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What changed in Avery Dennison's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Avery Dennison's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+324 added−311 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-26)

Top changes in Avery Dennison's 2025 10-K

324 paragraphs added · 311 removed · 281 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur vision is to leverage the strengths of our Materials and Solutions groups to continue to drive growth within these businesses and lead at the intersection of the physical and digital worlds. Our decades of experience creating solutions for customers and our core capabilities in materials science, engineering and process technology enable us to drive continuous innovation throughout our industries.
Biggest changeWith decades of experience and deep expertise in materials science, engineering, and process technology, we continuously innovate to anticipate market needs, address customer challenges and unlock new opportunities. 3 Table of Contents Our vision is to leverage the strengths of our Materials and Solutions groups to drive growth by delivering leading solutions at the intersection of the physical and digital worlds.
Self-adhesive materials provide consistent and versatile adhesion and are available in a large selection of materials, which can be made into labels of varying sizes and shapes. Our graphics and reflective products include a variety of films and other products that are sold to the architectural, commercial sign, digital printing and other related market segments.
Self-adhesive materials provide consistent and versatile adhesion and are available in a large selection of materials, which can be made into labels of varying sizes and shapes. Our graphics and reflective products include a variety of films and other products that are sold to the architectural, commercial sign, digital printing and related market segments.
In addition to base wages, our compensation and benefit programs — which vary by region, country and business unit — include short-term incentives (generally paid in cash), long-term incentives (e.g., cash- or stock-based awards), employee benefit and retirement plans, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, leave of absence and employee assistance programs.
In addition to base wages, our compensation and benefit programs — which vary by region, country and business unit — include short-term incentives (generally paid in cash), long-term incentives (e.g., cash- or stock-based awards), employee benefit and retirement plans, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, leave of absence benefits, and employee assistance programs.
We also make available on the investors section of our website under "Governance Documents" the following documents as currently in effect: (i) Amended and Restated Certificate of Incorporation, as amended; (ii) Amended and Restated Bylaws; (iii) Corporate Governance Guidelines; (iv) Code of Conduct, which applies to our directors, officers and employees; (v) Code of Ethics for our Chief Executive Officer and Senior Financial Officers; (vi) charters of the Audit, Talent and Compensation, Governance and Finance Committees of our Board of Directors; and (vii) Audit Committee Complaint Procedures for Accounting and Auditing Matters.
We also make available on the investors section of our website under "Governance Documents" the following documents as currently in effect: (i) Amended and Restated Certificate of Incorporation, as amended; (ii) Amended and Restated Bylaws; (iii) Corporate Governance Guidelines; (iv) Code of Conduct, which applies to our directors, officers and employees; (v) Code of Ethics for our Chief Executive Officer and Senior Financial Officers; (vi) charters of the Audit, Talent and Compensation, Governance, Cybersecurity, and Finance Committees of our Board of Directors; and (vii) Audit Committee Complaint Procedures for Accounting and Auditing Matters.
For graphics and reflective products, our largest competitors are 3M Company (“3M”) and the Orafol Group. For performance tapes products, our competitors include 3M; Tesa-SE, a subsidiary of Beiersdorf AG; Nitto Denko Corporation; and numerous regional and specialty suppliers. For fastener products, there are a variety of competitors supplying extruded and injection molded fasteners and fastener attaching equipment.
For graphics and reflective products, our largest competitors are 3M Company (“3M”) and the Orafol Group. For performance tapes products, our competitors include 3M; Tesa-SE, a subsidiary of Beiersdorf AG; Nitto Denko Corporation; and numerous regional and specialty suppliers. For fastener products, there is a variety of competitors supplying extruded and injection molded fasteners and fastener attaching equipment.
Workforce Health & Safety Safety is one of our highest priorities, and we continually work to ensure our manufacturing facilities, distribution centers and administrative offices focus on safety, so that anyone working in or visiting one of our locations feels and remains safe from injury.
Workforce Health & Safety Safety is one of our highest priorities, and we work to ensure our manufacturing facilities, distribution centers and administrative offices focus on safety, so that anyone working in or visiting one of our locations feels and remains safe from injury.
In the Solutions Group, our primary competitors include Checkpoint Systems, Inc., a subsidiary of CCL Industries Inc.; R-pac International Corporation; SML Group Limited; Arizon RFID Technology Cayman Co Ltd; and Tageos, a subsidiary of Fedrigoni Group.
In the Solutions Group, our primary competitors include Checkpoint Systems, Inc., a subsidiary of CCL Industries Inc.; R-pac International Corporation; SML Group Limited; Arizon RFID Technology Cayman Co Ltd; and Tageos SAS, a subsidiary of Fedrigoni Group.
The mechanical fasteners are primarily precision-extruded and injection-molded plastic devices used in various automotive, general industrial and retail applications. Our larger competitors in label materials include UPM Raflatac, a subsidiary of UPM Corporation; Fedrigoni Self-Adhesives; Lintec Corporation; Flexcon Corporation, Inc.; and an array of smaller regional and local companies.
The mechanical fasteners are primarily precision-extruded and injection-molded plastic devices used in various automotive, general industrial and retail applications. Our larger competitors in label materials include UPM Adhesive Materials, a subsidiary of UPM Corporation; Fedrigoni Self-Adhesives; Lintec Corporation; Flexcon Corporation, Inc.; and an array of smaller regional and local companies.
Item 1. BUSINESS Company Background Avery Dennison Corporation (“Avery Dennison” or the “Company” and generally referred to as “we” or “us”) was incorporated in Delaware in 1977 as Avery International Corporation, the successor corporation to a California corporation of the same name incorporated in 1946.
Item 1. BUSINESS Company Background Avery Dennison Corporation (“Avery Dennison” or the “Company” and generally referred to as “we” or “us”) was founded in 1935 and incorporated in Delaware in 1977 as Avery International Corporation, the successor corporation to a California corporation of the same name incorporated in 1946.
We are Making Possible TM products and solutions that help advance the industries we serve, providing branding and information solutions that optimize labor and supply chain efficiency, reduce waste, advance sustainability, circularity and transparency, and better connect brands and consumers.
We are Making Possible TM products and solutions that help advance the industries we serve, providing branding and information solutions that optimize labor and supply chain efficiency, reduce waste and mitigate loss, advance sustainability, circularity and transparency, and better connect brands and consumers.
Our Materials Group manufactures and sells Fasson ® -, JAC ® -, and Avery Dennison ® -brand pressure-sensitive label materials and performance tapes products, Avery Dennison ® - and Mactac ® -brand graphics, and Avery Dennison ® -brand reflective products. Materials Group’s business tends not to be seasonal, except for certain outdoor graphics and reflective products.
Our Materials Group manufactures and sells Fasson ® -, JAC ® -, and Avery Dennison ® -brand pressure-sensitive label materials and performance tapes products, Avery Dennison ® - and Mactac ® -brand graphics, and Avery Dennison ® -brand reflective products. Materials Group’s business tends not to be seasonal, except for certain outdoor graphics, building and construction, and reflective products.
We offer the opportunity for flexible work arrangements for most of our office-based workforce to provide them with greater flexibility to balance their work and personal commitments, while ensuring that we meet the needs of our business. Our information technology infrastructure, information security protocols and digital tools support employee efficiency and effectiveness wherever they work.
We offer the opportunity for flexible work arrangements for certain of our office-based workforce to provide them with flexibility to balance their work and personal commitments, while ensuring that we meet the needs of our business. Our information technology infrastructure, information security protocols and digital tools support employee efficiency and effectiveness wherever they work.
Our website is not intended to function as a hyperlink and the information on our website is not, nor should it be considered, part of this report or incorporated by reference into this report. Business Overview and Reportable Segments We are a global materials science and digital identification solutions company.
Our website is not intended to function as a hyperlink and the information on our website is not, nor should it be considered, part of this report or incorporated by reference into this report. Business Overview and Reportable Segments We are a global leader in materials science and digital identification solutions.
Human Capital Resources Our Global Workforce With approximately 70% of our 2024 net sales originating outside the U.S. and approximately 40% of our net sales originating in emerging markets (Latin America, Eastern Europe, Middle East/Northern Africa, and most countries in Asia Pacific), our employees are located in more than 50 countries to best serve our customers.
Human Capital Resources Our Global Workforce With approximately 69% of our 2025 net sales originating outside the U.S. and approximately 40% of our net sales originating in emerging markets (Latin America, Eastern Europe, Middle East/Northern Africa, and most countries in Asia Pacific), our employees are located in more than 50 countries to best serve our customers.
Approximately 83% of our employees at year-end 2024 were located outside the U.S. and approximately 66% were located in emerging markets. The charts below show our global employee population by region and operational function.
Approximately 83% of our employees at year-end 2025 were located outside the U.S. and approximately 67% were located in emerging markets. The charts below show our global employee population by region and operational function.
Self-adhesive materials are also used to convey variable information through 2 Table of Contents various digital triggers, including bar codes, QR codes and RFID inlays, for applications such as shipping labels and weight and price information for packaged meats and other foods.
Self-adhesive materials are also used to convey variable information through various digital triggers, including bar codes, quick response ("QR") codes and RFID inlays, for applications such as shipping labels and weight and price information for packaged meats and other foods.
Over 19,000 of our approximately 35,000 employees at year-end 2024, representing approximately 58% of our global workforce, were in Asia Pacific, serving our customers in that region. At that time, approximately 65% of our global workforce worked in the operations of our manufacturing facilities or in positions directly supporting them from other locations.
Nearly 20,000 of our approximately 35,000 employees at year-end 2025, representing approximately 58% of our global workforce, were in Asia Pacific, serving our customers in that region. At that time, approximately 71% of our global workforce worked in the operations of our manufacturing facilities or in positions directly supporting them from other locations.
Many of our new products result from our research and development efforts. These efforts are directed primarily toward developing products, solutions and operating techniques and improving productivity, sustainability and product performance, often in close association with our customers or end users.
These efforts are directed primarily toward developing products, solutions and operating techniques and improving productivity, sustainability and product performance, often in close association with our customers or end users.
We provide ongoing support and professional development resources to our team members worldwide to ensure that their skills evolve with our business needs, industry trends and human capital management best practices, as well as enable increased productivity, peak performance and career growth.
We provide ongoing support and professional development resources to our team members worldwide to ensure that their skills evolve with our business needs, industry trends and human capital management best practices, as well as enable increased productivity, peak performance and career growth. We have strong talent review and succession planning processes that provide targeted development opportunities for our team members.
We produce a majority of our self-adhesive materials using water-based emulsion and hot-melt adhesive technologies. A portion of our manufacturing process for self-adhesive materials utilizes organic solvents, which, unless controlled, could be emitted into the atmosphere or contaminate soil or groundwater.
Although shortages can occur from time to time, these raw materials are generally available. We produce the majority of our self-adhesive materials using water-based emulsion and hot-melt adhesive technologies. A portion of our manufacturing process for self-adhesive materials utilizes organic solvents, which, unless controlled, could be emitted into the atmosphere or contaminate soil or groundwater.
We leverage the group's materials science capabilities and process engineering expertise to develop and manufacture Intelligent Labels at scale and drive their further adoption through our converter channel access.
We leverage the group's materials science capabilities and process engineering expertise to drive further intelligent label adoption through our converter channel access.
Our business and functional teams use the anonymized results of our survey to identify and implement actions to address potential opportunities for improvement. While employee engagement is the result of many factors, we believe strong, encouraging and open leadership, as well as a continued effort to foster a collaborative, supportive culture, leads to strong workforce engagement.
Our business and functional teams use the anonymized results of this survey to identify potential opportunities for improvement, implementing action plans as appropriate. While employee engagement is the result of many factors, we believe our strong, encouraging and open leadership, as well as our continued efforts to foster a collaborative, supportive culture, has led to strong workforce engagement.
These efforts provide intellectual property that leverages our research and development relating to materials science, such as adhesives, films, inks and release liners, and process engineering technology, such as coating, laminating and printing technologies in Materials Group.
These efforts provide intellectual property that leverages our research and development relating to materials science, such as adhesives, films, inks and release liners, and process engineering technology, such as coating, laminating and printing technologies in Materials Group. We focus on research projects related to RFID, external embellishments, data and digital solutions and printing technologies in Solutions Group.
The branding solutions of the Solutions Group include brand embellishments, graphic tickets, tags, and labels, and sustainable packaging. Solutions Group’s information solutions include item-level RFID solutions; visibility and loss prevention solutions; price ticketing and marking; care, content, and country of origin compliance solutions; brand protection and security solutions; and Vestcom ® -brand shelf-edge productivity and media solutions.
Solutions Group’s information solutions include item-level RFID solutions; visibility and loss prevention solutions; price ticketing and marking; care, content, and country of origin compliance solutions; brand protection and security solutions; and Vestcom ® -brand shelf-edge productivity and media solutions.
Emulsion adhesives, hot-melt adhesives, and solventless and emulsion silicone systems have been installed in many of our facilities. 5 Table of Contents Based on current information, we do not believe that the cost of complying with applicable laws regulating the emission or discharge of materials into the environment, or otherwise relating to the protection of the environment, will have a material effect upon our capital expenditures, consolidated financial position, results of operations or competitive position.
Based on current information, we do not believe that the cost of complying with applicable laws regulating the emission or discharge of materials into the environment, or otherwise relating to the protection of the environment, will have a material effect upon our capital expenditures, financial position, results of operations or competitive position.
Our graphics portfolio offers highly engineered products ranging from vehicle wraps to architectural films. Our tapes portfolio includes bonding and functional materials for applications in various industry sectors such as automotive, building and construction and electronics.
Our label materials enhance brands' shelf appeal, inform shoppers, advance circularity, increase transparency and improve operational supply chain efficiency. Our graphics portfolio offers highly engineered products ranging from vehicle wraps to architectural films. Our tapes portfolio includes bonding and functional materials for applications in various industry sectors such as automotive, building and construction and electronics.
Our innovation efforts focus on anticipating market and customer challenges and opportunities, and applying technology to address them. Our investment in innovation aims to accelerate growth by developing new products and solutions, expand margins through material re-engineering, and enable customer success by leveraging scalable innovation platforms and delivering sustainability initiatives and advanced technologies.
Our investment in innovation aims to accelerate growth by developing new products and solutions, expand margins through material re-engineering, and enable customer success by leveraging scalable innovation platforms and delivering sustainability initiatives and advanced technologies. Many of our new products result from our research and development efforts.
In connection with the maintenance and acquisition of certain manufacturing equipment, we invest in solvent capture and control units to assist in regulating these emissions. We have developed adhesives and adhesive processing systems that minimize the use of solvents.
Emissions from these operations contain small amounts of volatile organic compounds, which are regulated by federal, state, local and foreign governments. In connection with the maintenance and acquisition of certain manufacturing equipment, we invest in solvent capture and control units to assist in regulating these emissions. We have developed adhesives and adhesive processing systems that minimize the use of solvents.
Additionally, our research and development efforts include sustainable innovation and design of products that advance the circular economy, reduce materials and waste, use recycled content, and extend product end-of-life or enable product recycling. Acquisitions and Venture Investments In addition to our investments to support organic growth, we have pursued complementary and synergistic acquisitions.
We have and license a number of patents in both of our reportable segments. Additionally, our research and development efforts include sustainable innovation and design of products that advance the circular economy, reduce materials and waste, use recycled content, and extend product end-of-life or enable product recycling.
Our global Recordable Incident Rate of 0.21 in 2024 was significantly lower than the Occupational Safety and Health Administration manufacturing industry average of 2.8 in 2023 (the most recent available industry average).
Our global Recordable Incident Rate of 0.17 in 2025 was significantly lower than the Occupational Safety and Health Administration manufacturing industry average of 2.7 in 2024 (the most recent available industry average). Workplace Culture We believe our talent is one of our greatest competitive advantages.
