions.

Goodwill

Changes in the net carrying amount of goodwill from operations for 2010 and 2009, by reportable segment, were as follows:


										Other
	Pressure-			Retail			Office and			specialty
	sensitive			Information			Consumer			converting
(In millions)	Materials			Services			Products			businesses			Total


Balance as of December 27, 2008	$	334.4		$	1,211.6		$	167.2		$	3.5		$	1,716.7
Acquisition adjustments⁽¹⁾		–			30.9			–			–			30.9
Goodwill impairment charges⁽²⁾		–			(820.0	)		–			–			(820.0	)
Translation adjustments		17.0			.3			5.8			.1			23.2


Balance as of January 2, 2010		351.4			422.8			173.0			3.6			950.8


Goodwill		351.4			1,242.8			173.0			3.6			1,770.8
Accumulated impairment losses		–			(820.0	)		–			–			(820.0	)


Balance as of January 2, 2010		351.4			422.8			173.0			3.6			950.8
Acquisitions		–			.7			–			–			.7
Translation adjustments		(5.4	)		(.3	)		(4.9	)		(.1	)		(10.7	)


Balance as of January 1, 2011		346.0			423.2			168.1			3.5			940.8


Goodwill		346.0			1,243.2			168.1			3.5			1,760.8
Accumulated impairment losses		–			(820.0	)		–			–			(820.0	)


Balance as of January 1, 2011	$	346.0		$	423.2		$	168.1		$	3.5		$	940.8


(1)		Acquisition adjustments in 2009 consisted of opening balance sheet adjustments associated with the DM Label acquisition in April 2008 of $32.6 and other acquisition adjustments of $(1.7).

(2)		As part of the interim goodwill impairment test completed in the second quarter of 2009, the Company recorded a non-cash impairment charge of $820 for the retail information services reporting unit in the first quarter of 2009, with no additional impairment charge recorded thereafter.

Indefinite-Lived Intangible Assets

In connection with the acquisition of Paxar, the Company acquired approximately $30 million of indefinite-lived intangible assets, consisting of certain trade names and trademarks, which are not subject to amortization because they have an indefinite useful life. In the first quarter of 2009, the Company recorded a non-cash impairment charge of $12 million related to these indefinite-lived intangible assets, with no additional impairment charge recorded thereafter. At January 1, 2011, the carrying value of these indefinite-lived intangible assets was $18 million. At January 2, 2010, the carrying value of these indefinite-lived intangible assets was $17.9 million, which included $.1 million of negative currency impact.

Finite-Lived Intangible Assets

The following table sets forth the Company’s finite-lived intangible assets resulting from business acquisitions at January 1, 2011 and January 2, 2010, which continue to be amortized:


			2010						2009

	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
(In millions)	Amount		Amortization		Amount		Amount		Amortization		Amount


Customer relationships	$	291.9	$	119.2	$	172.7	$	295.0	$	94.8	$	200.2
Patents and other acquired technology		53.6		28.1		25.5		53.6		23.5		30.1
Trade names and trademarks		44.8		38.0		6.8		47.0		39.8		7.2
Other intangibles		14.4		8.5		5.9		13.9		7.1		6.8


Total	$	404.7	$	193.8	$	210.9	$	409.5	$	165.2	$	244.3

Amortization expense on finite-lived intangible assets resulting from business acquisitions was $32.9 million for 2010, $33.5 million for 2009, and $32.8 million for 2008. The estimated amortization expense for finite-lived intangible assets resulting from completed business acquisitions for each of the next five fiscal years is expected to be approximately $33 million in 2011, $33 million in 2012, $31 million in 2013, $28 million in 2014, and $24 million in 2015.

As of January 1, 2011, the weighted-average amortization periods from the date of acquisition and weighted-average remaining useful lives of finite-lived intangible assets were as follows:


	Weighted-average
	amortization periods		Weighted-average
	from the date of		remaining
(In years)	acquisition		useful life


Customer relationships		13		8
Patents and other acquired technology		13		6
Trade names and trademarks		12		5
Other intangibles		7		3

Debt

12 Months Ended

Jan. 01, 2011

Debt [Abstract]

DEBT

NOTE 4. DEBT

Short-term variable rate domestic borrowings from commercial paper issuances were approximately $298 million (weighted-average interest rate of .4%) at January 1, 2011 and approximately $415 million (weighted-average interest rate of .2%) at January 2, 2010.

The Company had $81.8 million (weighted-average interest rate of 10.6%) and $60.1 million (weighted-average interest rate of 12.8%) of borrowings outstanding under foreign short-term lines of credit at January 1, 2011 and January 2, 2010, respectively.

Uncommitted lines of credit were approximately $407 million at January 1, 2011 and may be cancelled at any time by the Company or the banks.

Available short-term financing arrangements totaled $1.03 billion at January 1, 2011.

Commitment fees related to the Company’s committed lines of credit in 2010, 2009, and 2008 were $2.6 million, $2.3 million, and $.8 million, respectively.

Long-term debt and its respective weighted-average interest rates at January 1, 2011 consisted of the following:


(In millions)	2010			2009


Medium-term notes:
Series 1995 at 7.5% — due 2015 through 2025	$	50.0		$	50.0
Long-term notes:
Bank term loan		–			340.0
Senior notes due 2013 at 4.8%		250.0			250.0
Senior notes due 2017 at 6.6%		249.2			249.0
HiMEDS Senior notes		–			109.4
Senior notes due 2020 at 5.4%		249.8			–
Senior notes due 2033 at 6.0%		150.0			150.0
Other long-term borrowings		8.4			.8
Less amount classified as current		(1.2	)		(60.5	)


Total long-term debt	$	956.2		$	1,088.7

The Company’s medium-term notes have maturities from 2015 through 2025 and accrue interest at various fixed rates.

Maturities of long-term debt during the years 2011 through 2015 are $1.2 million (classified as current), $2.3 million, $252 million, $1.6 million and $5.6 million, respectively, with $694.7 million maturing in 2016 and thereafter.

In March 2009, the Company completed an exchange of approximately 6.6 million units (or 75.15%) of its HiMEDS units. The Company issued approximately 6.5 million shares of its common stock and paid approximately $43 million in cash for the exchanged HiMEDS units with a carrying value of approximately $331 million. As a result of this exchange, the Company recorded a debt extinguishment loss of approximately $21 million (included in “Other expense, net” in the Consolidated Statements of Operations) in the first quarter of 2009, which included a write-off of $9.6 million related to unamortized debt issuance costs. In November 2010, the Company completed the remarketing of its remaining HiMEDS senior notes in accordance with the original terms of the HiMEDS units by purchasing approximately $109 million of these senior notes. In aggregate, this remarketing resulted in the extinguishment of approximately $109 million of senior notes and the issuance of approximately 2.1 million shares of the Company’s common stock. As a result of this remarketing, the Company recorded a debt extinguishment loss of $2.8 million (included in “Other expense, net” in the Consolidated Statements of Operations), which consisted of a write-off related to unamortized debt issuance costs.

In January 2009, the Company entered into an amendment to a credit agreement for a $1 billion revolving credit facility (the “Revolver”) with certain domestic and foreign banks, maturing August 10, 2012. The amendment increased the Company’s flexibility for a specified period of time in complying with the financial covenants to which the Revolver is subject and excluded certain restructuring charges from the calculation of the financial ratios under those covenants. Additionally, the amendment increased the annual interest rate of the Revolver and provided for an increase in the facility fee payable under the Revolver. Financing available under the Revolver was used as a commercial paper back-up facility and to finance other corporate requirements.

In January 2009, a wholly-owned subsidiary of the Company entered into an amendment to a credit agreement for a $400 million term loan credit facility (“Credit Facility”) with certain domestic and foreign banks. The subsidiary’s payment and performance under the agreement were guaranteed by the Company. Financing available under the Credit Facility was permitted to be used for working capital and other general corporate purposes. The amendment increased the Company’s flexibility for a specified period of time in complying with the financial covenants to which the Credit Facility is subject and excluded certain restructuring charges from the calculation of the financial ratios under those covenants. The amendment also increased the annual interest rate of the Credit Facility. In April 2010, the Company issued $250 million of senior notes bearing an interest rate of 5.375% per year, due April 2020. Approximately $248 million in proceeds from the offering, net of underwriting discounts and offering expenses, were used, together with commercial paper borrowings, to repay the $325 million in indebtedness outstanding under the Credit Facility in May 2010. In the second quarter of 2010, the Company recorded a debt extinguishment loss of $1.2 million related to unamortized debt issuance costs from the Credit Facility.

As of January 1, 2011, the Company was in compliance with its financial covenants.

The Company’s total interest costs in 2010, 2009 and 2008 were $80.6 million, $89.5 million and $122.1 million, respectively, of which $4 million, $4.2 million and $6.2 million, respectively, were capitalized as part of the cost of assets.

The fair value of the Company’s long-term debt is estimated primarily based on the credit spread above U.S. Treasury securities on comparable notes with similar rates, credit rating, and remaining maturities. The fair value of the Company’s total debt, including short-term borrowings, was $1.39 billion at January 1, 2011 and $1.60 billion at January 2, 2010. Fair value amounts were determined primarily based on Level 2 inputs. Refer to Note 1, “Summary of Significant Accounting Policies.”

The Company had standby letters of credit with an aggregate contract amount of outstanding totaling $41.1 million and $52.5 million at January 1, 2011 and January 2, 2010, respectively. The aggregate contract amount of outstanding standby letters of credit approximated fair value.

Financial Instruments

12 Months Ended

Jan. 01, 2011

Financial Instruments [Abstract]

FINANCIAL INSTRUMENTS


NOTE 5.	FINANCIAL INSTRUMENTS

As of January 1, 2011, the U.S. dollar equivalent notional values of the Company’s outstanding commodity contracts and foreign exchange contracts were approximately $6.9 million and $1.18 billion, respectively.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the statements of financial position. The Company designates commodity forward contracts on forecasted purchases of commodities and foreign currency contracts on forecasted transactions as cash flow hedges and foreign currency contracts on existing balance sheet items as fair value hedges.

