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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K


x			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 2831, ~~2024~~2025 or


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-7685

AVERY DENNISON CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Delaware			95-1492269
(State of Incorporation)			(I.R.S. Employer Identification No.)

8080 Norton Parkway
Mentor, Ohio			44060
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code:

(440) 534-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1 par value

AVY

New York Stock Exchange

1.25% Senior Notes due 2025

AVY25

Nasdaq Stock Market

3.750% Senior Notes due 2034

AVY34

Nasdaq Stock Market

3.75% Senior Notes due 2034

AVY34

Nasdaq Stock Market

4.000% Senior Notes due 2035

AVY35

Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act:

Not applicable.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The aggregate market value of voting and non-voting common equity held by non-affiliates as of June 2827, ~~2024~~2025, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1713.56 billion.

Number of shares of common stock, $1 par value, outstanding as of ~~February~~January 2231, ~~2025~~2026, the end of the registrant’s most recent fiscal month: 7876,~~994~~877,~~622~~940.

The following documents are incorporated by reference into the Parts of this Form 10-K indicated below:

Document						Incorporated by reference into:
Portions of Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 24, 2025						Parts III, IV
Portions of Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 30, 2026						Parts III, IV

Table of Contents

AVERY DENNISON CORPORATION

FISCAL YEAR ~~2024~~2025 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	17
Item 1C.	Cybersecurity	18
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Mine Safety Disclosures	19
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 6.	Reserved	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3738
Item 8	Financial Statements and Supplementary Data	3839
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	8384
Item 9A.	Controls and Procedures	8384
Item 9B.	Other Information	8384
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	8384
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	8485
Item 11.	Executive Compensation	8688
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8688
Item 13.	Certain Relationships and Related Transactions, and Director Independence	8688
Item 14.	Principal Accountant Fees and Services	8688
PART IV
Item 15.	Exhibits and Financial Statement Schedules	8789
Item 16.	Form 10-K Summary	9294
	Signatures	9395
	Power of Attorney	9496

Table of Contents

Safe Harbor Statement

The matters discussed in this Annual Report on Form 10-K contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are not statements of historical fact, contain estimates, assumptions, projections and/or expectations regarding future events, which may or may not occur. Words such as “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “guidance,” “intend,” “may,” “might,” “objective,” “plan,” “potential,” “project,” “seek,” “shall,” “should,” “target,” “will,” “would,” or variations thereof, and other expressions that refer to future events and trends, identify forward-looking statements. Our forward-looking statements, and financial or other business targets, are subject to certain risks and uncertainties, which could cause our actual results to differ materially from the expected results, performance or achievements expressed or implied by such forward-looking statements.

We believe that the most significant risk factors that could affect our financial performance in the near term include: (i) the impact on underlying demand for our products from global economic conditions, tariffs, geopolitical uncertainty, and changes in environmental standards, regulations and preferences; (ii) competitors’ actions, including pricing, expansion in key markets, and product offerings; (iii) the cost and availability of raw materials; (iv) the degree to which higher costs can be offset with productivity measures and/or passed on to customers through price increases, without a significant loss of volume; (v) foreign currency fluctuations; and (vi) the execution and integration of acquisitions.

Certain risks and uncertainties are discussed in more detail under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. Actual results and trends may differ materially from historical or anticipated results depending on a variety of factors, including but not limited to, risks and uncertainties related to the following:

•International Operations –— worldwide economic, ~~social~~geopolitical, ~~geopolitical~~social and ~~market~~labor conditions; changes in geopolitical conditions, including those related to trade relations and tariffs, China, the Russia-Ukraine war, the Israel-Hamas war and related hostilities in the Middle East; fluctuations in foreign currency exchange rates; and other risks associated with international operations, including in emerging markets