For information regarding our acquisitions, see Note 2, “Business Acquisitions,” in the Notes to Consolidated Financial Statements. For information regarding our venture investments, see Note 9, “Fair Value Measurements,” in the Notes to Consolidated Financial Statements.
Additionally, during 2025, we made venture investments in five companies developing technological solutions that we believe have the potential to advance our businesses. For information regarding our acquisitions, see Note 2, “Business Acquisitions,” in the Notes to Consolidated Financial Statements. For information regarding our venture investments, see Note 9, “Fair Value Measurements,” in the Notes to Consolidated Financial Statements.
Pay equity is an important part of our global pay planning and practices. Each year, we engage an independent third party to evaluate pay equity, making merit-based pay adjustments where appropriate.
Pay equity is an important part of our global pay planning and practices. Each year, we engage an independent third party to evaluate internal pay equity, making merit-based pay adjustments where appropriate. In 2025, we reviewed pay, including base, annual, and long-term incentives. We continue to enhance our manager education, tools and processes to provide fair and equitable pay.
We have robust talent review and succession planning processes that provide individually targeted development opportunities for our team members. We emphasize on-the-job development and coaching, and also provide facilitator-led and direct-access online training, leadership opportunities to execute special projects and, in some cases, cross-functional, cross-regional, or cross-divisional work assignments.
We emphasize on-the-job development and coaching, and also provide facilitator-led and direct-access online training, leadership opportunities to execute special projects and, in some cases, cross-functional, cross-regional or cross-divisional work assignments. Our enterprise competency model represents our global standard for the leadership skills and behaviors that we develop in our employees so we can achieve our vision.
Because they are easy to apply without the need for adhesive activation, self-adhesive materials can provide cost savings compared to other materials that require heat- or moisture-activated adhesives, while also offering aesthetic and other advantages over alternative technologies.
Because they are easy to apply without the need for adhesive activation, self-adhesive materials can provide cost savings compared to other materials that require heat- or moisture-activated adhesives, while also offering aesthetic and other advantages over alternative technologies. 2 Table of Contents Label materials are sold worldwide to converters for labeling, decorating and specialty applications in the food, home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits and logistics market segments.
Workforce by Region Asia Pacific 58 % North America 21 Europe 17 Latin America 4 Workforce by Function Operations 65 % Non-Operations 35 Talent & Development Attracting, developing and retaining highly-skilled talent is critical to our ability to continue delivering sustainable growth.
Workforce by Region Asia Pacific 58 % North America 22 Europe 17 Latin America 3 Workforce by Function (1) Operations 71 % Non-Operations 29 (1) Reflects reclassification in 2025 of approximately 2,500 employees from Non-Operations to Operations compared to prior year. 4 Table of Contents Talent & Development We believe that attracting, developing and retaining highly-skilled talent is critical to our ability to continue delivering sustainable growth.
As a large ultra-high-frequency RFID solutions provider, we empower customers across multiple retail and industry segments, including apparel, logistics, food and grocery and general retail, to connect the physical and digital worlds by enabling a digital identity and life on physical items. Our innovation and data management capabilities, global footprint and market access continuously expand our solutions platform.
Our ultra-high-frequency RFID solutions empower customers across multiple retail and industry segments, including apparel, logistics, food and grocery, and general retail, to connect the physical and digital worlds by enabling a digital identity and life for physical items. The branding solutions of the Solutions Group include brand embellishments, graphic tickets, tags, and labels, and sustainable packaging.
All of our employees were paid at least the applicable legal minimum wage, and over 99% of our employees were paid above the applicable legal minimum wage, at year-end 2024. Pay is generally positioned around the market median, with variances based on knowledge, skills, years of experience and in line with our pay for performance philosophy.
Pay is generally positioned around the market median, with variances largely based on knowledge, skills, years of experience and consistent with our pay-for-performance philosophy.
In 2024, our Materials Group and Solutions Group reportable segments comprised approximately 69% and 31%, respectively, of our total net sales. In 2024, international operations constituted a substantial majority of our business, representing approximately 70% of our net sales. As of December 28, 2024, we operated over 200 manufacturing and distribution facilities and had locations in more than 50 countries.
Our reportable segments for fiscal year 2025 were Materials Group and Solutions Group, which comprised approximately 69% and 31%, respectively, of our total net sales. In 2025, international operations constituted a substantial majority of our business, representing approximately 69% of our net sales.
We believe that our exposure to diverse and growing markets, the size and scale of operations, our innovation capabilities, productivity culture, and brand strength across our businesses are the primary advantages in maintaining and further developing our competitive position. Our reportable segments for fiscal year 2024 were Materials Group and Solutions Group.
We serve an array of industries worldwide, including home and personal care, apparel, general retail, e-commerce, logistics, food and grocery, pharmaceuticals and automotive. We believe that our exposure to diverse and growing markets, the size and scale of operations, our innovation capabilities, productivity culture, and brand strength are the primary advantages in maintaining and further developing our competitive position.
Manufacturing and Environmental Matters We use various raw materials – primarily paper, plastic films and resins, as well as specialty chemicals purchased from various commercial and industrial sources – that are subject to price fluctuations. Although shortages can occur from time to time, these raw materials are generally available.
By fostering a workplace that embraces a mix of skills, experiences and backgrounds, we empower our employees to be increasingly productive, innovative and engaged. 5 Table of Contents Manufacturing and Environmental Matters We use various raw materials — primarily paper, plastic films and resins, as well as specialty chemicals purchased from various commercial and industrial sources — that can be subject to significant price fluctuations.
Label materials are sold worldwide to label converters for labeling, decorating and specialty applications in the food, home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits and logistics market segments. When used in package decoration applications, the visual appeal of self-adhesive materials can help increase sales of the products on which the materials are applied.
When used in package decoration applications, the visual appeal of self-adhesive materials can help increase sales of the products on which the materials are applied.
With a focus on continuous improvement, in 2023 we launched our survey using a more advanced platform providing real-time access to results, improved analytics and ability to connect data throughout the employee experience, more meaningful comparisons to external benchmarks, and ongoing pulse survey capability. We deployed this same platform in 2024, enabling year-over-year comparability of results.
Because we believe that an engaged workforce promotes retention and minimizes employee turnover, we annually conduct a global employee experience survey, which in 2025 leveraged for the third year a modernized platform and process, providing real-time access to results, improved analytics and ability to connect data throughout the employee experience, more meaningful comparisons to external benchmarks, and ongoing pulse survey capability.
Materials Group Our Materials Group is a leading global provider to the pressure-sensitive label and graphics industries. Our innovative products include label materials, graphics and reflective materials and functional bonding materials, like tapes. Our label materials enhance brands' shelf appeal, inform shoppers, advance circularity, increase transparency, help reduce waste and improve operational supply chain efficiency.
As of December 31, 2025, we operated over 200 manufacturing and distribution facilities and had locations in more than 50 countries. Materials Group Our Materials Group is a leading global provider to the pressure-sensitive label and graphics industries. Our innovative products include label materials, graphics and reflective materials and functional bonding materials, like tapes.
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We serve an array of industries worldwide, including home and personal care, apparel, general retail, e-commerce, logistics, food and grocery, pharmaceuticals and automotive.
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These include optimizing supply-chain and labor efficiency, reducing waste and mitigating loss, advancing sustainability, circularity and transparency, and helping brands and consumers to better connect.
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We focus on research projects related to RFID, external embellishments, data and digital solutions and printing technologies in Solutions 3 Table of Contents Group, in each case for which we have and license a number of patents.
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Our decades of experience creating solutions for customers and our deep expertise enable us to bring innovative solutions to the industries we serve. Our innovation efforts focus on anticipating market and customer challenges and opportunities, and applying technology to address them.
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In 2023, we acquired Silver Crystal Group ("Silver Crystal"), a Canada-based provider of sports apparel customization and application solutions across in-venue, direct-to-business and e-commerce platforms; LG Group, Inc. ("Lion Brothers"), a Maryland-based designer and manufacturer of apparel brand embellishments; and Thermopatch, Inc.
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Acquisitions and Venture Investments In addition to our investments to support organic growth, we have pursued complementary and synergistic acquisitions. In 2025, we acquired W.F. Taylor Holdings, Inc. ("Taylor Adhesives"), a Georgia-based flooring adhesives business. The aggregate purchase consideration for this acquisition was approximately $390 million.
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("Thermopatch"), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. The aggregate purchase consideration for these acquisitions was approximately $231 million. During 2024, we also made venture investments in three companies developing technological solutions that we believe have the potential to advance our businesses.
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This model, which establishes clear expectations that align with our values and strategies and increases fairness, consistency and transparency in how we hire/select, promote, develop and reward our talent, was embedded into key talent processes and practices in 2025, including performance management, development and learning.
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In 2024, we introduced an enterprise-wide competency model that provides transparency and clarity around what we expect from our leaders, which will serve as the go-forward foundation of all of our talent practices, from talent selection and retention to individual and career development to succession. 4 Table of Contents Compensation & Benefits Our total rewards philosophy is to offer market-based, competitive wages and benefits in the markets where we compete for talent.
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Compensation & Benefits Our total rewards philosophy is to offer market-based, competitive wages and benefits in the markets where we operate. All of our employees were paid at least the applicable legal minimum wage, and over 98% of our employees were paid above the applicable legal minimum wage, at year-end 2025.
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In 2024, we reviewed pay equity (considering total base, annual incentives and long-term incentives) with respect to gender for 93% of our global employee population, and with respect to gender and race/ethnicity for all U.S. employees. We continue to enhance our manager education, tools and processes to provide fair and equitable pay.
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Employee Engagement A highly engaged workforce not only allows us to attract and retain top-tier talent but also translates directly into better business outcomes that benefit all our stakeholders.
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Employee Engagement Because we believe that an engaged workforce promotes retention and minimizes employee turnover, we annually conduct a global employee engagement survey.
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We are dedicated to strengthening our high-performance, values-based culture—an environment grounded in fairness that provides our team members opportunities to thrive.
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Workplace Culture We aim to foster an environment where our employees with various skills, experiences and backgrounds can grow and be increasingly productive and innovative, allowing us to benefit from a highly engaged team and attract and retain talent for the benefit of our stakeholders.
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Emulsion adhesives, hot-melt adhesives, and solventless and emulsion silicone systems have been installed in many of our facilities.
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Our global people-focused strategic pillars include enhancing the experience of our manufacturing employees and making merit and transparency even more foundational to our employee experience.
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We have a global team that helps advance these priorities in coordination with regional councils and our employee resource groups, which are open to all our team members and provide individuals with shared interests a forum in which to identify ways in which we can improve our employee experience.
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Emissions from these operations contain small amounts of volatile organic compounds, which are regulated by federal, state, local and foreign governments. We continue to evaluate the use of alternative materials and technologies to minimize these emissions.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition to maintaining a comprehensive set of endpoint, network, email and cloud security solutions, we continue to take steps to further improve the security of our networks and systems, including further strengthening authentication; continuing to mature our zero trust architecture and strategy; maturing our operational technology security program; furthering our advanced prevention and detection measures; further enhancing and testing our security incident response plan; upgrading legacy systems to simplify and standardize business processes and applications; implementing more robust cloud security across multiple platforms; adopting AI policies, governance and risk management; continuously improving information technology project and portfolio management discipline; enhancing accountability with more aggressive key performance indicator targets; continuing to mature our data loss prevention framework to protect our critical data, network and site access controls; advancing our user access management program; limiting USB drive access across our company; increasing network segmentation; enhancing our focus on third party risk management; and improving our capabilities based on threat intelligence and the publicized incidents experienced by other companies, as well as ones that we have experienced despite their minimal operational or financial impact to date.
Biggest changeIn addition to maintaining a comprehensive set of endpoint, network, email and cloud security solutions, we continue to take steps to further improve the security of our networks and systems, including maturing our zero trust architecture and strategy; enhancing and testing our security incident response plan; maturing our operational technology security program; implementing more robust cloud security across multiple platforms; establishing AI policies, governance and risk management; maturing our data loss prevention framework to protect our critical data, network and site access controls; increasing network segmentation; enhancing our focus on third party risk management; and improving our capabilities based on threat intelligence and the publicized incidents experienced by other companies, as well as ones that we have experienced despite their minimal operational or financial impact to date.
We have operations in more than 50 countries and our domestic and international operations are strongly influenced by matters beyond our control, including changes in geopolitical, social, economic and labor conditions, tax laws, and U.S. and international trade regulations (including tariffs), as well as the impact these changes have on demand for our products.
We have operations in more than 50 countries and our domestic and international operations are strongly influenced by matters beyond our control, including changes in economic, geopolitical, social and labor conditions, tax laws, and U.S. and international trade regulations (including tariffs), as well as the impact these changes have on demand for our products.
Macroeconomic developments such as impacts from slower growth in the geographic regions in which we operate; inflation, resulting from, among other things, increased raw material, energy, and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in the global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades.
Macroeconomic developments such as impacts from slower growth in the geographic regions in which we operate; inflation resulting from, among other things, increased raw material, energy and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades.
In addition to the risk of substantial monetary judgments and penalties that could have a material adverse effect on our business, product liability claims or regulatory actions could result in negative publicity, reputational harm and loss of brand value.
In addition to the risk of substantial monetary judgments and penalties that could have a material adverse effect on our business, product liability claims or regulatory actions could result in negative publicity, reputational harm or loss of brand value.
If these developments were to occur widely in our customer base, our inability to collect on our accounts receivable from customers could substantially reduce our cash flows and income and have a material adverse effect on our business. 11 Table of Contents There is a rapidly evolving awareness and focus from certain stakeholders, including our investors, customers and employees, with respect to our company’s sustainability and governance practices, which could affect our business.
If these developments were to occur widely in our customer base, our inability to collect on our accounts receivable could substantially reduce our cash flows and income and have a material adverse effect on our business. 11 Table of Contents There is a rapidly evolving awareness and focus from certain stakeholders, including our investors, customers and employees, with respect to our company’s sustainability and governance practices, which could affect our business.
While we obtain written agreements and assurances that these third parties will protect this information and, where appropriate, assess the protections utilized by these third parties, we are aware of suppliers in our ecosystem who have experienced security events, and there is a risk the confidentiality of data held by third parties may be compromised.
While we obtain written agreements and assurances that these third parties will protect this information and, where appropriate, assess the protections utilized by these third parties, we are aware of suppliers in our ecosystem who have experienced security events, and there is a risk that confidentiality of data held by third parties may be compromised.
Risks Related to Income Taxes Changes in our tax rates affect our business. Our effective tax rate is affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws and regulations or their interpretation.
Risks Related to Income Taxes Changes in our tax rates affect our business. Our effective tax rate is affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, and changes in tax laws and regulations or their interpretation.
Our pension and projected postretirement benefit expenses and funding requirements increase or decrease as a result of the assumptions we use, including the discount rate, expected long-term rate of return or mortality rates.
Our pension and projected postretirement benefit expenses and funding requirements increase or decrease as a result of the assumptions we use, including the discount rate, expected long-term rate of return and mortality rates.
Our business operations have been and may continue to be adversely affected by the current and future political environment in China, both relating to in-country changes in laws and regulations or the interpretation thereof, as well as a result of its response to tariffs imposed by the U.S. government on goods imported from China, tariffs imposed by China on U.S. goods, the increasing use of economic sanctions and export control restrictions, and tensions related to Hong Kong and Taiwan.
Our business operations have been and may continue to be adversely affected by the current and future political environment in China, both relating to in-country changes in laws and regulations or the interpretation thereof, as well as a result of its response to tariffs by the U.S. government on goods imported from China, tariffs by China on U.S. goods, the increasing use of economic sanctions and export control restrictions, and tensions related to Hong Kong and Taiwan.