In April 2010, the Company entered into a contract to lock in the Treasury rate component of the interest rate on its $250 million debt issuance, which is discussed in Note 4, “Debt.” On April 9, 2010, the contract settled at a loss of $.3 million, which is being amortized into interest expense over the term of the related debt.

The following table provides the balances and locations of derivatives as of January 1, 2011:


	Asset			Liability
(In millions)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value


Foreign exchange contracts	Other current assets	$	16.8	Other current liabilities	$	7.9
Commodity contracts	Other current assets		.1	Other current liabilities		2.4


		$	16.9		$	10.3

The following table provides the balances and locations of derivatives as of January 2, 2010:


	Asset			Liability
(In millions)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value


Foreign exchange contracts	Other current assets	$	5.0	Other current liabilities	$	6.5
Commodity contracts	Other current assets		.5	Other current liabilities		3.5


		$	5.5		$	10.0

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings, resulting in no net material impact to income.

The following table provides the components of the gain (loss) recognized in income related to fair value hedging contracts. The corresponding gains or losses on the underlying hedged items approximated the net gain on these fair value hedging contracts.


(In millions)	Location of Gain (Loss) in Income	2010			2009


Foreign exchange contracts	Cost of products sold	$	(3.4	)	$	(2.8	)
Foreign exchange contracts	Marketing, general and administrative expense		40.2			15.3


		$	36.8		$	12.5

Cash Flow Hedges

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

The following table provides the components of the loss recognized in accumulated other comprehensive loss on derivatives (effective portion) related to cash flow hedging contracts:


(In millions)	2010			2009


Interest rate contracts	$	(.3	)	$	–
Foreign exchange contracts		(6.0	)		(7.7	)
Commodity contracts		(4.0	)		(2.7	)


	$	(10.3	)	$	(10.4	)

The following table provides the components of the loss reclassified from accumulated other comprehensive loss (effective portion) related to cash flow hedging contracts:


(In millions)	Location of Loss in Income	2010			2009


Interest rate contracts	Interest expense	$	(4.8	)	$	(6.9	)
Foreign exchange contracts	Cost of products sold		(2.9	)		(2.5	)
Commodity contracts	Cost of products sold		(4.6	)		(5.8	)


		$	(12.3	)	$	(15.2	)

The amount of gain or loss recognized in income related to the ineffective portion of, and the amounts excluded from, effectiveness testing for cash flow hedges and derivatives not designated as hedging instruments was not significant in 2010 and 2009.

As of January 1, 2011, a net loss of approximately $8 million is expected to be reclassified from accumulated other comprehensive loss to earnings within the next 12 months.

Pension and Other Postretirement Benefits

12 Months Ended

Jan. 01, 2011

Pension and Other Postretirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFITS


NOTE 6.	PENSION AND OTHER POSTRETIREMENT BENEFITS

Defined Benefit Plans

The Company sponsors a number of defined benefit plans covering eligible U.S. employees and employees in certain other countries. The Company makes contributions that are sufficient to meet the minimum funding requirements of applicable laws and regulations, plus additional amounts, if any, that management determines to be appropriate, to these plans. Benefits payable to employees are based primarily on years of service and employees’ pay during their employment with the Company. Certain benefits provided by one of the Company’s U.S. defined benefit plans may be paid, in part, from an employee stock ownership plan. While the Company has not expressed any intent to terminate these plans, the Company may do so at any time, subject to applicable laws and regulations.

The Company is also obligated to pay unfunded termination indemnity benefits to certain employees outside of the U.S. These benefits are subject to applicable agreements, local laws and regulations. The Company has not incurred significant costs related to performance under these types of arrangements and the associated liability is not included in the disclosures below.

The Company’s U.S. defined benefit pension plans and early retiree medical plan were closed to employees hired after December 31, 2008. Employees who participated in these plans before December 31, 2008 continued to participate and accrue pension benefits after satisfying the eligibility requirements of these plans.

Effective December 31, 2010, benefits for three of the Company’s U.S. defined benefit plans — the Avery Dennison Pension Plan (“ADPP”), the Benefit Restoration Plan (“BRP”), and the Supplemental Executive Retirement Plan (“SERP”) — were frozen. Benefits under these plans stopped accruing; however, pension benefits accrued through December 31, 2010 were preserved and will be paid out (for employees fully vested at the time of retirement or other qualified event) under the terms of their respective plans. As a result of freezing the ADPP and BRP, the Company recognized a curtailment loss of $2.4 million in 2010, recorded in “Other expense, net” in the Consolidated Statements of Operations. No curtailment gain or loss was recognized from freezing the SERP, as future service continues to impact the plan’s benefits and the determination of the value is not known until retirement of the participants. In connection with the freezing of the SERP, the Company granted an aggregate of approximately .2 million of stock options to the active SERP participants, which resulted in approximately $2.2 million of pretax stock-based compensation expense in the fourth quarter of 2010. This expense reflected the immediate recognition of compensation cost associated with those stock options granted to employees who are retirement eligible, as defined in the Company’s stock option and incentive plan. Refer to Note 9, “Shareholders’ Equity and Stock-based Compensation.”

Additionally, settlement events in Canada, Belgium, and Korea resulted in the Company’s recognition of a $2.3 million settlement loss in 2010.

Plan Assets

Assets of the Company’s U.S. defined benefit pension plans are invested in a diversified portfolio that consists primarily of equity and fixed income securities. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, including growth, value, and both small and large capitalization stocks. The Company’s target plan asset investment allocation in the U.S. is 75% in equity securities and 25% in fixed income securities and cash, subject to periodic fluctuations in these respective asset classes. The investment objective of the plans is to maximize the total rate of return (income and appreciation) within the limits of prudent risk-taking and Section 404 of the Employee Retirement Income Security Act of 1974, as amended. The plans are diversified across asset classes, striving to achieve an optimal balance between risk and return and between income and capital appreciation. Because many of the pension liabilities are long-term, the investment horizon is also long-term, but the investment plan must also ensure adequate near-term liquidity to meet benefit payments.

Assets of the Company’s international plans are invested in accordance with local accepted practices and include equity securities, fixed income securities, insurance contracts and cash. Asset allocations and investments vary by country and plan. The Company’s target plan asset investment allocation for its international plans combined is 54% in equity securities, 37% in fixed income securities and cash, and 8% in insurance contracts and other investments, subject to periodic fluctuations in these respective asset classes.

The weighted-average asset allocations for the Company’s defined benefit pension plans at end of year 2010 and 2009, by asset category, are as follows:


	2010						2009
	U.S.			Int’l			U.S.			Int’l


Equity securities		70	%		47	%		71	%		42	%
Fixed income securities and cash		30			43			29			47
Insurance contracts and other investments		–			10			–			11


Total		100	%		100	%		100	%		100	%

Fair Value Measurements

The following is a description of the valuation methodologies used for assets measured at fair value:

Cash is valued at nominal value. Money market funds are valued at a net asset value (“NAV”). Mutual funds are valued at fair value as determined by quoted market prices, based upon the NAV of shares held by the plans at year end. Pooled funds, which include real estate pooled funds and multi-asset common trust funds are comprised of shares or units in funds that are not publicly traded and are valued at net unit value, as determined by the fund’s trustees based on the underlying securities in the trust. Equities are valued at the closing price reported on the active market on which the individual securities are traded. Real estate investment trusts are valued based on quoted prices in active markets. Bonds and debentures consist primarily of government bonds, corporate bonds, and financial debentures, and are valued at average price provided by independent pricing companies. Insurance contracts are valued at book value, which approximates fair value and is calculated using the prior year balance plus or minus investment returns and changes in cash flows.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth, by level within the fair value hierarchy, the U.S. plans’ assets at fair value as of year end 2010:

Fair Value Measurements Using

Quoted

Significant

Prices in

Other

Active

Observable

Unobservable

Markets

Inputs

(In millions)

Total

(Level 1)

(Level 2)

(Level 3)

Assets:

Cash

–

Fixed income securities

Money market funds

56.3

–

56.3

–

Pooled funds — U.S. bonds

109.3

–

109.3

–

Total fixed income securities

165.6

–

165.6

–

Equity securities

Equities — U.S. growth

84.1

–

Equities — U.S. value

83.1

–

Equities — international

19.0

–

Mutual fund — international

12.7

–

Pooled funds — U.S. equities

140.4

–

140.4

–

Pooled funds — international

34.6

–

34.6

–

Total equity securities

373.9

198.9

175.0

–

Total U.S. plan assets at fair value

539.7

199.1

340.6

–

Other assets⁽¹⁾

Total U.S. plan assets

540.0


(1)		Included accrued receivables and pending broker settlements at year end 2010.

The following table sets forth, by level within the fair value hierarchy, the international plans’ assets at fair value as of year end 2010:

Fair Value Measurements Using

Quoted

Significant

Prices in

Other

Active

Observable

Unobservable

Markets

Inputs

(In millions)

Total

(Level 1)

(Level 2)

(Level 3)

Assets:

Cash

4.1

–

Fixed income securities

Money market funds

–

Mutual funds

–

Pooled funds — European bonds

179.4

–

179.4

–

Total fixed income securities

179.7

179.4

–

Equity securities

Pooled funds — global

79.3

–

79.3

–

Pooled funds — European region

63.8

–

63.8

–

Pooled funds — Asia Pacific region

12.2

–

12.2

–

Pooled funds — U.S.

11.9

–

11.9

–

Pooled funds — emerging markets

9.3

–

9.3

–

Pooled funds — real estate investment trusts

21.7

–

21.7

–

Total equity securities

198.2

–

198.2

–

Other investments

Pooled funds — other

16.7

–

16.7

–

Insurance contracts

27.3

–

27.3

Total other investments

44.0

–

16.7

27.3

Total international plan assets at fair value

426.0

4.4

394.3

27.3

Other assets⁽¹⁾

Total international plan assets

426.6


(1)		Included accrued receivables and pending broker settlements at year end 2010.