•Our Business –— fluctuations in demand affecting sales to customers; fluctuations in the cost and availability of raw materials and energy; changes in our markets due to competitive conditions, technological developments, laws and regulations, customer preferences; environmental regulations and sustainability trends; the impact of competitive products and pricing; the execution and integration of acquisitions; selling prices; customer and supplier concentrations or consolidations; the financial condition of distributors; outsourced manufacturers; product and service quality claims; restructuring and other cost reduction actions; our ability to generate sustained productivity improvement and our ability to achieve and sustain targeted cost reductions; the timely development and market acceptance of new products, including sustainable or sustainably-sourced products; our investment in development activities and new production facilities; the collection of receivables from customers; and our sustainability and governance practices

•Information Technology –— disruptions in information technology systems; cyber security events or other security breaches; and successful installation of new or upgraded information technology systems

•Income Taxes –— fluctuations in tax rates; changes in tax laws and regulations, and uncertainties associated with interpretations of such laws and regulations; outcome of tax audits; and the realization of deferred tax assets

•Human Capital –— recruitment and retention of employees and collective labor arrangements

•Our Indebtedness –— our ability to obtain adequate financing arrangements and maintain access to capital; credit rating risks; fluctuations in interest rates; and compliance with our debt covenants

•Ownership of Our Stock –— potential significant variability of our stock price and amounts of future dividends and share repurchases

•Legal and Regulatory Matters –— protection and infringement of our intellectual property; the impact of legal and regulatory proceedings, including with respect to compliance and anti-corruption, environmental, health and safety, and trade compliance

•Other Financial Matters –— fluctuations in pension costs and goodwill impairment

Our forward-looking statements are made only as of February 2625, ~~2025~~2026. We assume no duty to update these forward-looking statements to reflect new, changed or unanticipated events or circumstances, other than as may be required by law.

Table of Contents

PART I

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. In 1990, we merged one of our subsidiaries into Dennison Manufacturing Company (“Dennison”), as a result of which Dennison became our wholly-owned subsidiary and in connection with which we changed our name to Avery Dennison Corporation. You can learn more about us by visiting our website at www.averydennison.com. 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 ~~company~~. We are Making PossibleTM 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. We design and develop labeling and functional materials, radio-frequency identification ("RFID") inlays and tags, software applications that connect the physical and digital, and offerings that enhance branded packaging and carry or display information that improves the customer experience. 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 ~~across our businesses~~ are the primary advantages in maintaining and further developing our competitive position.

Our reportable segments for fiscal year ~~2024~~2025 were Materials Group and Solutions Group~~. In 2024~~, ~~our~~which ~~Materials Group and Solutions Group reportable segments~~ comprised approximately 69% and 31%, respectively, of our total net sales.

In ~~2024~~2025, international operations constituted a substantial majority of our business, representing approximately 7069% of our net sales. As of December 2831, ~~2024~~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. Our label materials enhance brands' shelf appeal, inform shoppers, advance circularity, increase transparency, ~~help reduce waste~~ 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. We leverage the group's materials science capabilities and process engineering expertise to ~~develop and manufacture Intelligent Labels at scale and~~ drive ~~their~~ further intelligent label adoption through our converter channel access.

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.

Pressure-sensitive materials consist primarily of papers, plastic films and metal foils, which are coated with internally-developed and purchased adhesives, and then laminated with specially-coated backing papers and films. They are then sold in roll or sheet form with either solid or patterned adhesive coatings in a wide range of face materials, sizes, thicknesses and adhesive properties.

A pressure-sensitive, or self-adhesive, material is one that adheres to a surface by press-on contact. It generally consists of four layers: a face material, which may be paper, metal foil or plastic film; an adhesive, which may be permanent or removable; a release coating; and a backing material to protect the adhesive from premature contact with other surfaces that can also serve as a carrier for supporting and dispensing individual labels. When the products are ready for use, the release coating and protective backing are removed, exposing the adhesive so that the label or other face material may be pressed or rolled into place. 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.