If the personal information of our customers or employees were to be misappropriated, we could incur costs to compensate our customers or employees or pay damages 12 Table of Contents or fines as a result of litigation or regulatory actions and our reputation with our customers and employees could be injured, resulting in loss of business or decline in morale.
If the personal information of our customers or employees were to be misappropriated, we could incur costs to compensate our customers or employees or 12 Table of Contents pay damages or fines as a result of litigation or regulatory actions and our reputation with our customers and employees could be injured, resulting in loss of business or decline in employee morale.
In addition to the risks applicable to our international operations, factors that have negatively impacted our operations in these emerging markets from time to time include the less established or reliable legal systems and possible disruptions due to unstable geopolitical conditions, civil unrest or economic volatility.
In addition to the risks applicable to our international operations, factors that have negatively impacted our operations in emerging markets from time to time include the less established or reliable legal systems and possible disruptions due to unstable geopolitical conditions, civil unrest or economic volatility.
We have established strategic innovation platforms and priorities focused, among other things, on delivering products and solutions that advance the circular economy, reduce supply chain waste and address the need for increased recyclability of plastic packaging.
We have established strategic innovation platforms and priorities focused, among other things, on delivering products and solutions that advance the circular economy, reduce supply chain waste and address the need for increased recyclability of packaging.
While we undertake business continuity planning and take actions to mitigate these disruptions when they occur, such as sourcing from other regions or suppliers, any disruption in our supply chain could have a material adverse effect on our sales and profitability, and any sustained inability to obtain adequate supplies could have a material adverse effect on our business. 8 Table of Contents We are affected by changes in our markets due to competitive conditions, technological developments, laws and regulations, and customer preferences.
While we undertake business continuity planning and take actions to mitigate these disruptions when they occur, such as sourcing from other regions or suppliers, any disruption in our supply chain could negatively impact our sales and profitability, and any sustained inability to obtain adequate supplies could have a material adverse effect on our business. 8 Table of Contents We are affected by changes in our markets due to competitive conditions, technological developments, laws and regulations, and customer preferences.
Concern regarding climate change has led and is likely to continue leading to increasing demands by legislators and regulators, customers, consumers, investors, employees and non-governmental organizations for companies to reduce their GHG emissions.
Concern regarding climate change has also led and is likely to continue leading to increasing demands by legislators and regulators, customers, consumers, investors, employees and non-governmental organizations for companies to reduce their GHG emissions.
These types of events could result in goodwill impairment charges in the future, which could materially adversely affect our business in the periods in which they are made. Item 1B. UNRESOLVED STAFF COMMENTS None. 17 Table of Contents
These events could result in goodwill impairment charges in the future, which could materially adversely affect our business in the periods in which they are made. Item 1B. UNRESOLVED STAFF COMMENTS None. 17 Table of Contents
We have accrued liabilities for the environmental clean-up of certain sites where it is probable that a loss will be incurred and the cost or amount of loss can be reasonably estimated, including the ten sites for which U.S. governmental agencies have designated us as a potentially responsible party as of our 2024 fiscal year-end.
We have accrued liabilities for the environmental clean-up of certain sites where it is probable that a loss will be incurred and the cost or amount of loss can be reasonably estimated, including the ten sites for which U.S. governmental agencies have designated us as a potentially responsible party as of our 2025 fiscal year-end.
The continued impact of this war and any related hostilities in the Middle East region or elsewhere is unknown and could have a material adverse effect on our business. We are not able to predict the duration and severity of adverse economic, social, geopolitical or market conditions in the U.S. or other countries.
The continued impact of this war and any related hostilities in the Middle East region or elsewhere is unknown and could have a material adverse effect on our business. We are not able to predict the duration and severity of adverse economic, geopolitical, social, or labor conditions in the U.S. or other countries.
Changes in our levels of stock repurchases or dividends could affect our stock price and increase its variability. In April 2022, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, in addition to the amount of shares that were then available for repurchase under our previous Board authorization.
Changes in our levels of stock repurchases or dividends could affect our stock price and increase its variability. In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, in addition to the amount of shares that were then available for repurchase under our previous Board authorization.
In addition, our profitability may be materially adversely affected if we generate less productivity improvement from our restructuring and other cost reduction actions than anticipated. As our business environment changes, we have adjusted and may need to further adjust our business strategies or restructure our operations or particular businesses.
In addition, our profitability may be materially adversely affected if we generate less productivity improvement from our restructuring and other cost reduction actions than anticipated. As our business environment changes, we have adjusted and may need to further adjust our business strategies, restructure our operations or particular businesses, or adjust our operational footprint.
In assessing fair value, we make estimates and assumptions about sales, operating margins, growth rates, and discount rates based on our business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
In assessing fair value, we make estimates and assumptions about sales, profit margins, growth rates and discount rates based on our business plans, economic projections, anticipated future cash flows and marketplace data. There are inherent uncertainties related to these factors and management’s judgment in applying these factors.
Other factors, including our financial performance on an absolute basis and relative to peer companies and competitors, as well as market expectations of our performance, the level of perceived growth or profit of our industries, and other company-specific factors, may also materially adversely affect our stock price.
Other factors, including our financial performance on an absolute basis and relative to peer companies and competitors, as well as market expectations of our performance, the level of perceived growth or profit of the industries we serve, and other company-specific factors, may also materially adversely affect our stock price.
Risk Related to Our International Operations The demand for our products is impacted by the effects of, and changes in, worldwide economic, social, geopolitical and market conditions, which have had in the past and could in the future have a material adverse effect on our business.
Risk Related to Our International Operations The demand for our products is impacted by the effects of, and changes in, worldwide economic, geopolitical, social and labor conditions, which have had in the past and could in the future have a material adverse effect on our business.
If we experience inflationary headwinds in the future, we may implement similar pricing measures. Our performance depends in part on our ability to offset increased raw material costs by raising our selling prices or re-engineering our products.
If we experience inflationary headwinds in the future, we may implement similar pricing actions. Our performance depends in part on our ability to offset increased raw material costs by raising our selling prices or re-engineering our products.
Foreign currency exchange rates, and fluctuations in those rates, affect our business. The majority of our net sales in 2024 was denominated in foreign currencies. Our financial results are therefore subject to the impact of currency translation, which may be material.
Foreign currency exchange rates, and fluctuations in those rates, affect our business. The majority of our net sales in 2025 was denominated in foreign currencies. Our financial results are therefore subject to the impact of currency translation, which may be material.
When it comes to our outsourced service providers, we have experienced delays or errors and reduced resource availability and manage ongoing risk when it comes to people, processes and software. Executive succession planning is critical to our long-term success.
When it comes to our outsourced service providers, we have experienced delays or errors and reduced resource availability and managed ongoing risk when it comes to people, processes and software. Executive succession planning is critical to our long-term success.
Since the Russia-Ukraine war began in February 2022, we have maintained our position of not shipping products for the Russian market. The impact of the continuing war, as well as any further retaliatory actions taken by Russia, the U.S., the European Union and other jurisdictions, is unknown and could have a material adverse effect on our business.
Since the Russia-Ukraine war began in 2022, we have maintained our position of not shipping products to the Russian market. The impact of the continuing war, as well as any further retaliatory actions taken by Russia, the U.S., the European Union and other jurisdictions, is unknown and could have a material adverse effect on our business.
Among other things, these covenants restrict our ability to incur additional indebtedness, incur certain liens on our assets, make certain investments, sell our assets or merge with third parties, or enter into certain transactions. The Revolver contains a financial covenant that requires us to maintain a maximum leverage ratio. Refer to Item 7.
Among other things, these covenants restrict our ability to incur additional indebtedness, incur certain liens on our assets, make certain investments, sell our assets or merge with third parties, or enter into certain transactions. The Revolver contains a financial covenant that requires us to maintain a maximum leverage ratio. Refer to “Capital Resources” in Item 7.
Funding obligations for each plan are determined based on the value of assets and liabilities on a specific date in accordance with applicable government regulations. Our pension funding requirements, and the timing of funding payments, could also be affected by future legislation or regulation.
Funding obligations for each plan are determined based on the value of assets and liabilities on a specific date in accordance with applicable government regulations. Our pension funding requirements, and the timing of funding payments, could also be affected by future laws or regulations.
We also could be required to recall and possibly discontinue the sale of products deemed to be defective or unsafe, which could result in adverse publicity and significant expense. 10 Table of Contents Changes in our business strategies and the restructuring of our operations affect our costs and the profitability of our businesses.
We also could be required to recall and possibly discontinue the sale of products deemed to be defective or unsafe, which could result in adverse publicity and significant expense. Changes in our business strategies and the restructuring of our operations affect our costs and the profitability of our businesses.
While we train our employees to comply with these regulations, use third party screening software, and take other measures, we cannot guarantee that a violation will not occur. A prohibited shipment has negative consequences, including government investigations, penalties, fines, civil and criminal sanctions and/or reputational harm.
While we train our employees to comply with these regulations, use third party screening software and take other precautionary measures, we cannot guarantee that a violation will not occur. A prohibited shipment can have negative consequences, including government investigations, penalties, fines, civil and criminal sanctions and/or reputational harm.
High-value products and solutions include our specialty and durable label materials, graphics and reflective solutions, and industrial tapes; intelligent labels that use RFID tags and inlays; shelf-edge pricing, productivity and consumer engagement solutions; and external embellishments.
High-value products and solutions include our specialty and durable label materials, graphics and reflective solutions, industrial and medical tapes, and trade and specialty adhesives; intelligent labels that use RFID tags and inlays; shelf-edge pricing, productivity and consumer engagement solutions; and external embellishments.
As a result, policies regarding corporate income and other taxes remain under heightened scrutiny globally. Due to the size of our international business activities, any substantial change in corporate tax policies, enforcement activities or legislative or regulatory actions could have a material adverse effect on our business. Additionally, the U.S.
As a result, policies regarding corporate income and other taxes remain under heightened scrutiny globally. Due to the size of our international business activities, any substantial change in corporate tax policies, tax enforcement activities or legislative or regulatory tax-related actions could have a material adverse effect on our business.
International operations and activities involve risks that are different from and potentially greater than the risks we face in our domestic operations, including changes in foreign geopolitical, regulatory and economic conditions, whether nationally, regionally or locally; changes in foreign currency exchange rates; differing levels of inflation; reduced protection of intellectual property rights; laws and regulations impacting our ability to repatriate foreign earnings; challenges complying with foreign laws and regulations, including those relating to sales, operations, taxes, employment and legal proceedings; establishing effective controls and procedures to monitor compliance with U.S. laws and regulations such as the Foreign Corrupt Practices Act and similar foreign laws and regulations, such as the UK’s Bribery Act of 2010; differences in lending practices; and challenges with complying with applicable export and import control laws and regulations.
International operations and activities involve risks that are different from and potentially greater than the risks we face in our domestic operations, including changes in foreign geopolitical, regulatory and economic conditions, whether nationally, regionally or locally; changes in foreign currency exchange rates; differing levels of inflation; reduced protection of intellectual property rights; laws and regulations impacting our ability to repatriate foreign earnings; challenges complying with foreign laws and regulations, including those relating to sales, operations, taxes, employment and legal proceedings; establishing effective controls and procedures to monitor compliance with U.S. laws and regulations; differences in lending practices; and challenges with complying with applicable export and import control laws and regulations.
We also perform cybersecurity due diligence and mitigate identified risks during our M&A due diligence process; however, there is still a risk that a recent or future acquisition experiences an event that could lead to a breach before risks are able to be mitigated.
We also perform cybersecurity due diligence and mitigate identified risks during our due diligence process related to potential acquisitions; however, there is still a risk that a recent or future acquisition experiences an event that could lead to a breach before risks are able to be mitigated.
While we believe we have appropriate leadership development programs and succession plans in place that are regularly discussed with our Board’s Talent and Compensation Committee, any failure to ensure effective leadership transitions and knowledge transfer involving key management (or other highly-skilled employees) could hinder our strategic planning and execution.
While we believe we have appropriate leadership development programs and succession plans in place that are regularly discussed with the Talent and Compensation Committee of our Board of Directors (our "Board"), any failure to ensure effective leadership transitions and knowledge transfer involving key management or other highly-skilled employees could hinder our strategic planning and execution.
Contractual provisions with third parties, including cloud service providers, substantially limit our ability to fully recover our losses.
Contractual provisions with third parties, including cloud service providers, substantially limit our ability to fully recover these potential losses.
The failure to comply with these or other covenants governing other indebtedness, including indebtedness incurred in the future, could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and result of operations, including cross-defaults to other debt facilities.
The failure to comply with these or other covenants governing other indebtedness, including indebtedness incurred in the future, 14 Table of Contents could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and result of operations, including by triggering cross-defaults in other debt facilities.
This includes providing market-competitive compensation and benefits and ensuring an engaged global team. Competition to recruit and retain critical talent has increased in recent years. Our ongoing productivity efforts and restructuring actions can increase this challenge.
This includes providing market-competitive compensation and benefits and ensuring an engaged global team. Competition to recruit and retain critical talent was challenging in recent years. Our ongoing productivity efforts and restructuring actions can increase this challenge.
Although we maintain product liability insurance coverage, claims are subject to a deductible or may not be covered under the terms of the policy.
Although we maintain product liability insurance coverage, claims are subject to a deductible or may not be covered under 10 Table of Contents the terms of the policy.
Because some of our products are sold by third parties, our business depends in part on the financial condition of these parties and their customers. Some of our products are sold not only by us, but also by third-party distributors. Some of our distributors also market products that compete with our products.
Because some of our products are sold by third parties, our business depends in part on the financial condition of these parties and their customers. Some of our products are sold by third-party distributors. Some of our distributors also market products that compete with our products.
While the impacts on our operations to date have not been significant, our business could be materially adversely impacted by changes in U.S. and non-U.S. trade policies, including potential modifications to existing trade agreements and additional tariffs or restrictions on free trade, impacting our raw materials or finished products.
While the direct impacts on our operations after our mitigating actions have not been significant, our business could be materially adversely impacted by changes in U.S. and non-U.S. trade policies, including potential modifications to existing trade agreements and additional tariffs or other restrictions on free trade, impacting our raw materials or finished products.
In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or permits, we may also be materially adversely affected through reputational harm and penalties. Obtaining the necessary export license for a particular sale may be time consuming and expensive and could result in the delay or loss of sales opportunities.
In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or permits, we may also be materially adversely affected through reputational harm and penalties. Obtaining the necessary export license for a particular sale may be time consuming and expensive and could result in delayed or lost sales.
Raw materials represent a significant portion of our costs and a critical element of our profitability. The markets for the raw materials used in our businesses are challenging and can be volatile, impacting availability and pricing. Additionally, energy costs can be volatile and unpredictable.
Raw materials represent a significant portion of our costs and a critical factor in our profitability. The markets for the raw materials used in our businesses can be volatile, impacting availability and pricing. Additionally, energy costs can be volatile and unpredictable.
Although we mitigate these risks by investing in high quality securities, ensuring adequate diversification of our investment portfolio, monitoring our portfolio’s overall risk profile and managing its liability profile, our net pension liability may nevertheless increase. The actuarial assumptions used for valuation purposes affect our earnings and cash flows.
Although we mitigate these risks by investing in high quality securities, ensuring adequate diversification of our investment portfolio, monitoring our portfolio’s overall risk profile and managing its liability profile, our net pension liability may nevertheless increase. The actuarial assumptions used in the measurement of our pension assets and liabilities affect our earnings and cash flows.
The defense of these claims, whether or not meritorious, or the development of new technologies is costly and diverts the attention of management. 15 Table of Contents We also have valuable intellectual property upon which third parties may infringe.
The defense of these claims, whether or not meritorious, or the development of new technologies would be costly and divert the attention of management. 15 Table of Contents We also have valuable intellectual property upon which third parties may infringe.
Changes in the value of our pension assets, which was approximately $660 million as of December 28, 2024, could materially adversely affect our earnings and cash flows as a result of a decline in the value of our investments due to increases in interest rates or volatility in financial markets.