The following table presents a reconciliation of Level 3 assets held during the year ended January 1, 2011:


	Level 3 assets
	Insurance
(In millions)	Contracts


Beginning balance at January 2, 2010	$	26.9
Net realized and unrealized gain		.8
Net purchases, issuances and settlements		(.3	)
Net transfers in (out) of Level 3		–
Impact of changes in foreign currency exchange rates		(.1	)


Ending balance at January 1, 2011	$	27.3

The following table sets forth, by level within the fair value hierarchy, the U.S. plans’ assets at fair value as of year end 2009:


				Fair Value Measurements Using
				Quoted		Significant		Significant
				Prices in		Other		Other
				Active		Observable		Unobservable
				Markets		Inputs		Inputs
(In millions)	Total			(Level 1)		(Level 2)		(Level 3)


Assets:
Cash	$	.3		$	.3	$	–	$	–
Fixed income securities
Money market funds		40.5			–		40.5		–
Pooled funds		97.8			–		97.8		–


Total fixed income securities		138.3			–		138.3		–


Equity securities
Equities		174.9			174.9		–		–
Mutual funds		15.2			15.2		–		–
Pooled funds		137.3			–		137.3		–


Total equity securities		327.4			190.1		137.3		–


Real estate investment trusts		1.9			1.9		–		–


Total U.S. plan assets at fair value	$	467.9		$	192.3	$	275.6	$	–


Other assets⁽¹⁾		(.2	)


Total U.S. plan assets	$	467.7


(1)		Included accrued receivables and pending broker settlements at year end 2009.

The following table sets forth, by level within the fair value hierarchy, the international plans’ assets at fair value as of year end 2009:


			Fair Value Measurements Using
			Quoted		Significant		Significant
			Prices in		Other		Other
			Active		Observable		Unobservable
			Markets		Inputs		Inputs
(In millions)	Total		(Level 1)		(Level 2)		(Level 3)


Assets:
Cash	$	4.7	$	4.7	$	–	$	–
Fixed income securities
Mutual funds		.2		.2		–		–
Bonds and debentures		1.0		–		1.0		–
Pooled funds		179.8		–		179.8		–


Total fixed income securities		181.0		.2		180.8		–


Equity pooled funds		163.9		–		163.9		–
Insurance contracts		26.9		–		–		26.9
Real estate pooled funds		18.2		–		18.2		–
Multi-asset common trust funds		7.0		–		7.0		–


Total international plan assets at fair value	$	401.7	$	4.9	$	369.9	$	26.9


Other assets⁽¹⁾		.4


Total international plan assets	$	402.1


(1)		Included accrued receivables and pending broker settlements at year end 2009.

The following table presents a reconciliation of Level 3 assets held during the year ended January 2, 2010:


	Level 3 assets
	Insurance
(In millions)	Contracts


Beginning balance at December 27, 2008	$	23.0
Net realized and unrealized gain		.9
Net purchases, issuances and settlements		1.8
Net transfers in (out) of Level 3		–
Impact of changes in foreign currency exchange rates		1.2


Ending balance at January 2, 2010	$	26.9

Postretirement Health Benefits

The Company provides postretirement health benefits to certain U.S. retired employees up to the age of 65 under a cost-sharing arrangement, and provides supplemental Medicare benefits to certain U.S. retirees over the age of 65. The Company’s policy is to fund the cost of the postretirement benefits on a cash basis. While the Company has not expressed any intent to terminate postretirement health benefits, the Company may do so at any time.

Plan Assumptions

Discount Rate

The Company, in consultation with its actuaries, annually reviews and determines the discount rates to be used in connection with its postretirement obligations. The assumed discount rate for each pension plan reflects market rates for high quality corporate bonds currently available. In the U.S., the Company’s discount rate was determined by evaluating several yield curves consisting of large populations of high quality corporate bonds. The projected pension benefit payment streams were then matched with the bond portfolios to determine a rate that reflected the liability duration unique to the Company’s plans.

Long-term Return on Assets

The Company determines the long-term rate of return assumption for plan assets by reviewing the historical and expected returns of both the equity and fixed income markets, taking into consideration that assets with higher volatility typically generate a greater return over the long run. Additionally, current market conditions, such as interest rates, are evaluated and peer data is reviewed to check for reasonability and appropriateness.

Healthcare Cost Trend Rate

The Company’s practice is to fund the cost of postretirement benefits on a cash basis. For measurement purposes, an 8.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2011. This rate is expected to decrease to approximately 5% by 2018.

A one-percentage-point change in assumed health care cost trend rates would have the following effects:


	One-percentage-point		One-percentage-point
(In millions)	increase		decrease


Effect on total of service and interest cost components	$	.2	$	(.2	)
Effect on postretirement benefit obligation		3.5		(3.1	)

Plan Balance Sheet Reconciliations

The following provides a reconciliation of benefit obligations, plan assets, funded status of the plans and accumulated other comprehensive income:

Plan Benefit Obligations


	Pension Benefits												U.S. Postretirement
													Health Benefits
	2010						2009						2010			2009
(In millions)	U.S.			Int’l			U.S.			Int’l

Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	693.6		$	465.8		$	611.9		$	449.9		$	37.0		$	31.8
Service cost		23.8			9.8			18.9			11.8			1.5			1.0
Interest cost		40.1			24.5			38.8			25.8			1.9			1.9
Participant contribution		–			4.1			–			4.3			1.2			1.8
Amendments		.8			.1			–			(.3	)		–			–
Actuarial loss (gain)		56.3			50.3			63.2			(25.0	)		1.9			5.3
Plan transfer⁽¹⁾		2.0			.3			2.0			–			–			–
Benefits paid		(37.8	)		(19.5	)		(41.2	)		(20.1	)		(4.8	)		(4.8	)
Net transfer in		–			–			–			.3			–			–
Pension curtailment		(34.0	)		(.8	)		–			–			–			–
Pension settlements⁽²⁾		–			(8.2	)		–			(.8	)		–			–
Foreign currency translation		–			(21.7	)		–			19.9			–			–


Projected benefit obligation at end of year	$	744.8		$	504.7		$	693.6		$	465.8		$	38.7		$	37.0



Accumulated benefit obligation at end of year	$	742.3		$	474.9		$	658.0		$	439.2


(1)		Plan transfer for the U.S. represented a transfer from the Company’s savings plan.

(2)		Pension settlements in 2010 represented settlement events in Canada, Belgium, Korea, Taiwan, and France.

Plan Assets


	Pension Benefits												U.S. Postretirement
													Health Benefits
	2010						2009						2010			2009
(In millions)	U.S.			Int’l			U.S.			Int’l

Change in plan assets:
Fair value of plan assets at beginning of year	$	467.7		$	402.1		$	386.6		$	325.0		$	–		$	–
Actual return on plan assets		54.7			44.1			86.7			60.8			–			–
Plan transfer⁽¹⁾		2.0			.1			2.0			–			–			–
Employer contribution		53.4			24.5			33.5			16.5			3.6			3.0
Participant contribution		–			4.1			–			4.3			1.2			1.8
Benefits paid		(37.8	)		(19.5	)		(41.1	)		(20.1	)		(4.8	)		(4.8	)
Pension settlements⁽²⁾		–			(8.2	)		–			(.8	)		–			–
Adjustment⁽³⁾		–			–			–			.7			–			–
Foreign currency translation		–			(20.6	)		–			15.7			–			–


Fair value of plan assets at end of year	$	540.0		$	426.6		$	467.7		$	402.1		$	–		$	–


(1)		Plan transfer for the U.S. represented a transfer from the Company’s savings plan.

(2)		Pension settlements in 2010 represented settlement events in Canada, Belgium, Korea, Taiwan, and France.

(3)		Adjustment in 2009 represented an additional plan assets related to a German pension plan.

Funded Status


	Pension Benefits												U.S. Postretirement
													Health Benefits
	2010						2009						2010			2009
(In millions)	U.S.			Int’l			U.S.			Int’l

Funded status of the plans:
Noncurrent assets	$	–		$	40.0		$	–		$	45.7		$	–		$	–
Current liabilities		(3.3	)		(2.9	)		(3.1	)		(2.4	)		(2.7	)		(3.0	)
Noncurrent liabilities		(201.5	)		(115.2	)		(222.8	)		(107.0	)		(36.0	)		(34.0	)


Plan assets less than benefit obligations	$	(204.8	)	$	(78.1	)	$	(225.9	)	$	(63.7	)	$	(38.7	)	$	(37.0	)


	Pension Benefits																		U.S. Postretirement
																			Health Benefits
	2010						2009						2008						2010			2009			2008
	U.S.			Int’l			U.S.			Int’l			U.S.			Int’l

Weighted-average assumptions used for determining year end obligations:
Discount rate		5.50	%		5.24	%		6.00	%		5.72	%		6.60	%		5.74	%		5.25	%		5.50	%		6.60	%
Rate of increase in future compensation levels		–			2.95			3.59			2.99			3.59			2.59			–			–			–

The amount in non-current pension assets represents the net assets of the Company’s overfunded plans, which consist of a few international plans. The amounts in current and non-current pension liabilities represent the net obligation of the Company’s underfunded plans, which consist of all U.S. and several international plans.

For U.S. and international plans combined, the projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were approximately $1.02 billion and $693.3 million, respectively, at year end 2010 and $952.2 million and $616.9 million, respectively, at year end 2009.

For U.S. and international plans combined, the accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were approximately $1 billion and $693.3 million, respectively, at year end 2010 and $897.8 million and $609.5 million, respectively, at year end 2009.