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. Self-adhesive materials are also used to convey variable information through

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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. 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. 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. 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. We also sell durable cast and reflective films to the construction, automotive and fleet transportation market segments and reflective films for traffic and safety applications. We provide sign shops, commercial printers and designers a broad range of pressure-sensitive materials that allow them to create impactful and informative brand and decorative graphics. We offer a wide array of pressure-sensitive vinyl and specialty materials designed for digital imaging, screen printing and sign cutting applications.

Our performance tapes products include a variety of Fasson®-brand and Avery Dennison®-brand tapes and other pressure-sensitive adhesive-based materials and converted products, mechanical fasteners and performance polymers. Our pressure-sensitive adhesive-based materials are available in roll form and in a wide range of face materials, sizes, thicknesses and adhesive properties. These materials and converted products are used in non-mechanical fastening, bonding and sealing systems for various automotive, electronics, building and construction, general industrial, personal care, and medical applications. 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~~Adhesive Materials, a subsidiary of UPM Corporation; Fedrigoni Self-Adhesives; Lintec Corporation; Flexcon Corporation, Inc.; and an array of smaller regional and local companies. 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~~is a variety of competitors supplying extruded and injection molded fasteners and fastener attaching equipment. We believe that entry of competitors into the field of pressure-sensitive adhesives and materials is limited by technical knowledge and capital requirements. We believe that our technical expertise, size and scale of operations, broad line of quality products, reliable service, product and process innovation, distribution capabilities and brand strength are the primary advantages in maintaining and further developing our competitive position.

Solutions Group

Our Solutions Group is a leading provider of information and branding solutions that cover worldwide marketplace needs ranging from digital identification and data management to branding and embellishment, productivity, pricing and retail media. AsOur ~~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 onfor physical items. ~~Our innovation and data management capabilities, global footprint and market access continuously expand our solutions platform.~~

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.

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. We believe that our product, process and solution innovation, global distribution network, reliable service, product quality and consistency, and ability to serve customers consistently with comprehensive solutions close to where they manufacture, source and sell are the key advantages in maintaining and further developing our competitive position.

Research, Development and Innovation

As a global leader in materials science, we innovate to develop and introduce new products and solutions that help customers solve some of the most complex problems in the industries we serve. ~~Our~~These ~~vision~~include isoptimizing tosupply-chain ~~leverage~~and ~~the~~labor ~~strengths~~efficiency, ofreducing ~~our~~waste ~~Materials~~ and ~~Solutions~~mitigating ~~groups~~loss, toadvancing ~~continue~~sustainability, tocircularity ~~drive~~and ~~growth~~transparency, ~~within~~and ~~these~~helping ~~businesses~~brands and ~~lead~~consumers atto ~~the~~better ~~intersection of the physical and digital worlds~~connect. ~~Our~~With decades of experience ~~creating solutions for customers~~ and ~~our~~deep ~~core~~expertise ~~capabilities~~ in materials science, engineering, and process technology, ~~enable~~we uscontinuously innovate to ~~drive~~anticipate ~~continuous innovation throughout our industries. Our innovation efforts focus on anticipating~~ market ~~and customer challenges and opportunities~~needs, ~~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~~challenges ~~by leveraging scalable innovation platforms~~ and ~~delivering~~unlock ~~sustainability~~new ~~initiatives and advanced technologies~~opportunities.

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~~Group,~~Our invision ~~each~~is ~~case~~to ~~for~~leverage ~~which~~the westrengths ~~have~~of our Materials and ~~license~~Solutions agroups ~~number~~to drive growth by delivering leading solutions at the intersection of ~~patents~~the physical and digital worlds. ~~Additionally,~~Our ~~our~~decades ~~research~~of experience creating solutions for customers and ~~development~~our ~~efforts~~deep ~~include~~expertise ~~sustainable~~enable us to bring innovative solutions to the industries we serve. Our innovation ~~and~~efforts ~~design~~focus ofon ~~products~~anticipating ~~that~~market ~~advance~~and ~~the~~customer ~~circular~~challenges ~~economy~~and opportunities, ~~reduce~~and ~~materials~~applying technology to address them. Our investment in innovation aims to accelerate growth by developing new products and ~~waste~~solutions, ~~use~~expand ~~recycled~~margins ~~content~~through material re-engineering, and ~~extend~~enable ~~product~~customer ~~end-of-life~~success orby ~~enable~~leveraging ~~product~~scalable ~~recycling~~innovation platforms and delivering sustainability initiatives and advanced technologies.