Changes in the value of our pension assets, which was approximately $733 million as of December 31, 2025, could materially adversely affect our earnings and cash flows as a result of a decline in the value of our investments due to increases in interest rates or volatility in financial markets.
We continue to invest in our long-term growth and margin expansion plans, with approximately $240 million in capital expenditures, including fixed assets and information technology, in 2024. We may not be able to recoup the costs of our infrastructure investments if actual demand is not as we anticipate.
Our infrastructure needs impact our business and expenditures. We continue to invest in our long-term growth and margin expansion plans, with approximately $200 million in capital expenditures, including fixed assets and information technology, in 2025. We may not be able to recoup the costs of our infrastructure investments if actual demand is not as we anticipate.
When long- and short-term interest rates rise, our borrowing costs increase. Continued increases in interest rates could, among other things, reduce the availability and/or increase the costs of obtaining new debt and refinancing existing indebtedness and negatively impact our business. Our current and future debt covenants may limit our flexibility.
Continued increases in interest rates could, among other things, reduce the availability and/or increase the costs of obtaining new debt and refinancing existing indebtedness and negatively impact our business. Our current and future debt covenants may limit our flexibility.
Goodwill is initially recorded at fair value and not amortized and is reviewed for impairment annually (or more frequently if impairment indicators are present). As of December 28, 2024, the carrying value of our goodwill was $1.98 billion. In 2024, we determined that the goodwill of our reporting units was not impaired.
Goodwill is initially recorded at fair value and not amortized and is reviewed for impairment annually (or more frequently if impairment indicators are present). As of December 31, 2025, the carrying value of our goodwill was $2.27 billion. In 2025, we determined that the goodwill of our reporting units was not impaired.
In addition, business and operational disruptions or delays caused by geopolitical, social or economic instability and unrest – such as recent civil, political and economic disturbances in Argentina, Afghanistan, Syria, Iraq, Yemen, Iran, Turkey, North Korea, and Bangladesh and the related impact on global stability, the Russia-Ukraine war, the Israel-Hamas war, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world – could contribute to a climate of economic and geopolitical uncertainty that could have a material adverse effect on our business.
In addition, business and operational disruptions or delays caused by geopolitical, social or economic instability and unrest – such as recent civil, political and economic disturbances in Syria, Yemen, Iran, Turkey, North Korea, and Bangladesh and the related impact on global stability, the Russia-Ukraine war, the Israel-Hamas war, the U.S.'s engagement in Venezuela, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world – could have a material adverse effect on our business.
In addition, since the beginning of the Israel-Hamas war in late 2023; our sales in Israel have declined, with sales representing less than 1% of our total net sales in 2024.
In addition, our sales in Israel have not recovered since the beginning of the Israel-Hamas war in late 2023, with sales representing less than 1% of our total net sales in 2025.
Industry consolidation could continue to increase the concentration of our business with our largest customers. Further consolidation may be accompanied by pressure from customers for us to lower our selling prices. While we have been generally successful at managing customer consolidations in the past, increased pricing pressures from our customers could have a material adverse effect on our business.
Further consolidation may increase pressure from customers for us to lower our selling prices. While we have been generally successful at managing customer consolidations in the past, increased pricing pressures from our customers could have a material adverse effect on our business.
In addition, our pension liabilities, which were approximately $709 million as of December 28, 2024, are subject to interest and inflation risk that may increase their value.
In addition, our pension liabilities, which were approximately $721 million as of December 31, 2025, are subject to interest and inflation risk that may increase their value.
These laws, which are continually evolving and imposing additional requirements on our current and former manufacturing facilities, impose liability for the costs of, and damages resulting from, cleaning up current sites, past spills, disposals and other releases of hazardous substances. Enforcement of these laws can be unclear and is subject to the discretion of governmental agencies.
These laws, which continue to evolve and impose additional requirements on our current and former manufacturing facilities, can result in liability for the costs of, and damages resulting from, cleaning up current sites, past spills, disposals and other releases of hazardous substances. Enforcement of these laws is subject to the discretion of governmental agencies.
Changes in consumer preferences and laws and regulations related to the use of plastics, particularly in Europe and certain states in the United States, presents the risk of reduced demand for certain of our products if customers seek decoration technology alternatives to pressure-sensitive labeling, but also the opportunity for increased demand for our more sustainable products, a significant focus of our research and development and related innovation efforts.
Changes in consumer preferences, laws and regulations related to the use of raw materials and extended producer responsibility rules focused on the end-of-life of products, particularly in Europe and certain states in the United States, present the risk of reduced demand for certain of our products if customers seek decoration technology alternatives to pressure-sensitive labeling, but also the opportunity for increased demand for our more sustainable products, a significant focus of our research and development and related innovation efforts.
If our access to commercial paper markets were to become limited, we would need to obtain short-term funding under our Revolver, which would result in the same exposure to variable interest rates. An increase in interest rates adversely affects our business. In 2024, our average variable-rate borrowings were approximately $400 million.
If our access to commercial paper markets were to become limited, we would need to obtain short-term funding under our Revolver, which would expose us to variable interest rates. An increase in interest rates adversely affects our business. In 2025, our average variable-rate borrowings were approximately $739 million.
We review goodwill for impairment by comparing the fair value of a reporting unit to its carrying value, calculating goodwill valuations primarily using an income approach based on the present value of projected future cash flows of each reporting unit.
A quantitative assessment primarily consists of comparing the fair value of a reporting unit to its carrying value, calculating goodwill valuations primarily using an income approach based on the present value of projected future cash flows of each reporting unit.
To drive our strategies to increase the proportion of our business from high-value categories, enhance our portfolio by growing our existing businesses and expanding into new areas, and accelerate market-driven innovation, we have made acquisitions and are likely to continue acquiring companies.
To drive our strategies to increase the proportion of our business from high-value categories, enhance our portfolio by growing our existing businesses and expanding into new areas, and accelerate market-driven innovation, we have made acquisitions and are likely to continue acquiring companies. In 2025, we acquired Taylor Adhesives for purchase consideration of approximately $390 million.
Foreign currency translation decreased our 2024 net sales by approximately $33 million compared to the prior year. 7 Table of Contents We monitor our foreign currency exposures and sometimes use hedging instruments to mitigate some of our transactional exposure to changes in foreign currencies.
Foreign currency translation increased our 2025 net sales by approximately $29 million compared to the prior year. We monitor our foreign currency exposures and sometimes use hedging instruments to mitigate some of our transactional exposure to changes in foreign currencies.
We had incremental savings from restructuring actions, net of transition costs, of approximately $63 million in 2024. As part of our continuous efficiency improvement culture, we intend to continue our efforts to reduce costs, which have in the past included, and may continue to include, facility closures and square footage reductions, headcount reductions, organizational restructuring, process standardization, and manufacturing relocation.
As part of our continuous efficiency improvement culture, we intend to continue our efforts to reduce costs, which have in the past included, and may continue to include, facility closures and square footage reductions, headcount reductions, organizational restructuring, process standardization, and manufacturing relocation.
We have made substantial investments in our sustainability-driven products, but there can be no assurance that they will be successful, and a significant reduction in the use of plastic packaging could materially adversely affect demand for our products. Continued growth in sustainability-focused regulation presents an increasing risk to our business.
We have made substantial investments in our sustainability-driven products, but there can be no assurance that they will be successful, and a significant reduction in the use of packaging could materially adversely affect demand for our products. Changes in sustainability-focused regulation present a risk to our business. In February 2026, the U.S.
Our level of indebtedness and credit ratings are significant factors in our ability to obtain short- and long-term financing. Significantly unfavorable changes in our debt leverage position and/or lower credit ratings could negatively impact our ability to issue debt at favorable terms to support our business needs and result in higher financing costs.
Significantly unfavorable changes in our debt leverage position and/or lower credit ratings could negatively impact our ability to issue debt at favorable terms to support our business needs and result in higher financing costs.
Increases in short-term interest rates directly impact the amount of interest we pay. Fluctuations in interest rates can increase our borrowing costs and have a material adverse effect on our business. In recent years, the U.S.
Increases in short-term interest rates directly impact the amount of interest we pay. Fluctuations in interest rates can increase our borrowing costs and have a material adverse effect on our business. After several years of raising interest rates in an effort to curb rising inflation across the globe, the U.S.
Our stock price, which increased significantly during the second half of 2023 and the first half of 2024 but declined during the second half year of 2024, is influenced by changes in the overall stock market and demand for equity securities in general.
Our stock price, which declined during the second half of 2024 and remained relatively stable during 2025, is influenced by changes in the overall stock market and demand for equity securities in general.
In recent years, we expanded our Materials Group’s manufacturing capabilities in France, India and Ohio; moved our Solutions Group’s Vietnam business into a new, expanded facility; and made additional investments in both capacity and business development globally for our Intelligent Labels platform, including new facilities in Brazil and consolidated operations in Mexico.
In 2025, we opened our first RFID inlay and label production site in India. Additionally, in recent years, we expanded our Materials Group’s manufacturing capabilities in Brazil, France, India, China and Ohio; moved our Solutions Group’s Vietnam business into a new, expanded facility; and made additional investments in both capacity and business development globally for our Intelligent Labels platform.
A significant consolidation of our customer base could negatively impact our business. While our customer base tends to be highly fragmented, in recent years, some of the converter customers served by our Materials Group reportable segment have consolidated and integrated vertically and some of our largest customers have acquired companies with similar or complementary product lines.
In recent years, some of the converter customers served by our Materials Group reportable segment have consolidated and integrated vertically and some of our largest customers have acquired companies with similar or complementary product lines. Industry consolidation could continue to increase the concentration of our business with our largest customers.
We are also exposed to changes in customer order patterns, such as changes in the levels of inventory maintained by customers and the timing of customer purchases, which are affected by announced price increases, changes in our customer incentive programs, or changes in the customer’s ability to achieve incentive targets.
We are also exposed to changes in customer order patterns, such as changes in the levels of inventory maintained by customers and the timing of customer purchases and new intelligent label program rollouts, which are affected by announced pricing actions, changes in our customer incentive programs, our customers' ability to achieve incentive targets, as well as changes in trade policy.
We cannot provide assurance that we will achieve the intended results of any of our restructuring and other cost reduction actions, which involve operational complexities, consume management attention and require substantial resources and effort.
In addition, cost reduction actions can result in restructuring charges and could expose us to production risk, loss of sales and employee turnover. We cannot provide assurance that we will achieve the intended results of any of our restructuring and other cost reduction actions, which involve operational complexities, consume management attention and require substantial resources and effort.
If we fail to achieve the intended results of such actions, our costs could increase, our assets could be impaired, and our returns on investments could be lower. Our ability to develop and successfully market new products and applications impacts our competitive position. The timely introduction of new products and improvements to current products helps determine our success.
If we fail to achieve the intended results of such actions, our costs could increase, our assets could be impaired, and our savings from these actions could be lower than expected. Our ability to develop and successfully market new products and applications impacts our competitive position.
In 2024, we repurchased 1.2 million shares of our common stock at an aggregate cost of $247.5 million. As of December 28, 2024, shares of our common stock in the aggregate amount of $346.9 million remained authorized for repurchase under this Board authorization.
In 2025, we repurchased 3.2 million shares of our common stock at an aggregate cost of $575.6 million. As of December 31, 2025, shares of our common stock in the aggregate amount of $526.3 million remained authorized for repurchase under the 2025 Board authorization.
Significant changes from our expected need for and/or returns on our infrastructure investments could materially adversely affect our business. Difficulty in the collection of receivables as a result of economic conditions or other market factors could have a material adverse effect on our business.
Difficulty in the collection of receivables as a result of economic conditions or other market factors could have a material adverse effect on our business.
Shortages and inflationary or other increases in the costs of raw materials, labor, freight and energy have occurred in the past, and could recur. In 2021 and 2022, we implemented targeted price increases in our Materials Group reportable segment to address raw material inflation, which began moderating in 2023 and largely stabilized in 2024.
Shortages and inflationary or other increases in the costs of raw materials, labor, freight and energy have occurred in the past, and could recur. In past years, we implemented targeted price increases in our Materials Group reportable segment to address raw material inflation; more recently, we implemented deflation-related price reductions as a result of lower raw material costs.
Fluctuations in currency exchange rates, such as the unfavorable impacts associated with the Argentine peso, Chinese renminbi and euro in 2024, may result in a variety of negative effects, including lower net sales, increased costs, lower gross margins, increased allowance for credit losses and/or write-offs of accounts receivable, and required recognition of impairments of capitalized assets, including goodwill and other intangible assets.
Overall, our foreign currency transaction exposure is largely mitigated because the costs of our products are generally denominated in the same currencies in which they are sold. 7 Table of Contents Fluctuations in foreign currency exchange rates, such as the unfavorable impacts associated with the Indian rupee and Brazilian real and favorable impacts associated with the euro in 2025, may result in a variety of negative effects, including lower net sales, increased costs, lower gross margins, increased allowance for credit losses and/or write-offs of accounts receivable, and required recognition of impairments of capitalized assets, including goodwill and other intangible assets.
The profitable growth of our business in emerging markets is an important part of our long-term growth strategy and our regional results have and can fluctuate significantly based on their economic conditions.
The profitable growth of our business in emerging markets is an important part of our long-term growth strategy and our regional results have and can fluctuate significantly based on their economic conditions and other events that occur more frequently in these markets and can significantly and adversely impact our operations (such as power outages, civil unrest or other hostilities, and labor stoppages).
Our strategy includes continuing to grow in emerging markets, which creates greater exposure to unstable geopolitical conditions, civil unrest, economic volatility, and other risks applicable to operating in these regions. Approximately 40% of our net sales in 2024 originated in emerging markets, which includes countries in Asia Pacific, Latin America, Eastern Europe and Middle East/Northern Africa.
Our strategy includes continuing to grow in emerging markets, which exposes us to less stable geopolitical conditions, civil unrest, economic volatility, and other risks applicable to operating in these regions. Approximately 40% of our net sales in 2025 originated in emerging markets.
We could focus on products that ultimately are not accepted by customers or end users or we could experience delays in the production or launch of new products that could compromise our competitive position. Our infrastructure needs impact our business and expenditures.
Research and development requires innovation and anticipation of market trends, which means that the costs of these expenditures may not be recovered through additional sales. We could focus on products that ultimately are not accepted by customers or end users or we could experience delays in the production or launch of new products that could compromise our competitive position.
Effective integration of systems, controls, employees, product lines, market segments, customers, suppliers and production facilities and cost savings can be difficult to achieve and the success of integration activities can be uncertain.
We continue to evaluate acquisition targets and ensure we have a pipeline of potential opportunities. Various risks, uncertainties and costs are associated with acquisitions. Effective integration of systems, controls, employees, product lines, market segments, customers, suppliers and production facilities and cost savings can be difficult to achieve and the success of integration activities can be uncertain.
These factors can have a material adverse effect on our business in the affected markets by decreasing consumer purchasing power, reducing demand for our products or increasing our costs. Our operations and activities outside of the U.S. subject us to risks different from and potentially greater than those associated with our domestic operations.
These factors can have a material adverse effect on our business in the affected markets by decreasing consumer purchasing power, reducing demand for our products or increasing our costs.
Those impacts could also hinder our ability to recruit and grow our talent pools in the impacted regions/countries. Risks Related to Our Indebtedness If our indebtedness increases significantly or our credit ratings are downgraded, we may have difficulty obtaining acceptable short- and long-term financing. At December 28, 2024, we had approximately $3.15 billion of debt.
Risks Related to Our Indebtedness If our indebtedness increases significantly or our credit ratings are downgraded, we may have difficulty obtaining short- and long-term financing on acceptable terms and conditions. At December 31, 2025, we had approximately $3.73 billion of debt. Our level of indebtedness and credit ratings are significant factors in our ability to obtain short- and long-term financing.