Accumulated Other Comprehensive Income (“AOCI”)

The pretax amounts recognized in “Accumulated other comprehensive income (loss)” in the Consolidated Balance Sheet:


	Pension Benefits										U.S. Postretirement
											Health Benefits
	2010					2009					2010			2009
(In millions)	U.S.		Int’l			U.S.		Int’l


Net actuarial loss (gain)	$	355.1	$	(.7	)	$	359.3	$	(1.3	)	$	25.8		$	25.6
Prior service cost (credit)		2.2		3.8			4.7		4.1			(16.5	)		(18.5	)
Net transition obligation		–		104.2			–		78.9			–			–


Net amount recognized in AOCI	$	357.3	$	107.3		$	364.0	$	81.7		$	9.3		$	7.1

The after-tax amounts and reconciliation of AOCI components as of January 1, 2011 are as follows:


	Pension Benefits												U.S. Postretirement
													Health Benefits
	Before-Tax			Before-Tax									Before-
	Amounts			Amounts						Net-of-Tax			Tax					Net-of-Tax
(In millions)	U.S.			Int’l			Tax Effect			Amount			Amount		Tax Effect			Amount


AOCI at January 2, 2010	$	364.0		$	81.7		$	(146.7	)	$	299.0		$	7.1	$	(2.7	)	$	4.4
Less: Amortization		(23.4	)		(4.7	)		9.7			(18.4	)		.4		(.2	)		.2


Net AOCI		340.6			77.0			(137.0	)		280.6			7.5		(2.9	)		4.6
Net actuarial loss (gain)		15.9			30.1	⁽¹⁾		(11.8	)		34.2			1.8		(.7	)		1.1
Prior service cost (credit)		.8			.2			(.3	)		.7			–		–			–


AOCI at January 1, 2011	$	357.3		$	107.3		$	(149.1	)	$	315.5		$	9.3	$	(3.6	)	$	5.7


(1)		Net of foreign currency translation gain of $2.1.

Plan Income Statement Reconciliations

The following table sets forth the components of net periodic benefit cost:


	Pension Benefits
																			U.S. Postretirement
	2010						2009						2008						Health Benefits
(In millions)	U.S.			Int’l			U.S.			Int’l			U.S.			Int’l			2010			2009			2008


Components of net periodic benefit cost:
Service cost	$	23.8		$	9.8		$	18.9		$	11.8		$	19.5		$	14.1		$	1.5		$	1.0		$	1.0
Interest cost		40.1			24.5			38.8			25.8			36.1			28.1			2.0			1.9			1.8
Expected return on plan assets		(48.4	)		(25.9	)		(48.6	)		(26.8	)		(50.9	)		(29.0	)					–			–
Recognized net actuarial loss		20.2			2.4			9.3			2.1			6.0			3.6			1.6			1.5			1.5
Amortization of prior service cost		.8			.5			.8			.5			1.1			1.4			(2.0	)		(2.0	)		(2.0	)
Amortization of transition obligation (asset)		–			(.5	)		–			(.6	)		–			(.6	)		–			–			–
Recognized loss (gain) on curtailment		2.4			(.9	)		–			–			–			(.1	)		–			–			–
Recognized loss on settlement		–			2.3	⁽¹⁾		.9			.2			–			–			–			–			–


Net periodic benefit cost	$	38.9		$	12.2		$	20.1		$	13.0		$	11.8		$	17.5		$	3.1		$	2.4		$	2.3


(1)		Represented settlement events in Canada, Belgium, and Korea.


	Pension Benefits
																			U.S. Postretirement
	2010						2009						2008						Health Benefits
	U.S.			Int’l			U.S.			Int’l			U.S.			Int’l			2010			2009			2008


Weighted-average assumptions used for determining net periodic cost:
Discount rate		6.00	%⁽¹⁾		5.72	%		6.60	%		5.74	%		6.55	%		5.53	%		5.50	%		6.60	%		6.30	%
Expected long-term rate of return on plan assets		8.75			6.23			8.75			6.51			8.75			6.66			–			–			–
Rate of increase in future compensation levels		3.59			2.99			3.59			2.59			3.59			2.66			–			–			–


(1)		The ADPP and BRP were remeasured on August 1, 2010 at 5.40% to reflect the plan freezes effective December 31, 2010.

Plan Contributions

In 2011, the Company expects to contribute approximately $8 million and may contribute up to an additional $25 million to its U.S. pension plans, and expects to contribute $21 million to its international pension plans (totaling approximately $50 million). The Company also expects to contribute approximately $3 million to its postretirement benefit plan in 2011.

Future Benefit Payments

Benefit payments, which reflect expected future service, are as follows:


					U.S. Postretirement
	Pension Benefits				Health Benefits

(In millions)	U.S.		Int’l


2011	$	40.5	$	18.7	$	2.7
2012		41.8		20.0		2.5
2013		43.1		21.0		2.5
2014		44.4		22.0		2.4
2015		45.6		23.4		2.4
2016 — 2020		259.6		143.2		13.6

Estimated Amortization Amounts in Accumulated Other Comprehensive Income

The Company’s estimates of fiscal year 2011 amortization of amounts included in accumulated other comprehensive income are as follows:


						U.S. Postretirement
	Pension Benefits					Health Benefits

(In millions)	U.S.		Int’l


Net actuarial loss	$	8.4	$	3.9		$	1.8
Prior service cost (credit)		.4		.4			(2.0	)
Net transition obligation (asset)		–		(.5	)		–


Net amount to be recognized	$	8.8	$	3.8		$	(.2	)

Defined Contribution Plans

The Company sponsors various defined contribution plans worldwide, with the largest plan being the Avery Dennison Corporation Savings Plan (“Savings Plan”), a 401(k) plan covering its U.S. employees. Employees hired after December 31, 2008, who were no longer eligible to participate in the Company’s defined benefit pension plans and early retiree medical plan, received an enhanced Company matching contribution in the Savings Plan through December 31, 2010. Effective January 1, 2011, the Company increased and made uniform its matching contribution for all participants in the Savings Plan in connection with the freeze of the ADPP and BRP on December 31, 2010.

Beginning March 2009, the Company’s match to the Savings Plan was funded by shares in the Company’s ESBT. During 2010 and 2009, the Company expensed $11.8 million and $9.2 million, respectively, related to its match of participant contributions in the Company’s defined contribution plan. This amount was recorded in “Marketing, general and administrative expense” in the Consolidated Statements of Operations. See Note 9, “Shareholders’ Equity and Stock-based Compensation,” for more information.

Employee Stock Ownership Plan (“ESOP”)

The Savings Plan has a leveraged ESOP feature, which allows the plan to borrow funds to purchase shares of the Company’s common stock at market prices. Savings Plan expense consisted primarily of stock contributions from the ESOP to participant accounts. As of March 2009, the shares in the ESOP were fully allocated to participants, and in August 2009, the final payment of the principal and interest on the outstanding loan was made.

ESOP expense was accounted for under the cost of shares allocated method. Net ESOP expense for 2009 and 2008 was $1.2 million and $1 million, respectively. Company contributions to pay interest or principal on ESOP borrowings were $2.2 million and $3.7 million in 2009 and 2008, respectively.

In 2009, interest costs incurred by the ESOP and dividends on unallocated ESOP shares used for debt service were not significant. In 2008, interest costs incurred by the ESOP were $.3 million and dividends on unallocated ESOP shares used for debt service were $.4 million.

The cost of shares allocated to the ESOP for 2009 and 2008 was $1.3 million and $2.8 million, respectively. Of the total shares held by the ESOP at year end 2008, .8 million shares were allocated and .1 million shares were unallocated.

Other Retirement Plans

The Company has deferred compensation plans which permit eligible employees and directors to defer a portion of their compensation. The deferred compensation, together with certain Company contributions, earns specified and variable rates of return. As of year end 2010 and 2009, the Company had accrued $135.3 million and $128.4 million, respectively, for its obligations under these plans. These obligations are funded by corporate-owned life insurance contracts and standby letters of credit. As of year end 2010 and 2009, these obligations were secured by standby letters of credit of $16 million and $28 million, respectively. To assist in the funding of these plans, the Company has purchased corporate-owned life insurance contracts. Proceeds from the insurance policies are payable to the Company upon the death of covered participants. The cash surrender value of these policies, net of outstanding loans, included in “Other assets” in the Consolidated Balance Sheet, was $181.7 million and $170 million at year end 2010 and 2009, respectively.

The Company’s deferred compensation expense was $5.2 million, $7 million, and $9.5 million for 2010, 2009 and 2008, respectively. A portion of the interest on certain Company contributions may be forfeited by participants if employment is terminated before age 55 other than by reason of death, disability or retirement.

Commitments

12 Months Ended

Jan. 01, 2011

Commitments Disclosure [Abstract]

Commitments


NOTE 7.	COMMITMENTS

Minimum annual rental commitments on operating leases having initial or remaining non-cancelable lease terms of one year or more are as follows:


Year	(In millions)


2011	$	66.1
2012		52.2
2013		36.8
2014		23.1
2015		17.5
2016 and thereafter		48.5


Total minimum lease payments	$	244.2

Operating leases relate primarily to office and warehouse space, and equipment for electronic data processing and transportation. The terms of these leases do not impose significant restrictions or unusual obligations, except as noted below. There were no significant capital lease obligations at year end 2010 and 2009.

On September 9, 2005, the Company completed the lease financing for a commercial facility (the “Facility”) located in Mentor, Ohio, used primarily for the new headquarters and research center for the Company’s roll materials group. The Facility consists generally of land, buildings, equipment and office furnishings. The Company has leased the Facility under an operating lease arrangement, which contains a residual value guarantee of $33.4 million.

Rent expense for operating leases, which includes maintenance and insurance costs and property taxes, was approximately $99 million in 2010, $100 million in 2009, and $105 million in 2008.