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 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. 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.

Acquisitions and Venture Investments

In addition to our investments to support organic growth, we have pursued complementary and synergistic acquisitions. In ~~2023~~2025, we acquired ~~Silver~~W.F. ~~Crystal~~Taylor ~~Group ("Silver Crystal")~~Holdings, ~~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~~Taylor ~~Brothers~~Adhesives"), a ~~Maryland~~Georgia-based ~~designer~~flooring ~~and~~adhesives ~~manufacturer of apparel brand embellishments; and Thermopatch, Inc~~business. ~~("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~~this ~~acquisitions~~acquisition was approximately $~~231~~390 million. ~~During~~Additionally, ~~2024~~during 2025, we ~~also~~ made venture investments in ~~three~~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.

Patents, Trademarks and Licenses

The loss of individual patents or licenses would not be material to us taken as a whole, nor to our operating segments individually. Our principal trademarks are Avery Dennison, our logo, and Fasson. We believe these trademarks are strong in the market segments in which we operate.

Human Capital Resources

Our Global Workforce

With approximately 7069% of our ~~2024~~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~~2025 were located outside the U.S. and approximately 6667% were located in emerging markets.

The charts below show our global employee population by region and operational function. ~~Over~~Nearly 1920,000 of our approximately 35,000 employees at year-end ~~2024~~2025, representing approximately 58% of our global workforce, were in Asia Pacific, serving our customers in that region. At that time, approximately 6571% of our global workforce worked in the operations of our manufacturing facilities or in positions directly supporting them from other locations.

Workforce by Region
Asia Pacific	58	%
North America	2122
Europe	17
Latin America	43
Workforce by Function
Workforce by Function(1)
Operations	6571	%
Non-Operations	3529

~~Talent~~(1) &Reflects ~~Development~~reclassification in 2025 of approximately 2,500 employees from Non-Operations to Operations compared to prior year.

Attracting, developing and retaining highly-skilled talent is critical to our ability to continue delivering sustainable 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 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. 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.

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Talent & Development

We believe that attracting, developing and retaining highly-skilled talent is critical to our ability to continue delivering sustainable 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 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. 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.

Compensation & Benefits

Our total rewards philosophy is to offer market-based, competitive wages and benefits in the markets where we ~~compete for talent~~operate. All of our employees were paid at least the applicable legal minimum wage, and over 9998% of our employees were paid above the applicable legal minimum wage, at year-end ~~2024~~2025. Pay is generally positioned around the market median, with variances largely based on knowledge, skills, years of experience and inconsistent ~~line~~ with our pay -for -performance philosophy. 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 offer the opportunity for flexible work arrangements for ~~most~~certain 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.

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 ~~2024~~2025, we reviewed pay, ~~equity~~including ~~(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.

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. Because we believe that an engaged workforce promotes retention and minimizes employee turnover, we annually conduct a global employee ~~engagement~~experience survey~~. With a focus on continuous improvement~~, which in ~~2023~~2025 weleveraged ~~launched~~for ~~our~~the ~~survey~~third ~~using~~year a ~~more~~modernized ~~advanced~~ 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. ~~We deployed this same platform in 2024, enabling year-over-year comparability of results.~~ Our business and functional teams use the anonymized results of ~~our~~this survey to identify ~~and~~potential ~~implement~~opportunities ~~actions~~for toimprovement, ~~address~~implementing ~~potential~~action ~~opportunities~~plans ~~for~~as ~~improvement~~appropriate. While employee engagement is the result of many factors, we believe our strong, encouraging and open leadership, as well as aour continued ~~effort~~efforts to foster a collaborative, supportive culture, ~~leads~~has led to strong workforce engagement.