Costs to comply with these regulations will continue to grow and any failure to meet the requirements of these regulations could result in fines or other penalties.
Developments in regulatory actions regarding these matters are likely to continue and may require conflicting responses, which could divert the attention of management. In addition, costs to comply with these regulations are likely to grow and any failure to meet the requirements of these regulations could result in fines or other penalties.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Information Security Officer (“ISO”) reports directly to our Chief Information Officer (“CIO”), a member of our Company Leadership Team and direct report of our Chief Executive Officer (“CEO”). The CIO and ISO together provide updates and discuss our cybersecurity preparedness with the Audit Committee at least semiannually, which its Chair then reports on to our full Board.
Biggest changeIn 2025, its Audit Committee was primarily responsible for overseeing our strategies, policies and risk management practices related to cybersecurity and information security, engaging with management, including our Chief Information Security Officer (“CISO”), who reports to our Chief Information Officer (“CIO”), a member of our Company Leadership Team and a direct report of our Chief Executive Officer (“CEO”).
The CSLT supervises our efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through a variety of means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants; and reports from cybersecurity systems deployed in our information technology environment. 18 Table of Contents
The CSLT manages our efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through a variety of means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants; and reports from cybersecurity systems deployed in our information technology environment. 18 Table of Contents
Our cybersecurity risk management program includes risk assessments designed to help identify potentially material cybersecurity risks to our critical systems, information, products and services, as well as our broader enterprise information technology environment; an information technology security team principally responsible for managing our cybersecurity risk assessment processes, security controls and response to any cybersecurity events; the use of third party experts and service providers, where appropriate, to assess, test and otherwise assist with protecting our security environment; cybersecurity awareness training for our employees and further training for our incident response personnel and senior management; a cybersecurity incident response plan that includes procedures for assessing and coordinating our response to cybersecurity events; and a third-party risk management process for service providers, suppliers and vendors.
Our cybersecurity risk management program includes risk assessments designed to help identify potentially material cybersecurity risks to our critical systems, information security, products and services, as well as our broader enterprise information technology environment; an information technology security team principally responsible for managing our cybersecurity risk assessment processes, security controls and response to any cybersecurity events; the use of third party experts and service providers, where appropriate, to assess, test and otherwise assist with protecting our security environment; cybersecurity awareness training for our employees and further training for our incident response personnel and senior management; a security incident response plan that includes procedures for assessing and coordinating our response to cybersecurity events; and a third-party risk management program designed to identify and mitigate risks associated with our supply chain and vendor ecosystem, which includes initial security posture assessments, contractual security requirements and ongoing monitoring of critical third parties to address potential cybersecurity threats.
We have not experienced cybersecurity events that have materially affected our operations, results of operations, or financial condition. However, we face certain ongoing risks from cybersecurity threats that, if realized, would be reasonably likely to materially affect us, including our operations, results of operations, or financial condition.
We have not experienced cybersecurity events that have materially affected our operations, results of operations or financial condition. However, we face ongoing risks from cybersecurity threats in an ever-evolving threat landscape that, if realized, could be reasonably likely to materially affect our business.
Risks and uncertainties related to cybersecurity are discussed in greater detail under “Risks Related to Information Technology” in Item 1A of this report.
Risks and uncertainties related to cybersecurity are discussed in greater detail under “Risks Related to Information Technology” in Item 1A of this report. Cybersecurity Governance Our Board considers cybersecurity risk as part of its overall risk oversight.
The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our external cybersecurity consultants. Information security personnel maintain a variety of technical and managerial security certifications and have broad security experience in manufacturing, finance, software and information technology environments.
Our information security management and personnel maintain a variety of technical and managerial security certifications and have broad security experience in manufacturing, finance, software and information technology environments.
Management updates the Audit Committee, if and as needed, regarding any significant cybersecurity events, as well as events that may have had lesser potential impact.
In addition, management updated the Cybersecurity Advisory Council, composed of members of our Board and management, to obtain additional insights into our cybersecurity risk management, and, if and as needed, to the Audit Committee regarding any significant cybersecurity events, as well as events that may have had lesser potential impact.
We use these frameworks to help us identify, assess and manage cybersecurity risks relevant to our business and do not intend to suggest that we meet any particular technical standards, specifications or requirements. Our cybersecurity risk management program complements our overall enterprise risk management program, using similar methodologies and governance processes to identify risks and mitigating strategies.
We design and assess our program based on the ISO 27000 and the National Institute of Standards and Technology ("NIST") SP-800 and Cybersecurity Framework. We use these frameworks to help us identify, assess and manage cybersecurity risks relevant to our business and do not intend to suggest that we meet any particular technical standards, specifications or requirements.
Item 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Our cybersecurity risk management program, which is designed to protect the confidentiality, integrity and availability of our critical systems and information, includes a comprehensive cybersecurity incident response plan. We design and assess our program based on the ISO 27000 and the National Institute of Standards and Technology (NIST) SP-800 and Cybersecurity Framework.
Item 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy Our cybersecurity risk management program, which is designed to protect the confidentiality, integrity and availability of our critical systems and information, includes a comprehensive security incident response plan. It complements our enterprise risk management program overseen by our Board, using similar methodologies and governance processes to identify risks and mitigating strategies.
Removed
Cybersecurity Governance Our Board of Directors (our “Board”) considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee primary responsibility for overseeing our cybersecurity risk management program and engaging with management on cybersecurity and other risks related to our information technology controls and security.
Added
During 2025, our CIO and CISO provided semiannual updates on our cybersecurity preparedness to the Audit Committee. These updates covered the overall status of our cybersecurity program, results of risk assessments, the evolving threat landscape, performance against key performance indicators and the progress with strategic information security initiatives. The Audit Committee Chair reported on these matters to our full Board.
Added
Effective January 2026, our Board formed a standalone Cybersecurity Committee to be primarily responsible for overseeing our strategies, policies and risk management practices related to cybersecurity and information security and the Cybersecurity Advisory Council ceased operating.
Added
The CSLT, which is led by our CIO and CISO, is primarily responsible for our overall cybersecurity risk management program and supervises both our internal cybersecurity and information security personnel and the external consultants advising our company on these matters.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSoignies and Turnhout, Belgium; Vinhedo, Brazil; Guangzhou, Kunshan, and Zhuozhou, China; Champ-sur-Drac, France; Gotha, Germany; Pune and Noida, India; Longford, Ireland; Kibbutz Hanita, Israel; Chungju, South Korea; Rodange, Luxembourg; Bangi, Malaysia; Queretaro, Mexico; Rayong, Thailand; and Cramlington, United Kingdom Solutions Group U.S. Fort Wayne, Indiana; New Century, Kansas; Miamisburg, Ohio; and Nashville, Tennessee Non-U.S.
Biggest changeSoignies and Turnhout, Belgium; Vinhedo, Brazil; Guangzhou, Kunshan and Zhuozhou, China; Champ-sur-Drac, France; Gotha, Germany; Noida and Pune, India; Longford, Ireland; Kibbutz Hanita, Israel; Rodange, Luxembourg; Bangi, Malaysia; Queretaro, Mexico; Chungju, South Korea; Rayong, Thailand; and Cramlington, United Kingdom Solutions Group U.S. Fort Wayne, Indiana; New Century, Kansas; Miamisburg, Ohio; and Nashville, Tennessee Non-U.S.
Dhaka, Bangladesh; Guangzhou, Nansha, Ningbo, Panyu, Shenzhen, and Suzhou, China; Ancarano, Italy; Kulim, Malaysia; Queretaro, Mexico; and Long An Province, Vietnam In addition to the manufacturing facilities described above, our other principal facilities include our corporate headquarters and divisional office in Mentor, Ohio and our divisional and corporate offices located in Dallas, Texas; Vinhedo, Brazil; Hong Kong and Kunshan, China; and Oegstgeest, the Netherlands.
Dhaka, Bangladesh; Guangzhou, Ningbo, Panyu, Shenzhen and Suzhou, China; Ancarano, Italy; Kulim, Malaysia; Queretaro, Mexico; and Long An Province, Vietnam In addition to the manufacturing facilities described above, our other principal facilities include our corporate headquarters and divisional office in Mentor, Ohio and our divisional and corporate offices located in Dallas, Texas; Vinhedo, Brazil; Hong Kong and Kunshan, China; and Oegstgeest, the Netherlands.
We own all of the principal properties identified above, except for the facilities in the following locations, which are leased: New Century, Kansas; Mentor, Ohio; Nashville, Tennessee; Hong Kong, Ningbo, Panyu, Shenzhen and Zhuozhou, China; Kibbutz Hanita, Israel; and Oegstgeest, the Netherlands. We consider all our properties, whether owned or leased, suitable and adequate for our current needs.
We own all of the principal properties identified above, except for the facilities in the following locations, which are leased: New Century, Kansas; Nashville, Tennessee; Hong Kong, Ningbo, Panyu, Shenzhen and Zhuozhou, China; Kibbutz Hanita, Israel; and Oegstgeest, the Netherlands. We consider all our properties, whether owned or leased, suitable and adequate for our current needs.
Item 2. PROPERTIES As of December 28, 2024, we operated manufacturing facilities in excess of 100,000 square feet in the reportable segments and locations listed below. Materials Group U.S. Peachtree City, Georgia; Greenfield and Lowell, Indiana; Fairport Harbor, Mentor, Oak Harbor, and Painesville, Ohio; and Mill Hall, Pennsylvania Non-U.S.
Item 2. PROPERTIES As of December 31, 2025, we operated manufacturing facilities in excess of 100,000 square feet in the reportable segments and locations listed below. Materials Group U.S. Peachtree City, Georgia; Greenfield and Lowell, Indiana; Fairport Harbor, Mentor, Oak Harbor and Painesville, Ohio; and Mill Hall, Pennsylvania Non-U.S.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod (1) Total number of shares purchased (2) Average price paid per share (3) Total number of shares purchased as part of publicly announced plans (2)(4) Approximate dollar value of shares that may yet be purchased under the plans (5) September 29, 2024 – October 26, 2024 105.5 $ 215.1 105.5 $ 462.9 October 27, 2024 – November 23, 2024 271.7 203.2 271.7 407.7 November 24, 2024 – December 28, 2024 311.0 195.6 311.0 346.9 Total 688.2 $ 201.6 688.2 $ 346.9 (1) The periods shown are our fiscal months during the thirteen-week quarter ended December 28, 2024.
Biggest changePeriod (1) Total number of shares purchased (2) Average price paid per share (3) Total number of shares purchased as part of publicly announced plans (2)(4) Approximate dollar value of shares that may yet be purchased under the plans (5) September 28, 2025 – October 25, 2025 265.4 $ 160.9 265.4 $ 604.4 October 26, 2025 – November 22, 2025 256.4 173.6 256.4 559.9 November 23, 2025 – December 31, 2025 191.9 175.4 191.9 526.3 Total 713.7 $ 169.3 713.7 $ 526.3 (1) The periods shown are our fiscal months during the quarter ended December 31, 2025.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Our common stock is listed under the ticker symbol “AVY” on the New York Stock Exchange. We did not sell securities in any unregistered transactions during fiscal year 2024. We have historically paid quarterly cash dividends.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Our common stock is listed under the ticker symbol “AVY” on the New York Stock Exchange. We did not sell securities in any unregistered transactions during fiscal year 2025. We have historically paid quarterly cash dividends.
Stockholder Return Performance The graph below compares the cumulative stockholder return on our common stock, including reinvestment of dividends, with the return on the S&P 500 Stock Index, S&P 500 Industrials Index and Dow Jones U.S. Container & Packaging Index, in each case for the five-year period ending December 31, 2024.
Stockholder Return Performance The graph below compares the cumulative stockholder return on our common stock, including reinvestment of dividends, with the return on the S&P 500 Stock Index, S&P 500 Industrials Index and Dow Jones U.S. Container & Packaging Index, in each case for the five-year period ending December 31, 2025.
(4) In April 2022, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees, commissions or other expenses related to such purchases, in addition to the amount outstanding under our previous Board authorization.
(4) In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees, commissions or other expenses related to such purchases, in addition to the amount outstanding under our previous Board authorization.
(b) Not applicable. 20 Table of Contents (c) Repurchases of Equity Securities by Issuer Repurchases by us or our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) of the Exchange Act) of registered equity securities in the fourth quarter of 2024 are shown in the table below.
(b) Not applicable. 20 Table of Contents (c) Repurchases of Equity Securities by Issuer Repurchases by us or our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) of the Securities Exchange Act of 1934, as amended) of registered equity securities in the fourth quarter of 2025 are shown in the table below.
Future dividend payments are subject to the approval by our Board of Directors based on our earnings, capital requirements, financial condition and other factors. We had 3,391 shareholders of record as of December 28, 2024, the last day of our 2024 fiscal year.
Future dividend payments are subject to the approval by our Board of Directors (our "Board") based on our earnings, capital requirements, financial condition and other factors. We had 3,130 shareholders of record as of December 31, 2025, the last day of our 2025 fiscal year.
Total Return Analysis (1) 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Avery Dennison $ 100 $ 121 $ 171 $ 145 $ 165 $ 155 Dow Jones U.S.
Total Return Analysis (1) 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Avery Dennison $ 100 $ 141 $ 120 $ 137 $ 128 $ 127 Dow Jones U.S.
Container & Packaging Index 100 121 135 112 120 136 S&P 500 Industrials Index 100 111 135 127 150 176 S&P 500 Index 100 118 152 125 158 197 (1) Assumes $100 invested on December 31, 2019 and reinvestment of dividends.
Container & Packaging Index 100 112 93 99 113 101 S&P 500 Industrials Index 100 121 114 135 159 190 S&P 500 Index 100 129 105 133 166 196 (1) Assumes $100 invested on December 31, 2020 and reinvestment of dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSegment adjusted operating income decreased in 2023 compared to the same period in 2022 primarily due to lower volume, partially offset by benefits from productivity initiatives, including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition costs, and the net impact of pricing and raw material input costs. 27 Table of Contents Solutions Group (In millions) 2024 2023 2022 Net sales including intersegment sales $ 2,795.0 $ 2,588.5 $ 2,581.6 Less intersegment sales (52.3) (35.5) (37.4) Net sales $ 2,742.7 $ 2,553.0 $ 2,544.2 Segment adjusted operating income (1) 289.3 252.0 310.1 (1) Segment adjusted operating income excluded charges associated with restructuring actions, outcomes of legal matters and settlements, net, and transaction and related costs in all years, loss on venture investments in 2024 and 2023, and gain on sales of assets in 2022.
Biggest changeSegment Adjusted Operating Income Segment adjusted operating income decreased in 2025 compared to 2024 primarily due the net impact of pricing and raw material input costs, as well as higher employee-related costs, partially offset by favorable volume/mix and benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs.
By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures.
By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture and other investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures.
We use the non-GAAP financial measures described below in this MD&A. • Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, the currency adjustments for transitional reporting of highly inflationary economies, and the reclassification of sales between segments.
We use the non-GAAP financial measures described below in this MD&A. • Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustments for transitional reporting of highly inflationary economies, and the reclassification of sales between segments.
Marketing, General and Administrative Expense Marketing, general and administrative expense increased in 2024 compared to 2023 primarily due to higher employee-related costs, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.
Marketing, general and administrative expense increased in 2024 compared to 2023 primarily due to higher employee-related costs, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs.
The assumed discount rates for our non-U.S. pension plans reflect market rates for high quality corporate bonds currently available. Our discount rates are determined by evaluating yield curves consisting of large populations of high quality corporate bonds.
The assumed discount rates for our non-U.S. pension plans reflect market rates for currently available high quality corporate bonds. Our discount rates are determined by evaluating yield curves consisting of large populations of high quality corporate bonds.