Contingencies

12 Months Ended

Jan. 01, 2011

Contingencies [Abstract]

Contingencies


NOTE 8.	CONTINGENCIES

Legal Proceedings

On May 21, 2003, The Harman Press filed in the Superior Court for the County of Los Angeles, California, a purported class action on behalf of indirect purchasers of label stock against the Company, UPM-Kymenne Corporation (“UPM”) and UPM’s subsidiary Raflatac (“Raflatac”), seeking treble damages and other relief for alleged unlawful competitive practices, with allegations including that the defendants attempted to limit competition among themselves through anticompetitive understandings. Three similar complaints were filed in various California courts. In November 2003, on petition from the parties, the California Judicial Council ordered the cases be coordinated for pretrial purposes. The cases were assigned to a coordination trial judge in the Superior Court for the City and County of San Francisco on March 30, 2004. On September 30, 2004, the Harman Press amended its complaint to add Bemis Company Inc.’s subsidiary Morgan Adhesives Company (“MACtac”) as a defendant. On January 21, 2005, American International Distribution Corporation filed a purported class action on behalf of indirect purchasers in the Superior Court for Chittenden County, Vermont. Similar actions were filed by Richard Wrobel, on February 16, 2005, in the District Court of Johnson County, Kansas; and by Chad and Terry Muzzey, on February 16, 2005 in the District Court of Scotts Bluff County, Nebraska. On February 17, 2005, Judy Benson filed a purported multi-state class action on behalf of indirect purchasers in the Circuit Court for Cocke County, Tennessee. Without admitting liability, the Company agreed to pay plaintiffs $2 million to resolve all claims related to the purported state class actions in the states of Kansas, Nebraska, Tennessee and Vermont. Those settlements were approved by the Tennessee court on March 12, 2010 and the complaints in those state actions were dismissed with prejudice. The Company recorded $2 million in the third quarter of 2009 in respect of the settlement of those claims, and made that payment on December 28, 2009. Also, without admitting liability, the Company paid $2.5 million on July 15, 2010 to resolve all claims in the California action. On December 8, 2010, the California court granted final approval of the settlement and dismissed all claims against the Company with prejudice. In respect of settlement of this claim, the Company recorded $.7 million in the fourth quarter of 2009 and $.3 million and $1.5 million in the first and second quarters of 2010, respectively.

The Company and its subsidiaries are involved in various other lawsuits, claims, inquiries, and other regulatory and compliance matters, most of which are routine to the nature of the Company’s business. Based upon current information, management believes that the impact of the resolution of these other matters is not material to the Company’s financial position, or is not estimable.

Environmental Matters

As of January 1, 2011, the Company has been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a potentially responsible party (“PRP”) at fourteen waste disposal or waste recycling sites, which are the subject of separate investigations or proceedings concerning alleged soil and/or groundwater contamination and for which no settlement of the Company’s liability has been agreed. The Company is participating with other PRPs at such sites and anticipates that its share of cleanup costs will be determined pursuant to remediation agreements entered into in the normal course of negotiations with the EPA or other governmental authorities.

The Company has accrued liabilities for these and certain other sites where it is probable that a loss will be incurred and the cost or amount of loss can be reasonably estimated. However, because of the uncertainties associated with environmental assessment and remediation activities, future expense to remediate the currently identified sites and any sites that could be identified in the future for cleanup could be higher than the liabilities accrued.

The activity in 2010 and 2009 related to environmental liabilities was as follows:


(In millions)	2010			2009


Balance at beginning of year	$	51.5		$	54.6
Purchase price adjustments related to acquisitions		–			.9
Accruals		(1.2	)		1.0
Payments		(4.0	)		(5.0	)


Balance at end of year	$	46.3		$	51.5

As of January 1, 2011, approximately $9 million of the total balance was classified as short-term.

These estimates could change depending on various factors, such as modification of currently planned remedial actions, changes in remediation technologies, changes in site conditions, changes in the estimated time to complete remediation projects, changes in laws and regulations affecting remediation requirements and other factors.

Other

The Company participates in international receivable financing programs with several financial institutions whereby advances may be requested from these financial institutions. Such advances are guaranteed by the Company. At January 1, 2011, the Company had guaranteed approximately $14 million.

As of January 1, 2011, the Company guaranteed up to approximately $17 million of certain foreign subsidiaries’ credit granted by suppliers, and $393 million of certain subsidiaries’ lines of credit with various financial institutions.

Shareholders' Equity and Stock-Based Compensation

12 Months Ended

Jan. 01, 2011

Shareholders' Equity and Stock-Based Compensation [Abstract]

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

NOTE 9. SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Common Stock and Common Stock Repurchase Program

The Company’s Certificate of Incorporation authorizes five million shares of $1 par value preferred stock (none outstanding), with respect to which the Board of Directors may fix the series and terms of issuance, and 400 million shares of $1 par value voting common stock.

In 1996, the Company established the ESBT to help meet the Company’s future obligations under employee benefit and compensation plans, including stock plans, 401(k) plans, and other employee benefit plans by contributing common stock of the Company. The Board of Directors previously authorized the issuance of up to 18 million shares to be used for the issuance of stock options and the funding of other Company obligations arising from various employee benefit plans. During 2010 and 2009, approximately 4.3 million and .7 million ESBT shares (with fair values of $163 million and $25 million, respectively) were released by the ESBT upon the settlement of the Company’s employee benefit obligations. These released shares were included as “Treasury stock at cost” in the Consolidated Balance Sheets. As of January 1, 2011, approximately 2 million shares remaining available for issuance are held in the ESBT. The ESBT common stock is carried at market value with changes in share price from prior reporting periods reflected as an adjustment to capital in excess of par value.

The Board of Directors authorizes the Company to repurchase shares of the Company’s outstanding common stock. Repurchased shares may be reissued under the Company’s stock option and incentive plans or used for other corporate purposes. During the fourth quarter of 2010, the Company repurchased approximately 2.7 million shares totaling $108.7 million. Additionally, in December 2010, the Company executed the repurchase of approximately .3 million shares for $13.5 million, which settled in January 2011. As of January 1, 2011, approximately 1.2 million shares were available for repurchase under the Board of Directors’ October 2006 authorization.

Subsequent to the end of 2010, on January 27, 2011, the Board of Directors authorized the Company to repurchase an additional 5 million shares of the Company’s stock.

Stock Based Compensation

The Company maintains various stock option and incentive plans. Net income for 2010, 2009 and 2008 included pretax stock-based compensation expense, which related to stock options, performance units (“PUs”), restricted stock units (“RSUs”) and restricted stock, of $35.2 million, $25.8 million and $29 million, respectively. These expenses were included in “Marketing, general and administrative expense” and were recorded in corporate expense and the Company’s operating segments, as appropriate. The total recognized tax benefit related to these stock-based compensation expenses for 2010, 2009 and 2008 was $11.9 million, $8.5 million and $9.7 million, respectively. No stock-based compensation cost was capitalized for the years ended 2010, 2009 and 2008, respectively.

Stock Options

Stock options granted to directors and employees may be granted at no less than 100% of the fair market value of the Company’s common stock on the date of the grant. Options generally vest ratably over a three-year period for directors and over a four-year period for employees. Prior to fiscal year 2010, options granted to directors generally vested ratably over a two-year period. Unexercised options expire ten years from the date of grant. All stock options granted under these plans have an exercise price equal to the fair market value of the underlying common stock on the date of grant.

The Company’s stock-based compensation expense related to stock options is the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period. The fair value of the Company’s stock option awards is estimated as of the date of grant using the Black-Scholes option-pricing model. This model requires input assumptions for the Company’s expected dividend yield, expected stock price volatility, risk-free interest rate and the expected option term. The following describes the assumptions used in estimating fair value of granted stock options.

Risk-free interest rate was based on the 52-week average of the Treasury-Bond rate that has a term corresponding to the expected option term.

Expected stock price volatility for options represents an average of the implied and historical volatility.

Expected dividend yield was based on the current annual dividend divided by the 12-month average of the Company’s monthly stock price prior to grant.

Expected option term was determined based on historical experience under the Company’s stock option plan.

Forfeiture rate of 5% was determined based on historical data of the Company’s stock option forfeitures.

The weighted-average fair value per share of options granted during 2010 was $8.76, compared to $6.57 for the year ended 2009 and $13.82 for the year ended 2008.

The underlying weighted-average assumptions used were as follows:


	2010			2009			2008


Risk-free interest rate		2.61	%		2.76	%		4.15	%
Expected stock price volatility		31.99	%		41.51	%		29.86	%
Expected dividend yield		2.51	%		3.83	%		2.76	%
Expected option term		6.0 years			6.1 years			6.0 years

The following table sets forth stock option information related to the Company’s stock option plans during 2010:


						Weighted-
				Weighted-		average
	Number			average		remaining		Aggregate
	of options			exercise		contractual		intrinsic value
	(in thousands)			price		life (in years)		(in millions)


Outstanding at January 2, 2010		10,760.2		$	49.72		5.87	$	34.0
Granted		1,850.8			33.09
Exercised		(121.2	)		21.10
Forfeited or expired		(921.4	)		53.41


Outstanding at January 1, 2011		11,568.4		$	47.06		5.75	$	62.0
Options vested and expected to vest at January 1, 2011		11,441.9			47.25		5.72		60.0
Options exercisable at January 1, 2011		8,298.1		$	52.70		4.69	$	20.5

The total intrinsic value of stock options exercised was $1.9 million in 2010, $.2 million in 2009 and $1.9 million in 2008. Cash received by the Company from the exercise of these stock options was approximately $2.5 million in 2010, $.6 million in 2009 and $3 million in 2008. The tax deduction associated with these options exercised was $.6 million in 2010, $.1 million in 2009 and $.6 million in 2008. The intrinsic value of the stock options is based on the amount by which the market value of the underlying stock exceeds the exercise price of the option.

In April and February 2010, the Company granted its annual stock-based compensation awards to its directors and certain of its eligible employees, respectively. Awards granted to retirement-eligible employees are treated as though they were immediately vested; as a result, the compensation expense related to stock option awards of $2.5 million, $.5 million and $3 million was recognized during 2010, 2009 and 2008, respectively, and was included in the stock option expense noted below.

Net income for 2010, 2009 and 2008 included pretax expense for stock options of $19.4 million, $17 million and $18.6 million, respectively.

The following table summarizes the Company’s unvested stock options during 2010:


	Number			Weighted-
	of options			average
	(in thousands)			exercise price


Unvested options outstanding at January 2, 2010		3,566.3		$	36.01
Granted		1,850.8			33.09
Vested		(2,006.8	)		38.59
Forfeited		(140.0	)		36.32


Unvested options outstanding at January 1, 2011		3,270.3		$	32.76

As of January 1, 2011, the Company had approximately $20 million of unrecognized compensation cost related to unvested stock option awards granted under the Company’s plans. This cost is expected to be recognized over the weighted-average remaining requisite service period of approximately 3 years.