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. Our global Recordable Incident Rate of 0.2117 in ~~2024~~2025 was significantly lower than the Occupational Safety and Health Administration manufacturing industry average of 2.87 in ~~2023~~2024 (the most recent available industry average).

Workplace Culture

We ~~aim~~believe toour ~~foster~~talent anis ~~environment~~one ~~where~~of our ~~employees~~greatest ~~with~~competitive ~~various~~advantages. ~~skills,~~We ~~experiences~~are ~~and~~dedicated ~~backgrounds can grow and be increasingly productive and innovative, allowing us~~ to ~~benefit~~strengthening ~~from a highly engaged team and attract and retain talent for the benefit of~~ our ~~stakeholders.~~high-performance, ~~Our global people~~values-~~focused~~based ~~strategic~~culture—an ~~pillars~~environment ~~include~~grounded ~~enhancing~~in ~~the~~fairness ~~experience~~that ofprovides our ~~manufacturing~~team ~~employees~~members ~~and~~opportunities ~~making merit and transparency even more foundational~~ to ~~our employee experience~~thrive. WeBy ~~have~~fostering a ~~global~~workplace ~~team~~ that ~~helps~~embraces ~~advance~~a ~~these~~mix ~~priorities~~of inskills, ~~coordination~~experiences ~~with regional councils~~ and ~~our employee resource groups~~backgrounds, ~~which~~we ~~are~~empower ~~open to all~~ our ~~team~~employees ~~members and provide individuals with shared interests a forum in which~~ to ~~identify~~be ~~ways~~increasingly inproductive, ~~which~~innovative weand ~~can improve our employee experience~~engaged.

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.

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. 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. 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. Emulsion adhesives, hot-melt adhesives, and solventless and emulsion silicone systems have been installed in many of our facilities.

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~~Based~~Manufacturing onand ~~current~~Environmental 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.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. 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. 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.

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.

For information regarding our potential responsibility for cleanup costs at certain hazardous waste sites, see Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with, or furnished to, the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge on our investor website at www.investors.averydennison.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. This website address is not intended to function as a hyperlink and the information located there is not, nor should it be considered, part of this report or incorporated by reference into this report. 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. These documents are also available free of charge upon written request to our Corporate Secretary, Avery Dennison Corporation, 8080 Norton Parkway, Mentor, Ohio 44060.

Reports filed with or furnished to the SEC may be viewed at www.sec.gov.

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Item 1A. RISK FACTORS

The risk factors described in this section could materially adversely affect our business, including our results of operations, cash flows and financial condition, and cause the value of our securities to decline. This list of risks is not exhaustive. Our ability to attain our goals and objectives is dependent on numerous factors and risks, including, but not limited to, the most significant ones described in this section.

Risk Related to Our International Operations

The demand for our products is impacted by the effects of, and changes in, worldwide economic, ~~social~~geopolitical, ~~geopolitical~~social and ~~market~~labor conditions, which have had in the past and could in the future have a material adverse effect on our business.

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, ~~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. In ~~2024~~2025, approximately 7069% of our net sales ~~were~~originated ~~produced~~outside inthe ~~international operations~~U.S.

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.