We determine the fair value of RSUs and the component of PUs that is subject to the achievement of a performance objective based on a financial performance condition based on the fair market value of our common stock as of the date of the grant, adjusted for foregone dividends.
We determine the fair value of RSUs and the component of PUs that is subject to the achievement of a performance objective based on a financial performance condition based on the fair market value of our common stock as of the grant date, adjusted for foregone dividends.
Additionally, current market conditions, including interest rates, are evaluated and market data is reviewed for reasonableness and appropriateness. An increase or decrease of 0.25% on the long-term return on assets associated with our non-U.S. plans would have decreased or increased our expected periodic benefit cost for the coming year by approximately $2 million.
Additionally, current market conditions, including interest rates, are evaluated and market data is reviewed for reasonableness and appropriateness. An increase or decrease of 0.25% in the long-term return on assets associated with our non-U.S. plans would have decreased or increased our expected periodic benefit cost for the coming year by approximately $2 million.
Certain factors may cause us to perform an impairment test prior to the fourth quarter, including significant underperformance of a business relative to expected operating results, significant adverse economic and industry trends, significant decline in our market capitalization for an extended period of time relative to net book value, or a decision to divest a portion of a reporting unit.
Certain factors may cause us to perform an impairment test prior to the fourth quarter, including significant underperformance of a business relative to expected operating results, significant adverse economic or industry trends, significant decline in our market capitalization for an extended period of time relative to net book value, or a decision to divest a portion of a reporting unit.
Refer to Note 9, “Fair Value Measurements,” to the Consolidated Financial Statements for more information regarding (gain) loss on venture investments. Refer to Note 8, "Contingencies," and Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information regarding outcomes of legal matters and settlements, net.
Refer to Note 9, “Fair Value Measurements,” to the Consolidated Financial Statements for more information regarding (gain) loss on venture and other investments, net. Refer to Note 8, "Contingencies," and Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information regarding outcomes of legal matters and settlements, net.
Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis to marketing, general and administrative expense over their respective estimated useful lives.
Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis to marketing, general and administrative expense over their estimated useful lives.
Non-GAAP Financial Measures 22 Overview and Outlook 23 Analysis of Results of Operations 25 Results of Operations by Reportable Segment 27 Financial Condition 29 Critical Accounting Estimates 34 Recent Accounting Requirements 37 NON-GAAP FINANCIAL MEASURES We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures.
Non-GAAP Financial Measures 22 Overview and Outlook 23 Analysis of Results of Operations 25 Results of Operations by Reportable Segment 27 Financial Condition 29 Critical Accounting Estimates 35 Recent Accounting Requirements 37 NON-GAAP FINANCIAL MEASURES We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures.
Our assumptions about discount rates are based on the weighted average cost of capital for comparable companies. Our assumptions about sales, operating margins and growth rates are based on our forecasts, business plans, economic projections, anticipated future cash flows, and marketplace data. We also make assumptions for varying perpetual growth rates for periods beyond our long-term business plan period.
Our assumptions about discount rates are based on the weighted average cost of capital of comparable companies. Our assumptions about sales, profit margins and growth rates are based on our forecasts, business plans, economic projections, anticipated future cash flows, and marketplace data. We also make assumptions for varying perpetual growth rates for periods beyond our long-term business plan period.
In our annual impairment test in the fourth quarter of 2024, the goodwill of all reporting units in our Materials Group and Solutions Group reportable segments were tested utilizing a qualitative assessment. Based on this assessment, we determined that the fair values of these reporting units were more-likely-than-not greater than their respective carrying values.
In our annual impairment test in the fourth quarter of 2025, the goodwill of all reporting units in our Materials Group and Solutions Group reportable segments were tested utilizing a qualitative assessment. Based on this assessment, we determined that the fair values of these reporting units were more-likely-than-not greater than their respective carrying values.
Refer to Note 1, “Summary of Significant Accounting Policies,” for more information. Contractual Obligations, Commitments and Off-Balance Sheet Arrangements Material Cash Requirements at End of Year 2024 We have short- and long-term material cash requirements related to our contractual obligations that arise in the normal course of business.
Refer to Note 1, “Summary of Significant Accounting Policies,” for more information. Contractual Obligations, Commitments and Off-Balance Sheet Arrangements Material Cash Requirements at End of Year 2025 We have short- and long-term material cash requirements related to our contractual obligations that arise in the normal course of business.
Segment Adjusted Operating Income Segment adjusted operating income increased in 2024 compared to the same period in 2023 primarily due to higher volume and benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and the net impact of pricing and raw material input costs.
Segment adjusted operating income increased in 2024 compared to 2023 primarily due to higher volume and benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and the net impact of pricing and raw material input costs.
Conversely, a 0.25% decrease in the discount rates associated with our non-U.S. plans would have increased our year-end projected benefit obligation by approximately $27 million and would not have a significant impact on expected periodic benefit cost for the coming year.
Conversely, a 0.25% decrease in the discount rates associated with our non-U.S. plans would have increased our year-end projected benefit obligation by approximately $26 million and would not have a significant impact on expected periodic benefit cost for the coming year.
We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparison with the results of competitors for quarters and year-to-date periods, as applicable.
We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparisons with the results of competitors for quarters and year-to-date periods, as applicable.
Additional U.S. taxes may also result from the impact of foreign currency fluctuations related to these earnings and profits. In June 2024, we entered into a Credit Agreement (the "Credit Agreement") related to our Revolver to borrow up to an aggregate of $1.2 billion through its maturity date of June 26, 2029.
Additional U.S. taxes may also result from the impact of foreign currency fluctuations related to these earnings and profits. 33 Table of Contents In June 2024, we entered into a Credit Agreement (the "Credit Agreement") related to our Revolver to borrow up to an aggregate of $1.2 billion through its maturity date of June 26, 2029.
We remain committed to maintaining an investment grade rating. 33 Table of Contents Fair Value of Debt The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury securities or euro government bond securities, as applicable, on notes with similar rates, credit ratings and remaining maturities.
We remain committed to maintaining an investment grade rating. Fair Value of Debt The estimated fair value of our long-term debt is primarily based on the credit spread above U.S. Treasury securities or euro government bond securities, as applicable, on notes with similar rates, credit ratings and remaining maturities.
Our 2025 fiscal year that began on December 29, 2024 will end on December 31, 2025; fiscal years 2026 and beyond will be coincident with the calendar year beginning on January 1 and ending on December 31. • Organic sales change refers to sales change ex. currency, excluding the estimated impact of acquisitions and product line divestitures.
Our 2025 fiscal year began on December 29, 2024 and ended on December 31, 2025; fiscal years 2026 and beyond will be coincident with the calendar year beginning on January 1 and ending on December 31. • Organic sales change refers to sales change ex. currency, excluding the estimated impact of acquisitions and product line divestitures.
Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were approximately €495 million ($539 million), which we intend to use to repay our €500 million of senior notes maturing in March 2025 and for general corporate purposes.
Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were approximately €495 million ($539 million), which we used to repay our €500 million of senior notes maturing in March 2025 and for general corporate purposes.
During 2024 and 2023, the Argentine peso devalued significantly compared to the U.S. dollar, resulting in remeasurement losses of approximately $16 million and $30 million, respectively, which was included in "Other expense (income), net" in the Consolidated Statements of Income. The 2024 losses included Blue Chip Swap transactions that resulted in losses of approximately $10 million.
During 2025, 2024 and 2023, the Argentine peso devalued significantly compared to the U.S. dollar, resulting in remeasurement losses of approximately $6 million, $16 million and $30 million, respectively, which were included in "Other expense (income), net" in the Consolidated Statements of Income. The 2024 losses included Blue Chip Swap transactions that resulted in losses of approximately $10 million.
The Revolver contains a financial covenant that requires us to maintain a maximum leverage ratio (calculated as a ratio of consolidated debt minus unrestricted cash and cash equivalents in excess of $50 million to consolidated EBITDA as defined in the agreement) of not more than 3.50 to 1.00; provided that, in the event of an acquisition by us that exceeds $250 million, the maximum leverage ratio increases to 4.00 to 1.00 for the fiscal quarter in which the acquisition occurs and the three fiscal quarters immediately following that fiscal quarter.
The Revolver contains a financial covenant that requires us to maintain a maximum leverage ratio (calculated as a ratio of consolidated debt minus unrestricted cash and cash equivalents in excess of $50 million to consolidated EBITDA as defined in the agreement) of not more than 3.50 to 1.00; provided that, in the event of an acquisition by us that exceeds $250 million, which occurred when we acquired Taylor Adhesives, the maximum leverage ratio increases to 4.00 to 1.00 for the fiscal quarter in which the acquisition occurs and the three fiscal quarters immediately following that fiscal quarter.
In consultation with outside specialists, we estimate the fair value of our reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various assumptions, including a reporting unit's forecasted sales, operating margins and growth rates, as well as 34 Table of Contents discount rates.
In consultation with outside specialists, we estimate the fair value of our reporting units using various valuation techniques, with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires us to make various assumptions, including a reporting unit's forecasted sales, profit margins and growth rates, as well as discount rates.
In addition to principal and interest payments on our outstanding debt obligations, our contractual obligations primarily consist of lease payments. Refer to Note 4, "Debt," to the Consolidated Financial Statements for a summary of our principal payments for short-term borrowings and long-term debt obligations as of December 28, 2024.
In addition to principal and interest payments on our outstanding debt obligations, our contractual obligations primarily consist of lease payments. Refer to Note 4, "Debt," to the Consolidated Financial Statements for a summary of our principal payments for short-term borrowings and long-term debt obligations as of December 31, 2025.
In 2023, on an organic basis, net sales increased by a high single digit rate in high-value categories and decreased by a low double-digit rate in the base business compared to the prior year. Company-wide, on an organic basis, sales of intelligent labels increased by a low double-digit rate compared to the prior year.
In 2025, on an organic basis, net sales increased by a mid-single digit rate in high-value categories and decreased by a low single digit rate in the base business compared to the prior year. Company-wide, on an organic basis, sales of intelligent labels increased by a low single digit rate compared to the prior year.
Critical estimates include, but are not limited to, the following: • Future revenue and profit margins; • Royalty rates; • Discount rates; • Customer retention rates; • Technology migration curves; and • Useful lives assigned to acquired intangible assets.
Critical estimates include, but are not limited to, the following: • Future revenue and profit margins; • Royalty rates; • Discount rates; • Customer retention rates; 35 Table of Contents • Technology migration curves; and • Useful lives assigned to acquired intangible assets.
Purchases of Software and Other Deferred Charges In 2024, 2023 and 2022, we invested in information technology upgrades worldwide. Proceeds from Company-Owned Life Insurance Policies In 2023, we utilized approximately $48 million of the cash surrender value available under our company-owned life insurance policies.
Purchases of Software and Other Deferred Charges In 2025, we primarily invested in information technology upgrades in the U.S. In 2024 and 2023, we invested in information technology upgrades worldwide. Proceeds from Company-Owned Life Insurance Policies In 2023, we utilized approximately $48 million of the cash surrender value available under our company-owned life insurance policies.
On March 6, 2023, we completed our business acquisition of Thermopatch, Inc. ("Thermopatch"), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. These acquisitions expanded the product portfolio in our Solutions Group reportable segment.
("Lion Brothers"), a Maryland-based designer and manufacturer of apparel brand embellishments. On March 6, 2023, we completed our business acquisition of Thermopatch, Inc. ("Thermopatch"), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. These acquisitions expanded the product portfolio in our Solutions Group reportable segment.
The fair value of short-term borrowings, which includes commercial paper issuances and short-term lines of credit, approximates their carrying value given their short duration. The fair value of our total debt was $3.01 billion at December 28, 2024 and $3.11 billion at December 30, 2023. Fair value amounts were determined based primarily on Level 2 inputs.
The fair value of short-term borrowings, which includes commercial paper issuances and short-term lines of credit, approximates their carrying value given their short duration. The fair value of our total debt was $3.67 billion at December 31, 2025 and $3.01 billion at December 28, 2024. Fair value amounts were determined based primarily on Level 2 inputs.
As of December 28, 2024, a 0.25% increase in the discount rates associated with our non-U.S. plans would have decreased our year-end projected benefit obligation by approximately $27 million and would not have a significant impact on expected periodic benefit cost for the coming year.
As of December 31, 2025, a 0.25% increase in the discount rates associated with our non-U.S. plans would have decreased our year-end projected benefit obligation by approximately $26 million and would not have a significant impact on expected periodic benefit cost for the coming year.
Our future results are subject to changes in geopolitical, social and economic conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange rates.
Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates.
In 2022, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including Malaysia, China and Vietnam, and the U.S.; in our Materials Group reportable segment, we primarily invested in buildings and equipment in the U.S. and certain countries in Europe, primarily France, and Latin America, primarily Brazil.
In 2024, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including China and Malaysia, the U.S. and certain countries in Latin America, primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S., and certain countries in Europe, primarily France, and Asia Pacific, primarily China.
Subsequent to fiscal year-end 2024, in January 2025, the Audit Committee of our Board of Directors approved a change to our previous 52- or 53-week fiscal year generally ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year.
OVERVIEW AND OUTLOOK Fiscal Year In January 2025, the Audit Committee of our Board of Directors approved a change to our previous 52- or 53-week fiscal year generally ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year.
In April 2023, we increased our quarterly dividend to $0.81 per share, representing an increase of approximately 8% from our previous dividend rate of $0.75 per share. Share Repurchases From time to time, our Board authorizes the repurchase of shares of our outstanding common stock.
In April 2024, we increased our quarterly dividend to $0.88 per share, representing an increase of approximately 9% from our previous dividend rate of $0.81 per share. Share Repurchases From time to time, our Board authorizes the repurchase of shares of our outstanding common stock.
Refer to Note 7, "Commitments and Leases," to the Consolidated Financial Statements for a summary of our lease obligations as of December 28, 2024.
Refer to Note 7, "Commitments and Leases," to the Consolidated Financial Statements for a summary of our lease obligations as of December 31, 2025.
Investing Activities (In millions) 2024 2023 2022 Purchases of property, plant and equipment $ (208.8) $ (265.3) $ (278.1) Purchases of software and other deferred charges (31.0) (19.8) (20.4) Proceeds from company-owned life insurance policies — 48.1 — Purchases of Argentine Blue Chip Swap securities (34.2) — — Proceeds from sales of Argentine Blue Chip Swap securities 24.0 — — Proceeds from sales of property, plant and equipment .6 1.0 2.3 Proceeds from insurance and sales (purchases) of investments, net 10.1 1.9 1.9 Proceeds from sale of venture investment — — 1.1 Payments for acquisitions, net of cash acquired, and venture investments (3.8) (224.9) (39.5) Net cash used in investing activities $ (243.1) $ (459.0) $ (332.7) 29 Table of Contents Purchases of Property, Plant and Equipment In 2024, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including China and Malaysia, the U.S. and certain countries in Latin America, primarily Mexico; in our Materials Group reportable segment, we primarily invested in buildings and equipment to support growth in the U.S., and certain countries in Europe, primarily France, and Asia Pacific, primarily China.
Investing Activities (In millions) 2025 2024 2023 Purchases of property, plant and equipment $ (169.0) $ (208.8) $ (265.3) Purchases of software and other deferred charges (31.4) (31.0) (19.8) Proceeds from company-owned life insurance policies — — 48.1 Purchases of Argentine Blue Chip Swap securities — (34.2) — Proceeds from sales of Argentine Blue Chip Swap securities — 24.0 — Proceeds from sales of property, plant and equipment 22.6 .6 1.0 Proceeds from insurance and sales (purchases) of investments, net 3.5 10.1 1.9 Proceeds from settlement of net investment hedges 6.2 — — Payments for settlement of net investment hedges (26.1) — — Payments for acquisitions, net of cash acquired, and venture investments (401.8) (3.8) (224.9) Net cash used in investing activities $ (596.0) $ (243.1) $ (459.0) 29 Table of Contents Purchases of Property, Plant and Equipment In 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe and certain countries in Asia Pacific, primarily China; in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including China and Vietnam, the U.S. and certain countries in Latin America, primarily Mexico.