Performance Units

Since the second quarter of 2008, following the shareholder approval of the Company’s amended and restated stock option and incentive plan on April 24, 2008, the Company has granted PUs to certain eligible employees of the Company. These PUs are payable in shares of the Company’s common stock at the end of a three-year cliff vesting period provided that certain performance metrics are achieved at the end of each respective performance period. Over the performance period, the number of the Company’s common stock issued will be adjusted upward or downward based upon the probability of achievement of performance metrics. The actual number of shares issued can range from 0% to 200% of the target shares at the time of grant.

The pretax compensation expense related to PUs was $7.7 million, $3.1 million and $1.2 million for the years ended 2010, 2009 and 2008, respectively. The tax deduction associated with the vesting of PUs and the related issuance of common stock was $.2 million in 2010 and $.2 million in 2009.

The following table summarizes information about awarded PUs:


				Weighted-
	Number of			average
	PUs			grant-date
	(in thousands)			fair value


Unvested at January 2, 2010		651.2		$	22.12
Granted at target		342.5			29.06
Vested		(15.1	)		28.66
Forfeited		(60.5	)		23.45


Unvested at January 1, 2011		918.1		$	24.52

As of January 1, 2011, the Company had approximately $12 million of unrecognized compensation cost related to these PUs, which reflects the Company’s current expectation of meeting certain performance metrics. This cost is expected to be recognized over the weighted-average remaining requisite service period of approximately 2 years.

Restricted Stock Units and Restricted Stock

RSU’s are granted under the Company’s stock option and incentive plan and vest based on one of the following:


	o	A vesting period of 1 to 5 years provided that employment continues for 1 to 5 years after the date of the award; or
	o	A vesting period of 3 years provided that a certain performance objective is met at the end of the third year after the year of the award. If the performance objective is not achieved at the end of the third year, these same RSUs may vest if the performance objective is met at the end of the fourth year, and if not achieved at that time, then these same RSUs may vest if the performance objective is met at the end of the fifth year following the year of grant.

For both groups, if the above vesting conditions are not met, the RSUs will be forfeited.

Certain RSUs granted from 2005 through 2008 include dividend equivalents in the form of additional RSUs, which are equivalent to the amount of the dividend paid or property distributed on a single share of common stock multiplied by the number of RSUs in the employee’s account. Starting in fiscal year 2008, the Company began granting RSUs without dividend equivalents.

The following table summarizes information about awarded RSUs:


				Weighted-
	Number of			average
	RSUs			grant-date
	(in thousands)			fair value


Unvested at January 2, 2010		783.3		$	32.24
Granted		598.4			30.01
Vested		(197.8	)		39.00
Forfeited		(56.0	)		29.76


Unvested at January 1, 2011		1,127.9		$	30.00

The total compensation expense related to RSUs and restricted stock is amortized on a straight-line basis over the requisite service period.

The pretax compensation expense related to RSUs was $8 million, $5.5 million and $7.8 million for the years ended 2010, 2009 and 2008, respectively. The tax deduction associated with the vesting of RSUs and the related issuance of common stock was approximately $2.2 million in 2010, $1.3 million in 2009 and $.8 million in 2008.

The pretax compensation expense related to Paxar converted performance share awards was $.1 million in 2009 and $1.1 million in 2008. The tax deduction associated with the vesting of performance shares and the related issuance of common stock was $.4 million in 2009 and $.2 million in 2008.

During 2005, the Company also awarded 30,000 shares of restricted stock, which vests in two equal increments, the first vested in 2009 and the second will vest in 2012. Pretax compensation expense for this award was $.1 million in 2010, $.1 million in 2009 and $.3 million in 2008.

The Company recognizes stock-based compensation awards granted to retirement-eligible employees as though they were immediately vested; as a result, the pretax compensation expense related to RSUs granted to retirement-eligible employees was recognized and included in the compensation expense noted above.

As of January 1, 2011, the Company had approximately $19 million of unrecognized compensation cost related to unvested RSUs and restricted stock. This cost is expected to be recognized over the remaining requisite service period (weighted-average remaining service period of approximately 2 years for RSUs and restricted stock).

Cost Reduction Actions

12 Months Ended

Jan. 01, 2011

Cost Reduction Actions [Abstract]

COST REDUCTION ACTIONS

NOTE 10. COST REDUCTION ACTIONS

Severance charges recorded under the restructuring actions below are included in “Other accrued liabilities” in the Consolidated Balance Sheet. Severance and related costs represent cash paid or to be paid to employees terminated under these actions. Asset impairments are based on the estimated market value of the assets. Charges below are included in “Other expense, net” in the Consolidated Statements of Operations.

2010

In 2010, the Company continued its cost reduction program initiated in late 2008 and implemented additional restructuring actions resulting in a reduction of approximately 1,040 positions, impairment of certain assets, and lease cancellations. At January 1, 2011, approximately 500 employees impacted by these actions remain with the Company, and are expected to leave in 2011. Pretax charges related to these actions totaled $19 million, including severance and related costs of $15.3 million, impairment of fixed assets, buildings, and land of $2.6 million, and lease cancellation charges of $1.1 million. The table below details the accruals and payments related to these actions:


	Pressure-			Retail			Office and			Other
	sensitive			Information			Consumer			specialty
	Materials			Services			Products			converting
(In millions)	Segment			Segment			Segment			businesses			Total


Total severance and related costs accrued during the period ended
April 3, 2010	$	1.5		$	2.2		$	.7		$	.3		$	4.7
July 3, 2010		2.0			–			(.1	)		–			1.9
October 2, 2010		.1			.9			4.5			.3			5.8
January 1, 2011		.9			(.4	)		.2			2.2			2.9


Total expense accrued during 2010		4.5			2.7			5.3			2.8			15.3
2010 Settlements		(3.9	)		(1.9	)		(.5	)		(.6	)		(6.9	)


Balance at January 1, 2011	$	.6		$	.8		$	4.8		$	2.2		$	8.4


Asset Impairments
Machinery and equipment	$	.2		$	.2		$	–		$	.1		$	.5
Buildings		.7			.9			–			–			1.6
Land		.5			–			–			–			.5
Other
Lease cancellations		–			.2			.9			–			1.1


	$	1.4		$	1.3		$	.9		$	.1		$	3.7

2009

In 2009, the Company continued its cost reduction program initiated in late 2008, resulting in a reduction of approximately 3,335 positions, impairment of certain assets, and lease cancellations. At January 1, 2011, no employees impacted by these actions remain with the Company. Pretax charges related to these actions totaled $129.1 million, including severance and related costs of $86.8 million, impairment of fixed assets, buildings, land and patents of $39.9 million, and lease cancellation charges of $2.4 million. The table below details the accruals and payments related to these actions:


	Pressure-			Retail			Office and			Other
	sensitive			Information			Consumer			specialty
	Materials			Services			Products			converting
(In millions)	Segment			Segment			Segment			businesses			Total


Total severance and related costs accrued during the period ended
April 4, 2009	$	7.6		$	5.8		$	.9		$	2.8		$	17.1
July 4, 2009		13.4			4.6			.3			7.5			25.8
October 3, 2009		3.9			21.0			(.2	)		2.3			27.0
January 2, 2010		2.3			6.3			8.0			.3			16.9


Total expense accrued during 2009		27.2			37.7			9.0			12.9			86.8
2009 Settlements		(19.5	)		(23.6	)		(.3	)		(11.0	)		(54.4	)
2010 Settlements		(7.1	)		(13.7	)		(8.1	)		(1.8	)		(30.7	)


Balance at January 1, 2011	$	.6		$	.4		$	.6		$	.1		$	1.7


Asset Impairments
Machinery and equipment	$	2.7		$	10.6		$	.7		$	14.0		$	28.0
Buildings		.7			2.4			3.9			.9			7.9
Land		.1			–			–			–			.1
Patents		1.9			.2			.4			1.4			3.9
Other
Lease cancellations		1.7			.7			–			–			2.4


	$	7.1		$	13.9		$	5.0		$	16.3		$	42.3

2008

In 2008, the Company implemented cost reduction actions, including the new program initiated in the fourth quarter, resulting in a reduction of approximately 1,475 positions, impairment of certain assets and software, as well as lease cancellations. At January 1, 2011, no employees impacted by these actions remain with the Company. Pretax charges related to these actions totaled $40.7 million, including severance and related costs of $29.8 million, impairment of fixed assets and buildings of $7.7 million, lease cancellation charges of $2.3 million and software impairment of $.9 million. The table below details the accruals and payments related to these actions:


	Pressure-			Retail			Office and			Other
	sensitive			Information			Consumer			specialty
	Materials			Services			Products			converting
(In millions)	Segment			Segment			Segment			businesses			Total


Total severance and related costs accrued during the period ended
March 29, 2008	$	1.5		$	1.4		$	.2		$	.2		$	3.3
June 28, 2008		.2			2.8			4.2			–			7.2
September 27, 2008		2.5			1.4			3.2			1.6			8.7
December 27, 2008		2.5			3.8			3.1			1.2			10.6


Total expense accrued during 2008		6.7			9.4			10.7			3.0			29.8
2008 Settlements		(1.5	)		(4.7	)		(5.2	)		(1.1	)		(12.5	)
2009 Settlements		(5.0	)		(4.6	)		(4.8	)		(1.8	)		(16.2	)
2010 Settlements		(.2	)		(.1	)		(.7	)		(.1	)		(1.1	)


Balance at January 1, 2011	$	–		$	–		$	–		$	–		$	–


Asset Impairments
Machinery and equipment	$	4.9		$	1.3		$	1.2		$	.2		$	7.6
Buildings		–			.1			–			–			.1
Software		–			–			.9			–			.9
Other
Lease cancellations		.9			1.4			–			–			2.3


	$	5.8		$	2.8		$	2.1		$	.2		$	10.9

Taxes Based on Income

12 Months Ended

Jan. 01, 2011

Taxes Based on Income [Abstract]