~~Tensions~~Trade-related ~~remain~~uncertainty inremains ~~trade~~elevated ~~relations~~ between the U.S. and ~~certain~~ other regions and countries, including Canada, Mexico, China, India and the European Union. ~~The~~In 2025, the U.S. ~~recently~~implemented ~~announced~~a ~~intentions~~10% toglobal ~~impose~~baseline ~~a significant~~ tariff rate on ~~certain~~nearly ~~goods~~all ~~from~~imports, ~~Canada~~with ~~and~~higher ~~Mexico~~rates ~~and a smaller tariff~~ on certain goods ~~from China~~. ~~Each~~Additionally, ofit ~~these~~applied ~~countries~~significant ~~announced~~tariffs ~~that~~on ~~they~~goods ~~would~~from ~~impose~~Canada, ~~reciprocal tariffs~~Mexico, ~~with~~China ~~Canada~~ and ~~Mexico~~the ~~each~~European ~~agreeing~~Union, ~~upon~~each ~~certain~~of ~~concessions~~which ~~with~~announced ~~the~~reciprocal Utariffs.S. toThe ~~temporarily~~amount ~~delay~~of ~~the~~these ~~mutual~~tariffs ~~imposition~~or ofthe ~~tariffs.~~classes ~~The~~of ~~tariff~~goods on ~~certain~~which ~~goods~~they ~~from~~are ~~China~~applied ~~has~~continues ~~gone~~to ~~into~~evolve ~~effect,~~and ~~with~~could ~~China~~significantly ~~imposing~~change. ~~reciprocal~~The ~~tariffs,~~U.S. ~~and~~government ~~the~~continues ~~amount~~to ofnegotiate ~~these~~with ~~tariffs~~countries orregarding the ~~classes~~tariffs. ofIn ~~goods~~July on2025, ~~which~~the ~~they~~U.S. ~~are~~and ~~imposed~~the ~~could~~European ~~significantly~~Union ~~increase.~~agreed ~~The~~to ~~U.S.~~a ~~has~~framework ~~also~~for ~~indicated~~a trade deal that itincluded ~~may~~a ~~impose~~baseline ~~reciprocal~~tariff ~~tariffs~~rate of 15% on most goods imported from ~~other~~the ~~countries~~European orUnion ~~regions~~into the U.S. While the direct impacts on our operations toafter ~~date~~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. ~~These~~The ~~actions~~indirect orimpact ~~other~~on demand for our products and solutions as a result of these events, which have resulted in softer consumer volumes, continues to be uncertain and elevated. We estimate that the indirect impact of tariffs resulted in an aggregate low single digit rate decrease in sales in our overall apparel categories over the second, third and fourth quarters of 2025. On February 20, 2026, the U.S. Supreme Court issued a decision holding that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. While this may provide immediate relief from these specific duties, there will likely be a period of trade policy instability. Further developments in international trade relations, including increased deglobalization, 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 ~~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, 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 ~~contribute to a climate of economic and geopolitical uncertainty that could~~ have a material adverse effect on our business. Since the Russia-Ukraine war began in ~~February~~ 2022, we have maintained our position of not shipping products ~~for~~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. In addition, our sales in Israel have not recovered 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~~2025. We have experienced some disruptions in our operations in Israel and the Middle East and implemented plans to address these disruptions, as well as the impacts thereof in Gaza, Lebanon and other areas of the Middle East, while focusing on the continued safety of our Israeli employees and their families. 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, ~~geopolitical~~ or ~~market~~labor conditions in the U.S. or other countries.

Foreign currency exchange rates, and fluctuations in those rates, affect our business.

The majority of our net sales in ~~2024~~2025 was denominated in foreign currencies. Our financial results are therefore subject to the impact of currency translation, which may be material. 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.

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. Foreign currency translation decreased our 2024 net sales by approximately $33 million compared to the prior year.

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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. 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. The effectiveness of our hedges in part depends on our ability to accurately forecast our future cash flows, which is particularly difficult during periods of uncertain demand for our products and services and volatile foreign currency exchange rates. Our hedging activities may offset only a portion, or none at all, of the material adverse financial effects of unfavorable movements in foreign currency exchange rates over the limited time the hedges are in place and we may incur significant losses from these activities.

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. 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. 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.

If we are unable to successfully expand our business in emerging markets or achieve the return on capital we expect from our investments in these countries, our financial performance would be materially adversely affected. 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. 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.

A substantial portion of our employees and assets are located outside of the U.S. and, in ~~2024~~2025, approximately 7069% of our net sales ~~was~~were generated outside of the U.S. 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.

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. 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 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 we are unable to successfully expand our business in emerging markets or achieve the return on capital we expect from our investments in these countries, our financial performance would be materially adversely affected. 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. 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.