The unfavorable impact of foreign currency translation on net sales in 2024 compared to 2023 was primarily related to sales in China and Brazil, partially offset by the favorable impact of euro-denominated sales.
The favorable impact of foreign currency translation on net sales in 2025 compared to 2024 was primarily related to euro-denominated sales, partially offset by sales in India and Brazil.
Net Sales The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below. 2024 2023 Reported net sales change 5 % (8) % Foreign currency translation — 1 Sales change ex. currency (1) 5 % (7) % Acquisitions (1) (1) Organic sales change (1) 5 % (8) % (1) Totals may not sum due to rounding.
Net Sales The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below. 2025 2024 Reported net sales change 1 % 5 % Foreign currency translation — — Impact of extra days — — Sales change ex. currency (1) — % 5 % Acquisitions — (1) Organic sales change (1) — % 5 % (1) Totals may not sum due to rounding.
Analysis of Selected Balance Sheet Accounts Long-lived Assets Property, plant and equipment, net, decreased by approximately $39 million to $1.59 billion at year-end 2024, which primarily reflected depreciation expense and the impact of foreign currency translation, partially offset by purchases of property, plant and equipment.
Analysis of Selected Balance Sheet Accounts Long-lived Assets Property, plant and equipment, net, increased by approximately $21 million to $1.61 billion at year-end 2025, which primarily reflected purchases of property, plant and equipment and the impact of foreign currency translation, partially offset by current year depreciation expense.
Prior periods have been conformed to the current period presentation. Segment adjusted operating income is defined as income before taxes adjusted for other expense (income), net; interest expense, other non-operating expense (income), net; and other items. Refer to Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information.
Segment adjusted operating income is defined as income before taxes adjusted for other expense (income), net; interest expense, other non-operating expense (income), net; and other items. Refer to Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information.
Additionally, where applicable, sales change ex. currency is also adjusted for an extra week in our fiscal year and the calendar shift resulting from an extra week in the prior fiscal year.
Additionally, where applicable, sales change ex. currency is also adjusted for the estimated impact of extra days in our fiscal year and the calendar shift resulting from extra days in the prior fiscal year.
Refer to Note 11, “Supplemental Equity and Comprehensive Income Information,” to the Consolidated Financial Statements for more information. 31 Table of Contents Impact of Foreign Currency Translation (In millions) 2024 2023 Change in net sales $ (33) $ (58) In 2024, international operations generated approximately 70% of our net sales.
Refer to Note 11, “Supplemental Equity and Comprehensive Income Information,” to the Consolidated Financial Statements for more information. Impact of Foreign Currency Translation (In millions) 2025 2024 Change in net sales $ 29 $ (33) In 2025, international operations generated approximately 69% of our net sales.
Segment adjusted operating income decreased in 2023 compared to 2022 primarily due to higher employee-related costs, lower volume, growth investments and the impact of unfavorable foreign currency translation, partially offset by benefits from productivity initiatives, including temporary cost-saving actions and savings from restructuring actions, net of transition costs. 28 Table of Contents FINANCIAL CONDITION Liquidity Operating Activities (In millions) 2024 2023 2022 Net income $ 704.9 $ 503.0 $ 757.1 Depreciation 197.1 187.4 177.4 Amortization 115.1 111.0 113.3 Provision for credit losses and sales returns 47.4 49.9 50.1 Stock-based compensation 28.7 22.3 47.4 Deferred taxes and other non-cash taxes (18.5) (24.4) 18.4 Other non-cash expense and loss (income and gain), net 67.2 37.1 23.5 Trade accounts receivable (107.3) (16.7) (22.1) Inventories (90.7) 111.7 (140.7) Accounts payable 106.7 (87.6) 68.2 Taxes on income 40.2 (18.7) 18.9 Other assets (48.0) 37.7 15.3 Other liabilities (104.0) (86.7) (165.8) Net cash provided by operating activities $ 938.8 $ 826.0 $ 961.0 In 2024, cash flow provided by operating activities increased compared to 2023 primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by changes in operational working capital and the settlement payment for the Adasa legal matter.
Segment adjusted operating income increased in 2024 compared to 2023 primarily due to higher volume and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and growth investments. 28 Table of Contents FINANCIAL CONDITION Liquidity Operating Activities (In millions) 2025 2024 2023 Net income $ 688.0 $ 704.9 $ 503.0 Depreciation 206.4 197.1 187.4 Amortization 121.8 115.1 111.0 Provision for credit losses and sales returns 51.2 47.4 49.9 Stock-based compensation 27.9 28.7 22.3 Deferred taxes and other non-cash taxes (19.9) (18.5) (24.4) Other non-cash expense and loss (income and gain), net 48.8 67.2 37.1 Trade accounts receivable 44.0 (107.3) (16.7) Inventories 53.2 (90.7) 111.7 Accounts payable (144.4) 106.7 (87.6) Taxes on income (5.1) 40.2 (18.7) Other assets 3.8 (48.0) 37.7 Other liabilities (194.3) (104.0) (86.7) Net cash provided by operating activities $ 881.4 $ 938.8 $ 826.0 In 2025, cash flow provided by operating activities decreased compared to 2024 primarily due to higher incentive compensation payments, higher tax payments, net of refunds, lower net income and higher trade rebate payments, partially offset by the prior-year settlement payment for the Adasa legal matter and changes in operational working capital.
Shares of our common stock in the aggregate amount of $346.9 million remained authorized for repurchase under this Board authorization as of December 28, 2024. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.
Shares of our common stock in the aggregate amount of $526.3 million remained authorized for repurchase under this Board authorization as of December 31, 2025. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.
Net (Tax Withholding) Proceeds Related to Stock-Based Compensation Approximately 0.1 million stock options were exercised in 2024, resulting in proceeds of approximately $10 million. Refer to Note 12, “Long-Term Incentive Compensation,” to the Consolidated Financial Statements for more information.
Net (Tax Withholding) Proceeds Related to Stock-Based Compensation Approximately 0.1 million stock options were exercised in 2024, resulting in proceeds of approximately $10 million. Refer to Note 12, “Long-Term Incentive Compensation,” to the Consolidated Financial Statements for more information. Settlement of Fair Value Hedges In 2025, we settled €920 million notional amount of fair value hedges.
As a result, we disclose goodwill separately from other intangible assets. Our reporting units are composed of either a discrete business or an aggregation of businesses with similar economic characteristics. We perform our annual impairment test of goodwill during the fourth quarter.
Our reporting units are composed of either a discrete business or an aggregation of businesses with similar economic characteristics. We perform our annual impairment test of goodwill during the fourth quarter.
Proceeds from Insurance and Sales (Purchases) Investments, net In 2024, we received approximately $8 million of insurance proceeds for losses related to damaged property, plant and equipment.
Proceeds from Sales of Property, Plant and Equipment In 2025, we primarily received proceeds from the sales of properties in China, Vietnam and Argentina. Proceeds from Insurance and Sales (Purchases) Investments, net In 2024, we received approximately $8 million of insurance proceeds for losses related to damaged property, plant and equipment.
Dividends Paid We paid dividends per share of $3.45, $3.18 and $2.93 in 2024, 2023 and 2022, respectively. In April 2024, we increased our quarterly dividend rate to $0.88 per share, representing an increase of approximately 9% from our previous quarterly dividend rate of $0.81 per share.
Dividends Paid We paid dividends per share of $3.70, $3.45 and $3.18 in 2025, 2024 and 2023, respectively. In April 2025, we increased our quarterly dividend rate to $0.94 per share, representing an increase of approximately 7% from our previous quarterly dividend rate of $0.88 per share.
Segment Adjusted Operating Income Segment adjusted operating income increased in 2024 compared to 2023 primarily due to higher volume and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and growth investments.
Segment Adjusted Operating Income Segment adjusted operating income decreased in 2025 compared to 2024 primarily due to higher employee-related costs, the net impact of pricing and raw material input costs, and growth investments, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and higher volume.
We determine the fair value of stock-based awards that are subject to achievement of performance objectives based on a market condition, which includes MSUs and the other component of PUs, using the Monte-Carlo simulation model, which utilizes multiple input variables, including expected stock price volatility and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the respective target performance objectives established for the award. 36 Table of Contents Forfeiture Rate Changes in estimated forfeiture rates are recorded as cumulative adjustments in the period estimates are revised.
We determine the fair value of stock-based awards that are subject to achievement of performance objectives based on a market condition, which includes MSUs and the other component of PUs, using the Monte-Carlo simulation model, which utilizes multiple input variables, including expected stock price volatility and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the respective target performance objectives established for the award.
These charges consisted of severance and related costs for the reduction of approximately 1,280 positions, as well as asset impairment charges, at numerous locations across our company. During 2023, we recorded $49.0 million in restructuring charges, net of reversals, related to these actions.
These charges consisted of severance and related costs for the reduction of approximately 1,280 positions, as well as asset impairment charges, at numerous locations across our company. During 2025, we recorded $1.6 million of reversals related to our 2023 Actions that were completed in the fourth quarter of 2025.
(In millions, except percentages) 2024 2023 (A) Working capital $ 216.1 $ 96.5 Reconciling items: Cash and cash equivalents (329.1) (215.0) Other current assets (305.3) (245.4) Short-term borrowings and current portion of long-term debt and finance leases 592.3 622.2 Current income taxes payable and other current accrued liabilities 929.6 800.2 (B) Operational working capital $ 1,103.6 $ 1,058.5 (C) Fourth-quarter net sales, annualized $ 8,742.8 $ 8,442.0 Operational working capital, as a percentage of annualized current-quarter net sales (B) ÷ (C) 12.6 % 12.5 % Accounts Receivable Ratio The average number of days sales outstanding was 61 days in both 2024 and 2023, calculated using the accounts receivable balance at year-end divided by the average daily sales in the fourth quarter of 2024 and 2023, respectively.
(In millions, except percentages) 2025 2024 (A) Working capital $ 336.7 $ 216.1 Reconciling items: Cash and cash equivalents (202.8) (329.1) Other current assets (307.8) (305.3) Short-term borrowings and current portion of long-term debt and finance leases 522.9 592.3 Current income taxes payable and other current accrued liabilities 869.0 929.6 (B) Operational working capital $ 1,218.0 $ 1,103.6 (C) Fourth-quarter net sales, annualized $ 9,084.8 $ 8,742.8 Operational working capital, as a percentage of annualized current-quarter net sales (B) ÷ (C) 13.4 % 12.6 % Accounts Receivable Ratio The average number of days sales outstanding was 63 days in 2025 compared to 61 days in 2024, calculated using the accounts receivable balance at year-end divided by the average daily sales in the fourth quarter of 2025 and 2024, respectively.
Gross profit margin in 2023 increased compared to 2022 primarily due to benefits from productivity initiatives, including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition costs, and the net impact of pricing and raw material inputs costs, partially offset by lower volume and higher employee-related costs.
Gross profit in 2024 increased compared to 2023 primarily due to higher volume and benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and the net impact of raw material deflation-related price reductions.
ANALYSIS OF RESULTS OF OPERATIONS Income before Taxes (In millions, except percentages) 2024 2023 2022 Net sales $ 8,755.7 $ 8,364.3 $ 9,039.3 Cost of products sold 6,225.0 6,086.8 6,635.1 Gross profit 2,530.7 2,277.5 2,404.2 Marketing, general and administrative expense 1,415.3 1,313.7 1,330.8 Other expense (income), net 71.6 180.9 (.6) Interest expense 117.0 119.0 84.1 Other non-operating expense (income), net (26.7) (30.8) (9.4) Income before taxes $ 953.5 $ 694.7 $ 999.3 Gross profit margin 28.9 % 27.2 % 26.6 % Gross Profit Margin Gross profit margin in 2024 increased compared to 2023 primarily due to benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and higher volume, partially offset by higher employee-related costs.
ANALYSIS OF RESULTS OF OPERATIONS Income before Taxes (In millions, except percentages) 2025 2024 2023 Net sales $ 8,855.5 $ 8,755.7 $ 8,364.3 Cost of products sold 6,309.2 6,225.0 6,086.8 Gross profit 2,546.3 2,530.7 2,277.5 Marketing, general and administrative expense 1,422.5 1,415.3 1,313.7 Other expense (income), net 77.5 71.6 180.9 Interest expense 135.4 117.0 119.0 Other non-operating expense (income), net (14.2) (26.7) (30.8) Income before taxes $ 925.1 $ 953.5 $ 694.7 25 Table of Contents Gross Profit Gross profit in 2025 increased compared to 2024 primarily due to benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs, and higher volume, partially offset by the net impact of raw material deflation-related price reductions and higher employee-related costs.
In 2024, net sales increased on an organic basis compared to the prior year due to higher volume, partially offset by the impact of raw material deflation-related price reductions. On an organic basis, net sales increased by low single digit rates in North America and Western Europe and a high single digit rate in emerging markets.
On an organic basis, net sales increased by a low single digit rate in North America, and decreased by low single digit rates in Europe, the Middle East and North Africa, Asia Pacific and Latin America. 27 Table of Contents In 2024, net sales on an organic basis increased compared to the prior year due to higher volume, partially offset by the impact of raw material deflation-related price reductions.
We realized approximately $63 million and $69 million in savings from restructuring actions, net of transition costs, in 2024 and 2023, respectively, primarily related to our 2023 actions. Restructuring charges were included in “Other expense (income), net” in the Consolidated Statements of Income. Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information.
Savings from Restructuring Actions We realized more than $60 million in incremental savings from restructuring actions, net of transition costs, in each of 2025 and 2024. Restructuring charges were included in “Other expense (income), net” in the Consolidated Statements of Income. Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information.
Adjustments based on filed returns are recorded when identified. Tax laws and regulations are complex and subject to different interpretations by taxpayers and governmental taxing authorities. We review our tax positions quarterly and adjust the balances if and as new information becomes available. Significant judgment is required in determining our tax expense and evaluating our tax positions, including evaluating uncertainties.
Adjustments based on filed returns are recorded when identified. 36 Table of Contents Tax laws and regulations are complex and subject to different interpretations by taxpayers and governmental taxing authorities. We review our tax positions quarterly and adjust the balances if and as new information becomes available.
In 2023, cash flow provided by operating activities decreased compared to 2022 primarily due to lower net income and higher tax payments, net of refunds, partially offset by changes in operational working capital and lower incentive compensation payments.
In 2024, cash flow provided by operating activities increased compared to 2023 primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by changes in operational working capital and the settlement payment for the Adasa legal matter.
In 2024, adjusted free cash flow increased compared 24 Table of Contents to 2023 primarily due to higher net cash provided by operating activities and lower purchases of property, plant and equipment, partially offset by lower proceeds from company-owned life insurance policies.
In 2025, adjusted free cash flow increased compared to 2024 primarily due to lower purchases of property, plant and equipment and higher proceeds from sales of property, plant and equipment, partially offset by lower net cash provided by operating activities.
At year-end 2024, we had cash and cash equivalents of $329.1 million held in accounts at third-party financial institutions in numerous locations throughout the world. At year-end 2024, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in the Asia Pacific region.
We use these resources to fund our operational needs. At year-end 2025, we had cash and cash equivalents of $202.8 million held in accounts at third-party financial institutions in numerous locations throughout the world. At year-end 2025, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in the Asia Pacific region.