TAXES BASED ON INCOME

NOTE 11. TAXES BASED ON INCOME

Taxes based on income (loss) were as follows:


(In millions)	2010			2009			2008


Current:
U.S. federal tax	$	(11.9	)	$	(13.1	)	$	4.3
State taxes		(3.6	)		2.0			3.9
International taxes		97.9			58.6			126.7


		82.4			47.5			134.9


Deferred:
U.S. federal tax		(16.6	)		(49.0	)		(36.5	)
State taxes		7.2			(7.5	)		2.3
International taxes		(38.6	)		(35.2	)		(96.2	)


		(48.0	)		(91.7	)		(130.4	)


Provision for (benefit from) income taxes	$	34.4		$	(44.2	)	$	4.5

The principal items accounting for the difference in taxes as computed at the U.S. statutory rate, and as recorded, were as follows:


(In millions)	2010			2009			2008


Computed tax at 35% of income (loss) before taxes	$	123.0		$	(276.8	)	$	94.7
Increase (decrease) in taxes resulting from:
State taxes, net of federal tax benefit		1.6			(7.9	)		3.5
Foreign earnings taxed at different rates		(63.6	)		(5.9	)		(62.2	)
Valuation allowance		2.5			4.0			(45.3	)
Goodwill and indefinite-lived intangible asset impairment		–			276.4			–
Deferred compensation assets		(7.9	)		(30.5	)		–
U.S. federal tax credits (R&D and low-income housing)		(3.8	)		(2.8	)		(5.2	)
Tax contingencies and audit settlements		(17.7	)		7.2			24.8
Other items, net		.3			(7.9	)		(5.8	)


Provision for (benefit from) income taxes	$	34.4		$	(44.2	)	$	4.5

Consolidated income (loss) before taxes for U.S. and international operations was as follows:


(In millions)	2010		2009			2008


U.S.	$	27.0	$	(412.6	)	$	(14.2	)
International		324.3		(378.3	)		284.8


Income (loss) before taxes	$	351.3	$	(790.9	)	$	270.6

The effective tax rate was approximately 10% for the full year 2010 compared to approximately 6% for the full year 2009. The 2010 effective tax rate reflects $45.5 million of benefit from net operating losses resulting from the local statutory write down of certain investments in Europe and $17.7 million of net benefit from releases and accruals of certain tax reserves. The 2009 effective tax rate was most significantly influenced by the non-cash goodwill and intangible asset impairment charges, as these expenses are largely not tax deductible, thereby reducing the tax benefit from the loss.

Income taxes have not been provided on certain undistributed earnings of foreign subsidiaries of $1.20 billion and $1.23 billion at years ended 2010 and 2009, respectively, because such earnings are considered to be indefinitely reinvested. It is not practicable to estimate the amount of tax that would be payable upon distribution of these earnings. Deferred taxes have been accrued for earnings that are not considered indefinitely reinvested. The repatriation accrual for 2010 and 2009 was $15.3 million and $21.7 million, respectively.

Deferred income taxes reflect the temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts utilized for tax purposes. The primary components of the temporary differences that gave rise to the Company’s deferred tax assets and liabilities were as follows:


(In millions)	2010			2009


Accrued expenses not currently deductible	$	69.7		$	65.8
Net operating losses		348.5			214.7
Tax credit carryforwards		111.4			101.8
Capital loss carryforward		13.5			14.1
Postretirement and postemployment benefits		108.6			94.8
Pension costs		104.2			107.3
Inventory reserves		11.6			11.3
Other assets		7.5			1.7
Valuation allowance		(115.6	)		(115.4	)


Total deferred tax assets⁽¹⁾		659.4			496.1


Depreciation and amortization		(188.1	)		(184.3	)
Repatriation accrual		(15.3	)		(21.7	)
Foreign operating loss recapture		(122.0	)		–
Other liabilities		(6.6	)		(13.0	)


Total deferred tax liabilities⁽¹⁾		(332.0	)		(219.0	)


Total net deferred tax assets from operations	$	327.4		$	277.1


(1)		Reflects gross amount before jurisdictional netting of deferred tax assets and liabilities.

A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. When establishing a valuation allowance, the Company considers future sources of taxable income such as “future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards” and “tax planning strategies.”

Net operating loss carryforwards of foreign subsidiaries for 2010 and 2009 were $1.14 billion and $709.6 million, respectively. The increase in 2010 is largely due to certain foreign statutory investment impairments. If unused, foreign net operating losses of $41.7 million will expire between 2011 and 2014, and $78.7 million will expire after 2014. Net operating losses of $1.02 billion can be carried forward indefinitely. Based on current projections, certain indefinite lived foreign net operating losses may take approximately 50 years to be fully utilized. Tax credit carryforwards of both domestic and foreign subsidiaries for 2010 and 2009 totaled $111.4 million and $101.8 million, respectively. If unused, tax credit carryforwards of $2.6 million will expire between 2011 and 2013, $54.3 million will expire between 2014 and 2018, and $47.5 million will expire after 2018. Tax credit carryforwards of $7 million can be carried forward indefinitely. The Company has established a valuation allowance for the net operating loss and credit carryforwards not expected to be utilized. The valuation allowance for 2010 and 2009 is $115.6 million and $115.4 million, respectively.

The Company has been granted tax holidays in several jurisdictions including Bangladesh, China, Thailand and Vietnam. The tax holidays expire between 2011 and 2016. These tax holidays benefit the Company’s consolidated effective tax rate on operations by less than 2%.

Tax Benefit Reserve

On January 1, 2011, the Company’s unrecognized tax benefits totaled $154.2 million, including $102.1 million of unrecognized tax benefits which, if recognized, would reduce the annual effective income tax rate. As of January 2, 2010, the Company’s unrecognized tax benefits totaled $182.0 million, including $121.8 million of unrecognized tax benefits which, if recognized, would reduce the annual effective income tax rate.

Where applicable, the Company recognizes potential accrued interest and penalties related to unrecognized tax benefits from its global operations in income tax expense. The Company recognized a benefit of $2.6 million of interest and penalties in the Consolidated Statements of Operations in 2010 and an expense of $1.1 million and $7.6 million of interest and penalties in the Consolidated Statements of Operations in 2009 and 2008, respectively. The Company has accrued for $20.9 million and $23.4 million of interest and penalties in the Consolidated Balance Sheets in 2010 and 2009, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


(In millions)	2010			2009


Balance at beginning of year	$	151.7		$	142.9
Acquired balance		–			8.0
Additions based on tax positions related to the current year		17.4			32.0
Additions for tax position of prior years		7.0			9.8
Reductions for tax positions of prior years:
Changes in judgment		–			(1.8	)
Settlements		(7.9	)		(2.1	)
Lapses of applicable statute		(36.7	)		(41.9	)
Changes due to translation of foreign currencies		(4.3	)		4.8


Balance at end of year (excluding interest and penalties)		127.2			151.7
Interest and penalties associated with uncertain tax positions		27.0			30.3


Balance at end of year (including interest and penalties)	$	154.2		$	182.0

The amount of income taxes the Company pays is subject to ongoing audits by taxing jurisdictions around the world. The Company’s estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts, and circumstances existing at that time. The Company believes that it has adequately provided for reasonably foreseeable outcomes related to these matters. However, the Company’s future results may include favorable or unfavorable adjustments to its estimated tax liabilities in the period the assessments are made or resolved, which may impact the Company’s effective tax rate. With some exceptions, the Company and its subsidiaries are no longer subject to income tax examinations by tax authorities for years prior to 2005.

It is reasonably possible that during the next 12 months, the Company may realize a decrease in its gross uncertain tax positions by approximately $32 million, primarily as the result of cash payments and closing tax years. The Company anticipates that it is reasonably possible that cash payments of up to $14 million relating to gross uncertain tax positions could be paid within the next 12 months.

Segment Information

12 Months Ended

Jan. 01, 2011

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 12. SEGMENT INFORMATION

The accounting policies of the segments are described in Note 1, “Summary of Significant Accounting Policies.” Intersegment sales are recorded at or near market prices and are eliminated in determining consolidated sales. The Company evaluates performance based on income from operations before interest expense and taxes. General corporate expenses are also excluded from the computation of income from operations for the segments.

The Company does not disclose total assets by reportable segment since the Company does not produce and review such information internally. The Company does not disclose revenues from external customers for each product because it is impracticable to do so. As the Company’s reporting structure is not organized by country, results by individual country are not provided because it is impracticable to do so.

Financial information by reportable segment and other businesses from operations is set forth below. Prior year amounts have been restated to reflect the transfer of a business from Retail Information Services to other specialty converting businesses to align with a change in the Company’s internal reporting structure.