Risks Related to Our Business

As a manufacturer, our sales and profitability depend upon the availability and cost of raw materials and energy, which may be subject to significant price fluctuations, and our ability to control or offset increases in raw material and labor costs. Raw material and freight cost increases have impacted our business.

Raw materials represent a significant portion of our costs and a critical ~~element~~factor ofin 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. 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~~past ~~and 2022~~years, we implemented targeted price increases in our Materials Group reportable segment to address raw material inflation; more recently, ~~which~~we ~~began~~implemented ~~moderating~~deflation-related inprice ~~2023~~reductions ~~and~~as ~~largely~~a ~~stabilized~~result inof ~~2024~~lower raw material costs. If we experience inflationary headwinds in the future, we may implement similar pricing ~~measures~~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.

It is also important for us to obtain timely delivery of materials, equipment, and other resources from suppliers, and to make timely delivery to customers. We may experience supply chain disruptions due to natural and other disasters or other events, or our existing relationships with suppliers could deteriorate or end in the future. 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~~negatively aimpact ~~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.

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We are affected by changes in our markets due to competitive conditions, technological developments, laws and regulations, and customer preferences. If we do not compete effectively or respond appropriately to these changes, it could reduce demand for our products and solutions, or we could lose market share or reduce our selling prices to maintain market share, any of which could materially adversely affect our business.

Growing the proportion of our portfolio in high-value categories that serve markets that are growing faster than gross domestic product, represent large pools of potential profit and leverage our core capabilities is an important part of our long-term growth strategy. High-value products and solutions include our specialty and durable label materials, graphics and reflective solutions, industrial and ~~industrial~~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. We face the risk that existing or new competitors, which include some of our customers, distributors, and suppliers, will expand in our key market segments or develop new technologies, including in high-value categories, enhancing their competitive position relative to ours. Competitors also may be able to offer products, services, lower prices or other incentives that we cannot or that, to maintain profitability, we may not be able to offer. There can be no assurance that we will be able to compete successfully against current or future competitors or new technologies.

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 ~~price~~pricing ~~increases~~actions, changes in our customer incentive programs, orour ~~changes~~customers' ~~in the customer’s~~ ability to achieve incentive targets, as well as changes in trade policy. Changes in customers’ preferences for our products can also decrease demand for our products and have a material adverse effect on our business. In our Solutions Group reportable segment, sales in our overall apparel categories declined in 2025 as a result of tariff-related uncertainty. In our Materials Group reportable segment, as supply chain constraints eased in 2022, customers increased inventory levels following a period of reduced availability. In the fourth quarter of 2022, inventories downstream from our company began to unwind swiftly, resulting in lower demand. This continued in 2023, with volume improving sequentially throughout that year and normalizing in 2024.

We are affected by changes in our markets due to increasing environmental regulations and sustainability trends. If we do not respond appropriately to these changes, it could negatively impact ~~market~~customer demand, our market share and pricing, any of which could materially adversely affect our business. Adverse weather conditions and natural disasters, including those related to the impacts of climate change, have and can adversely affect our business.