Marketing, general and administrative expense decreased in 2023 compared to 2022 primarily due to benefits from productivity initiatives, including temporary cost-saving actions and savings from restructuring actions, net of transition costs, partially offset by higher employee-related costs and growth investments. 25 Table of Contents Other Expense (Income), Net (In millions) 2024 2023 2022 Other expense (income), net by type Restructuring charges, net of reversals: Severance and related costs, net of reversals $ 35.4 $ 70.8 $ 7.6 Asset impairment and lease cancellation charges 6.5 8.6 .1 Other items: Losses from Argentine peso remeasurement and Blue Chip Swap transactions 16.4 29.9 — (Gain) loss on venture investments 19.2 1.5 (13.5) Outcomes of legal matters and settlements, net (6.2) 64.3 6.3 Transaction and related costs .3 5.3 .3 (Gain) loss on sales of assets — .5 (1.4) Other expense (income), net $ 71.6 $ 180.9 $ (.6) Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information regarding restructuring charges, net of reversals.
Other Expense (Income), Net (In millions) 2025 2024 2023 Other expense (income), net, by type Restructuring charges, net of reversals: Severance and related costs, net of reversals $ 43.2 $ 35.4 $ 70.8 Asset impairment and lease cancellation charges 4.0 6.5 8.6 Other items: (Gain) loss on venture and other investments, net 23.3 19.2 1.5 Losses from Argentine peso remeasurement and Blue Chip Swap transactions 5.6 16.4 29.9 Transaction and related costs 5.1 .3 5.3 Outcomes of legal matters and settlements, net 9.2 (6.2) 64.3 (Gain) loss on sales of assets (12.9) — .5 Other expense (income), net $ 77.5 $ 71.6 $ 180.9 Refer to Note 13, “Cost Reduction Actions,” to the Consolidated Financial Statements for more information regarding restructuring charges, net of reversals.
In 2024, net sales increased on an organic basis primarily due to higher volume, partially offset by the impact of raw material deflation-related price reductions. In 2023, net sales decreased on an organic basis primarily due to lower volume, partially offset by pricing actions.
In 2025, net sales on an organic basis were comparable to the prior year, reflecting the impact of higher volume offset by the impact of raw material deflation-related price reductions. In 2024, net sales increased on an organic basis primarily due to higher volume, partially offset by the impact of raw material deflation-related price reductions.
Refer to Note 12, “Long-term Incentive Compensation,” to the Consolidated Financial Statements for information regarding cash-based awards to employees under one of our long-term incentive compensation plans. Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information regarding our unrecognized tax benefits of approximately $81 million.
Refer to Note 12, “Long-term Incentive Compensation,” to the Consolidated Financial Statements for information regarding cash-based awards to employees under one of our long-term incentive compensation plans.
In April 2022, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees, commissions or other expenses related to such purchases and in addition to any amount outstanding under our previous Board authorization.
In 2025, 2024 and 2023, we repurchased approximately 3.2 million, 1.2 million and 0.8 million shares of our common stock, respectively. 31 Table of Contents In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750 million, excluding any fees, commissions or other expenses related to such purchases and in addition to the amount outstanding under our previous Board authorization.
Cash Flow (In millions) 2024 2023 2022 Net cash provided by operating activities $ 938.8 $ 826.0 $ 961.0 Purchases of property, plant and equipment (208.8) (265.3) (278.1) Purchases of software and other deferred charges (31.0) (19.8) (20.4) Proceeds from company-owned life insurance policies — 48.1 — Purchases of Argentine Blue Chip Swap securities (34.2) — — Proceeds from sales of Argentine Blue Chip Swap securities 24.0 — — Proceeds from sales of property, plant and equipment .6 1.0 2.3 Proceeds from insurance and sales (purchases) of investments, net 10.1 1.9 1.9 Payments for certain acquisition-related transaction costs — — .6 Adjusted free cash flow $ 699.5 $ 591.9 $ 667.3 In 2024, net cash provided by operating activities increased compared to 2023 primarily due to higher net income, lower incentive compensation payments and lower tax payments, net of refunds, partially offset by changes in operational working capital and the settlement payment for the Adasa legal matter.
Accounting Guidance Updates Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for this information. 24 Table of Contents Cash Flow (In millions) 2025 2024 2023 Net cash provided by operating activities $ 881.4 $ 938.8 $ 826.0 Purchases of property, plant and equipment (169.0) (208.8) (265.3) Purchases of software and other deferred charges (31.4) (31.0) (19.8) Proceeds from company-owned life insurance policies — — 48.1 Purchases of Argentine Blue Chip Swap securities — (34.2) — Proceeds from sales of Argentine Blue Chip Swap securities — 24.0 — Proceeds from sales of property, plant and equipment 22.6 .6 1.0 Proceeds from insurance and sales (purchases) of investments, net 3.5 10.1 1.9 Adjusted free cash flow $ 707.1 $ 699.5 $ 591.9 In 2025, net cash provided by operating activities decreased compared to 2024 primarily due to higher incentive compensation payments, higher tax payments, net of refunds, lower net income and higher trade rebate payments, partially offset by the prior-year settlement payment for the Adasa legal matter and changes in operational working capital.
Business Acquisitions 2023 Business Acquisitions On November 23, 2023, we completed our business acquisition of Silver Crystal Group ("Silver Crystal"), a Canada-based provider of sports apparel customization and application solutions across in-venue, direct-to-business and e-commerce platforms. On May 22, 2023, we completed our business acquisition of LG Group, Inc. ("Lion Brothers"), a Maryland-based designer and manufacturer of apparel brand embellishments.
The Taylor Adhesives acquisition was not material to the Consolidated Financial Statements. 2023 Business Acquisitions On November 23, 2023, we completed our business acquisition of Silver Crystal Group ("Silver Crystal"), a Canada-based provider of sports apparel customization and application solutions across in-venue, direct-to-business and e-commerce platforms. On May 22, 2023, we completed our business acquisition of LG Group, Inc.
Operational Working Capital Ratio Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital below. Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment.
Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment. Operational working capital, as a percentage of annualized current-quarter net sales, in 2025 increased compared to 2024. Further information regarding the components of operational working capital is provided below.
Future interest payments for long-term debt as of December 28, 2024 are approximately $106 million in 2025; $97 million in 2026; $97 million in 2027; $97 million in 2028; $73 million in 2029; and $243 million from 2030 through maturity.
Future interest payments for long-term debt as of December 31, 2025 are approximately $124 million in 2026; $124 million in 2027; $124 million in 2028; $99 million in 2029; $94 million in 2030; and $302 million from 2031 through maturity.
The decrease in average inventory turnover primarily reflected higher inventory balances, partially offset by the impact of foreign currency translation. 32 Table of Contents Accounts Payable Ratio The average number of days payable outstanding was 77 days in both 2024 and 2023, calculated using the accounts payable balance at year-end divided by the annualized fourth-quarter cost of products sold in 2024 and 2023, respectively.
The increase in average number of days sales outstanding primarily reflected the impact of foreign currency translation. Inventory Ratio Average inventory turnover was 6.4 in both 2025 and 2024, calculated using the annualized fourth-quarter cost of products sold in 2025 and 2024, respectively, and divided by the inventory balance at the respective year-end.
Inventory Ratio Average inventory turnover was 6.4 in 2024 compared to 6.6 in 2023, calculated using the annualized fourth-quarter cost of products sold in 2024 and 2023, respectively, and divided by the inventory balance at the respective year-end.
Accounts Payable Ratio The average number of days payable outstanding was 74 days in 2025 compared to 77 days in 2024, calculated using the accounts payable balance at year-end divided by the annualized fourth-quarter cost of products sold in 2025 and 2024, respectively.
These charges consisted of severance and related costs for the reduction of approximately 1,450 positions, as well as asset impairment charges, at numerous locations across our company.
These charges consisted of severance and related costs for the reduction of approximately 90 positions, as well as asset impairment charges, reflecting actions at numerous locations in our Solutions Group reportable segment.
Outlook Certain factors that we believe will contribute to our 2025 results are described below. • We anticipate net sales to increase, driven by volume growth in both the Solutions Group and Materials Group reportable segments. • We expect an unfavorable impact to our full-year net sales and operating income from foreign currency translation, based on recent rates. • We anticipate incremental savings from restructuring actions, net of transition costs. • We expect our full-year effective tax rate to be in the mid-twenty percent range.
Certain factors that we believe will contribute to our 2026 results are described below. • We anticipate a favorable impact to our full-year net sales and operating income from foreign currency translation, based on recent rates. • We anticipate an unfavorable impact to our operating income from higher interest expense. • We anticipate our full-year effective tax rate to be in the mid-twenty percent range. • We anticipate incremental savings from restructuring actions, net of transition costs. • We anticipate an unfavorable impact to our operating income from normalization of the majority of our 2025 temporary cost savings, which was largely related to lower incentive compensation.
These items were included in "Other expense (income), net." $ 30.8 $ 86.3 $ 7.8 Net Sales The factors impacting reported net sales change are shown in the table below. 2024 2023 Reported net sales change 7 % — % Foreign currency translation 1 2 Sales change ex. currency (1) 8 2 Acquisitions (2) (3) Organic sales change (1) 6 % (1) % (1) Totals may not sum due to rounding.
Net Sales The factors impacting reported net sales change are shown in the table below. 2025 2024 Reported net sales change 1 % 7 % Reclassification of sales between segments 2 — Foreign currency translation — 1 Impact of extra days — — Sales change ex. currency (1) 2 8 Acquisitions — (2) Organic sales change (1) 2 % 6 % (1) Totals may not sum due to rounding.
Financing Activities (In millions) 2024 2023 2022 Net increase (decrease) in borrowings with maturities of three months or less $ (269.0) $ (36.6) $ 34.6 Additional long-term borrowings 539.2 394.9 — Repayments of long-term debt and finance leases (308.1) (255.9) (6.3) Dividends paid (277.5) (256.7) (238.9) Share repurchases (247.5) (137.5) (379.5) Net (tax withholding) proceeds related to stock-based compensation (8.4) (23.8) (25.1) Other (4.8) (1.6) — Net cash used in financing activities $ (576.1) $ (317.2) $ (615.2) Borrowings and Repayment of Debt During 2024, 2023 and 2022, our commercial paper borrowings funded various activities, including repayments of long-term debt, acquisitions, dividend payments, share repurchases, capital expenditures and other general corporate purposes. 30 Table of Contents In November 2024, we issued €500 million of senior notes, due November 4, 2034, which bear an interest rate of 3.750% per year, payable annually in arrears.
Refer to Note 2, “Business Acquisitions,” to the Consolidated Financial Statements for more information. 30 Table of Contents Financing Activities (In millions) 2025 2024 2023 Net increase (decrease) in borrowings with maturities of three months or less $ 422.5 $ (269.0) $ (36.6) Additional long-term borrowings 576.5 539.2 394.9 Repayments of long-term debt and finance leases (559.4) (308.1) (255.9) Dividends paid (288.4) (277.5) (256.7) Share repurchases (572.3) (247.5) (137.5) Net (tax withholding) proceeds related to stock-based compensation (12.8) (8.4) (23.8) Proceeds from settlement of fair value hedges 32.8 — — Payments for settlement of fair value hedges (13.5) — — Other (.3) (4.8) (1.6) Net cash used in financing activities $ (414.9) $ (576.1) $ (317.2) Borrowings and Repayment of Debt During 2025, 2024 and 2023, our commercial paper borrowings funded various activities, including repayments of long-term debt, acquisitions, dividend payments, share repurchases, capital expenditures and other general corporate purposes.
Interest Expense Interest expense decreased in 2024 compared to 2023 primarily due to a decrease in commercial paper borrowings, partially offset by higher debt balances. Interest expense increased in 2023 compared to 2022 primarily as a result of higher interest rates on borrowings and higher debt balances.
Interest Expense Interest expense increased in 2025 compared to 2024 primarily due to the €500 million of senior notes we issued in September 2025 and the €500 million of senior notes we issued in November 2024. Interest expense decreased in 2024 compared to 2023 primarily due to a decrease in commercial paper borrowings, partially offset by higher debt balances.
We believe this approach provides a more precise measurement of service and interest cost by aligning the timing of plan liability cash flows to the corresponding rates on the yield curve. 35 Table of Contents Long-term Return on Plan Assets We determine 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 account our asset allocation, the correlation between returns in our asset classes, and our mix of active and passive investments.
Long-term Return on Plan Assets We determine 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 account our asset allocation, the correlation between returns in our asset classes, and our mix of active and passive investments.
Net Income Net income increased from approximately $503 million in 2023 to approximately $705 million in 2024.
Net Income Net income decreased from approximately $705 million in 2024 to approximately $688 million in 2025.
We currently anticipate using the net proceeds from the €500 million of senior notes we issued in the fourth quarter of 2024, cash flows from operations and commercial paper borrowings to repay €500 million of senior notes, $25 million of medium-term notes and $5 million of medium-term notes maturing in the first, second and third quarters of 2025, respectively.
In the first quarter of 2025, we repaid our €500 million of senior notes at maturity using the net proceeds from the €500 million of senior notes we issued in the fourth quarter of 2024, cash flows from operations and commercial paper borrowings.
The primary factors affecting this increase were: • Higher volume • Benefits from productivity initiatives, including temporary cost-saving actions, material re-engineering and savings from restructuring actions, net of transition costs • The impact of the accrual for a legacy legal matter in the prior year • Lower restructuring charges These items were partially offset by the following factors: • Higher employee-related costs • Higher provision for income taxes • The net impact of raw material deflation-related price reductions Cost Reduction Actions 2025 Actions In the fourth quarter 2024, we recorded $13.1 million in restructuring charges related to our 2025 actions.
The primary factors affecting this decrease were: • The net impact of raw material deflation-related price reductions • Higher employee-related costs • Higher interest expense • Growth investments These items were partially offset by the following factors: • Benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs • Higher volume/mix 23 Table of Contents Cost Reduction Actions 2025 Actions During 2025, we recorded $48.8 million in restructuring charges, net of reversals, related to our 2025 actions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Sensitivity An assumed 44 and 41 basis point increase in interest rates affecting our variable-rate borrowings (10% of our weighted average interest rate on floating rate debt) in 2024 and 2023, respectively, would not have had a significant impact on interest expense. 37 Table of Contents
Biggest changeInterest Rate Sensitivity An assumed 29 and 44 basis point increase in interest rates affecting our variable-rate borrowings (10% of our weighted average interest rate on floating rate debt) in 2025 and 2024, respectively, would not have had a significant impact on interest expense. 38 Table of Contents
Foreign Exchange Value-At-Risk We use a Value-At-Risk (“VAR”) model to determine the estimated maximum potential one-day loss in earnings associated with our foreign exchange positions and contracts. This approach assumes that market rates or prices for foreign exchange positions and contracts are normally distributed. VAR model estimates are made assuming normal market conditions. The model includes foreign exchange derivative contracts.
Foreign Exchange Value-At-Risk We use a Value-At-Risk (“VAR”) model to determine the estimated maximum potential one-day loss in earnings associated with our foreign exchange positions and contracts. This approach assumes that market rates or prices for foreign exchange positions and contracts are normally distributed. VAR model estimates are made assuming normal market conditions. The model includes foreign exchange derivative instruments.
The currency correlation was based on one-year historical data obtained from one of our domestic banks. A 95% confidence level was used for a one-day time horizon. The estimated maximum potential one-day loss in earnings for our foreign exchange positions and contracts was not significant at year-end 2024 or 2023.
The currency correlation was based on one-year historical data obtained from one of our domestic banks. A 95% confidence level was used for a one-day time horizon. The estimated maximum potential one-day loss in earnings for our foreign exchange positions and contracts was not significant at year-end 2025 or 2024.
The VAR model is a risk analysis tool and does not represent actual losses in fair value that we could incur, nor does it consider the potential effect of favorable changes in market factors. In both 2024 and 2023, the VAR was estimated using a variance-covariance methodology.
The VAR model is a risk analysis tool and does not represent actual losses in fair value that we could incur, nor does it consider the potential effect of favorable changes in market factors. In both 2025 and 2024, the VAR was estimated using a variance-covariance methodology.

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