(In millions)	2010			2009			2008


Net sales to unaffiliated customers:
Pressure-sensitive Materials	$	3,639.8		$	3,300.0		$	3,643.8
Retail Information Services		1,521.7			1,320.9			1,547.2
Office and Consumer Products		815.2			849.3			935.8
Other specialty converting businesses		536.0			482.5			583.6


Net sales to unaffiliated customers	$	6,512.7		$	5,952.7		$	6,710.4



Intersegment sales:
Pressure-sensitive Materials	$	157.0		$	147.1		$	172.5
Retail Information Services		2.0			1.6			2.1
Office and Consumer Products		.8			.7			1.2
Other specialty converting businesses		30.7			15.8			26.3
Eliminations		(190.5	)		(165.2	)		(202.1	)


Intersegment sales	$	–		$	–		$	–



Income (loss) before taxes:
Pressure-sensitive Materials	$	317.8		$	184.7		$	257.2
Retail Information Services		65.0			(899.0	)		13.5
Office and Consumer Products		91.5			118.1			145.7
Other specialty converting businesses		4.8			(44.1	)		5.2
Corporate expense		(51.2	)		(65.3	)		(35.1	)
Interest expense		(76.6	)		(85.3	)		(115.9	)


Income (loss) before taxes	$	351.3	⁽¹⁾	$	(790.9	)⁽²⁾	$	270.6	⁽³⁾






Capital expenditures:
Pressure-sensitive Materials	$	50.2	$	41.5	$	50.1
Retail Information Services		28.2		19.6		45.0
Office and Consumer Products		4.4		5.6		6.1
Other specialty converting businesses		22.7		7.6		16.6
Corporate		1.8		1.3		1.4


Capital expenditures⁽⁴⁾	$	107.3	$	75.6	$	119.2



Depreciation expense:
Pressure-sensitive Materials	$	77.8	$	86.2	$	91.7
Retail Information Services		53.2		58.3		65.6
Office and Consumer Products		11.2		13.6		17.0
Other specialty converting businesses		26.7		25.6		26.3
Corporate		4.0		3.9		4.0


Depreciation expense	$	172.9	$	187.6	$	204.6


(1)		Results for 2010 included “Other expense, net” totaling $27.7, consisting of restructuring costs, asset impairment charges and lease cancellation costs of $19, loss from curtailment and settlement of pension obligations of $4.3, loss from debt extinguishments of $4, net legal settlement costs of $.9, partially offset by a gain on a sale of investment of $(.5). Of the total $27.7, the Pressure-sensitive Materials segment recorded $6.9, the Retail Information Services segment recorded $5.8, the Office and Consumer Products segment recorded $8.4, the other specialty converting businesses recorded $3.1, and Corporate recorded $3.5.

(2)		Results for 2009 included “Other expense, net” totaling $191.3, consisting of restructuring costs, asset impairment charges and lease cancellation costs of $129.1, legal settlements of $41, and a loss from debt extinguishment of $21.2. Of the total $191.3, the Pressure-sensitive Materials segment recorded $75.3, the Retail Information Services segment recorded $51.6, the Office and Consumer Products segment recorded $14, the other specialty converting businesses recorded $29.2 and Corporate recorded $21.2.

		Additionally, 2009 operating loss for the Retail Information Services segment included goodwill and indefinite-lived intangible asset impairment charges of $832 taken in the first quarter of 2009.

(3)		Results for 2008 included “Other expense, net” totaling $36.2, consisting of restructuring costs, asset impairment charges and lease cancellation costs of $40.7, partially offset by a gain on sale of investments of $(4.5). Of the total $36.2, the Pressure-sensitive Materials segment recorded $12.6, the Retail Information Services segment recorded $12.2, the Office and Consumer Products segment recorded $12.7, the other specialty converting businesses recorded $3.2 and Corporate recorded $(4.5).

		Additionally, 2008 operating income for the Retail Information Services segment included transition costs associated with the Paxar and DM Label acquisitions of $24.1.

(4)		Included capital expenditures accrued but not paid of $12.4 in 2010, $8.2 in 2009 and $4.7 in 2008. Capital expenditures refer to purchases of property, plant and equipment.

Financial information relating to the Company’s operations by geographic area is set forth below:


(In millions)	2010		2009		2008


Net sales to unaffiliated customers:
U.S.	$	2,111.5	$	2,026.4	$	2,218.4
Europe		2,019.5		1,949.4		2,366.6
Asia		1,513.3		1,236.8		1,297.6
Latin America		484.3		394.2		448.0
Other international		384.1		345.9		379.8


Net sales	$	6,512.7	$	5,952.7	$	6,710.4


Property, plant and equipment, net:
U.S.	$	488.4	$	509.3	$	604.2
International		774.5		845.4		888.8


Property, plant and equipment, net	$	1,262.9	$	1,354.7	$	1,493.0

Revenues are attributed to geographic areas based on the location to which the product is shipped. Export sales from the United States to unaffiliated customers are not a material factor in the Company’s business.

Quarterly Financial Information

12 Months Ended

Jan. 01, 2011

Quarterly Financial Information [Abstract]

QUARTERLY FINANCIAL INFORMATION


NOTE 13.	QUARTERLY FINANCIAL INFORMATION (Unaudited)


	First			Second		Third		Fourth
(In millions, except per share data)	Quarter⁽¹⁾			Quarter⁽²⁾		Quarter⁽³⁾		Quarter⁽⁴⁾


2010
Net sales	$	1,554.7		$	1,680.1	$	1,640.8	$	1,637.1
Gross profit		440.8			490.4		453.0		441.8
Net income		54.7			83.8		64.2		114.2
Net income per common share		.52			.79		.61		1.08
Net income per common share, assuming dilution		.51			.78		.60		1.06


2009
Net sales	$	1,426.2		$	1,455.4	$	1,549.3	$	1,521.8
Gross profit		345.1			390.3		436.0		415.1
Net income (loss)		(898.9	)		39.8		62.5		49.9
Net income (loss) per common share		(8.99	)		.38		.59		.47
Net income (loss) per common share, assuming dilution		(8.99	)		.38		.59		.47


(1)		Results in the first quarter of 2010 included pretax “Other expense, net” totaling $6.3, consisting of restructuring costs of $4.7, asset impairment charges of $.2, and an accrual for legal settlements of $1.4.

		Results in the first quarter of 2009 included pretax “Other expense, net” totaling $97.3 consisting of asset impairment charges of $21.9, restructuring costs of $17.1, lease cancellation charges of $.1, an accrual for a legal settlement of $37, and a loss of $21.2 from debt extinguishment. Additionally, results included goodwill and indefinite-lived intangible asset impairment charges of $832.

(2)		Results in the second quarter of 2010 included pretax “Other expense, net” totaling $4.6, consisting of restructuring costs of $1.9, asset impairment charges of $.6, a loss from curtailment and settlement of a foreign pension obligation of $1.9, and a loss of $1.2 from debt extinguishment, partially offset by a gain on sale of investment of $(.5) and net gain on legal settlements of $(.5).

		Results in the second quarter of 2009 included pretax “Other expense, net” totaling $29.6 consisting of restructuring costs of $25.8 asset impairment charges of $3.3, and lease cancellation charges of $.5.


(3)		Results in the third quarter of 2010 included pretax “Other expense, net” totaling $10.5, consisting of restructuring costs of $5.8, asset impairment charges of $1.3 and lease cancellation costs of $1 and a loss from curtailment and settlement of domestic pension obligations of $2.4.

		Results in the third quarter of 2009 included pretax “Other expense, net” totaling $35.5 consisting of restructuring costs of $27 and asset impairment charges of $4.7, lease cancellation charges of $1.8, and legal settlement charges of $2.

(4)		Results in the fourth quarter of 2010 included pretax “Other expense, net” totaling $6.3 consisting of restructuring costs of $2.9, asset impairment charges of $.4, and lease cancellation charges of $.2, and a loss of $2.8 from debt extinguishment.

		Results in the fourth quarter of 2009 included pretax “Other expense, net” totaling $28.9 consisting of restructuring costs of $16.9, asset impairment charges of $9.9, lease cancellation charges of $.1, and legal settlement charges of $2. Additionally, results included out-of-period adjustments related to deferred compensation assets of $4.9 and a deferred tax asset of $1, which decreased net income by $5.9.

Fair Value Measurements

12 Months Ended

Jan. 01, 2011

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS


NOTE 14.	FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of January 1, 2011:

Fair Value Measurements Using

Significant

Other

Quoted Prices in

Observable

Unobservable

Active Markets

Inputs

(In millions)

Total

(Level 1)

(Level 2)

(Level 3)

Assets:

Available for sale securities

12.2

–

Derivative assets

16.9

16.8

–

Liabilities:

Derivative liabilities

10.3

2.4

7.9

–

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of January 2, 2010:

Fair Value Measurements Using

Significant

Other

Quoted Prices in

Observable

Unobservable

Active Markets

Inputs

(In millions)

Total

(Level 1)

(Level 2)

(Level 3)

Assets:

Available for sale securities

11.9

–

Derivative assets

5.5

5.0

–

Liabilities:

Derivative liabilities

10.0

3.5

6.5

–

Available for sale securities are measured at fair value using quoted prices and classified within Level 1 of the valuation hierarchy. Derivatives that are exchange-traded are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. Derivatives measured based on inputs that are readily available in public markets are classified within Level 2 of the valuation hierarchy.

Non-recurring Fair Value Measurements

The following table summarizes the fair value measurements of assets measured on a non-recurring basis during 2010:

Fair Value Measurements Using

Significant

Other

Quoted Prices in

Observable

Unobservable

Active Markets

Inputs

Total

(In millions)

Total

(Level 1)

(Level 2)

(Level 3)

Gains (Losses)

Long-lived assets

2.4

–

2.4

–

(1.0

)

Long-lived assets with carrying amounts totaling $3.4 million were written down to their fair values of $2.4 million, resulting in an impairment charge of $1.0 million during 2010, which was included in “Other expense, net” in the Consolidated Statements of Operations.

The following table summarizes the fair value measurements of assets measured on a non-recurring basis during 2009:


			Fair Value Measurements Using
					Significant		Significant
					Other		Other
			Quoted Prices in		Observable		Unobservable
			Active Markets		Inputs		Inputs		Total
(In millions)	Total		(Level 1)		(Level 2)		(Level 3)		Gains (Losses)


Goodwill	$	415.0	$	–	$	–	$	415.0	$	(820.0	)
Indefinite-lived intangible assets		18.0		–		–		18.0		(12.0	)
Long-lived assets		11.0		–		8.0		3.0		(20.3	)

Long-lived assets with carrying amounts totaling $31.3 million were written down to their fair values totaling $11 million, resulting in impairment charges of $20.3 million during 2009. These charges were included in “Other expense, net” in the Consolidated Statements of Operations.

Goodwill with a carrying amount of $1.21 billion was written down to its estimated implied fair value of $415 million, resulting in a non-cash impairment charge of $820 million in the first quarter of 2009. Additionally, certain indefinite-lived assets with a carrying value of approximately $30 million were written down to their estimated implied fair value of $18 million, resulting in a non-cash impairment charge of $12 million in the first quarter of 2009. These charges were included in “Goodwill and indefinite-lived intangible asset impairment charges” in the Consolidated Statements of Operations. Refer to Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” for further information.