A substantial amount of our label ~~material~~materials is sold for use in ~~plastic~~ packaging in the food, beverage, and home and personal care market segments. In recent years, there has been an accelerated focus on sustainability and transparency in sustainability reporting, with greater concern regarding climate change and single-use plastics, corporate commitments and increasing stakeholder expectations regarding the reuse and recyclability of plastic packaging and recycled content, and increased regulation in multiple geographies regarding the collection, recycling and use of recycled content. Changes in consumer preferences, ~~and~~ laws and regulations related to the use of ~~plastics~~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, ~~presents~~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. 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 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~~Changes ~~growth~~ in sustainability-focused regulation ~~presents~~present ana ~~increasing~~ risk to our business. ~~Reporting~~In February 2026, the U.S. Environmental Protection Agency rescinded its 2009 Greenhouse Gas Endangerment Finding, which served as the foundation for various regulations of GHG emissions. Conversely, while currently in a state of flux, reporting requirements such as the European Union's Corporate Sustainability Reporting Directive, ~~and~~which ~~the~~will ~~Corporate~~impose ~~Sustainability~~additional ~~Due~~disclosure ~~Diligence~~requirements ~~Directive~~for our company beginning in ~~Europe~~2028 (based on 2027 data), and the state of California’s climate reporting requirements are ~~increasing~~expected to increase the amount of sustainability ~~disclosures~~data we are required to ~~make~~generate, ~~as well as requiring the~~ audit, ofverify athrough ~~greater~~third-parties ~~amount~~and ~~of our sustainability data~~disclose. ~~Costs~~Developments toin ~~comply~~regulatory ~~with~~actions regarding these ~~regulations~~matters ~~will~~are ~~continue~~likely to ~~grow~~continue and ~~any~~may ~~failure~~require toconflicting ~~meet~~responses, ~~the~~which ~~requirements of these regulations~~ could ~~result~~divert inthe ~~fines~~attention orof ~~other penalties~~management. AsIn ~~part~~addition, ofcosts ~~our efforts~~ to ~~mitigate~~comply ~~the~~with ~~impacts~~these ofregulations ~~climate~~are ~~change~~likely ~~on our business, we engaged a third party~~ to ~~help~~grow ~~us assess our physical~~ and ~~transitional~~any ~~risk~~failure ~~relative~~ to meet the ~~recommendations~~requirements of ~~the~~these ~~Financial~~regulations ~~Stability~~could ~~Board's~~result ~~Task~~in ~~Force~~fines onor ~~Climate-Related~~other ~~Financial Disclosures~~penalties.

The scientific consensus is that emissions of greenhouse gases (“GHG”) are altering our atmosphere in ways that are adversely affecting global climate. There is continuing concern from members of the scientific community and the general public that GHG emissions and other human activities will continue causing significant changes in weather patterns and increase the frequency or severity of extreme weather events, including droughts, wildfires and flooding. These types of extreme weather events have and may continue to adversely impact us, our suppliers and our customers, including their ability to purchase our products and our ability to timely receive appropriate raw materials to manufacture and transport our products on a timely basis. ~~Concern~~The ~~regarding~~extent ~~climate~~of ~~change~~the ~~has~~impact ~~led~~of ~~and~~climate ischange ~~likely~~on toour ~~continue~~business ~~leading~~is touncertain, ~~increasing~~as ~~demands~~it bywill ~~legislators~~depend ~~and~~on ~~regulators,~~the ~~customers,~~limits ~~consumers,~~imposed ~~investors~~by, ~~employees~~ and ~~non-governmental~~timing ~~organizations for companies to reduce their GHG emissions. One~~ of, ~~our~~new ~~2025~~or ~~sustainability~~stricter ~~goals~~laws isand toregulations, ~~achieve~~more atstringent ~~least~~environmental astandards 3%and ~~absolute~~expectations, ~~reduction~~and inevolving ~~our~~customer ~~GHG emissions year-over-year~~ and atconsumer ~~least~~preferences, abut ~~26%~~it ~~absolute~~is ~~reduction~~likely ~~compared~~ to increase our ~~2015~~costs ~~baseline~~and bycould ~~2025; we~~ have ~~already~~a ~~exceeded~~material ~~the~~adverse ~~cumulative~~effect ~~2025~~on ~~GHG~~our ~~emissions reduction goal~~business. AsAfter ~~part~~partnering ofwith ~~our~~a ~~more~~third-party ~~ambitious~~expert ~~2030 sustainability goals, we are aiming by 2030~~ to ~~reduce~~assess our ~~Scope~~disclosures 1against ~~and~~the 2recommendations ~~GHG~~regarding ~~emissions~~the byinformation ~~70%~~that ~~compared~~companies toshould ~~our~~disclose ~~2015 baseline and work with our supply chain~~ to ~~reduce~~allow ~~Scope~~their 3stakeholders ~~GHG emissions. We could face risks~~ to ~~our~~assess ~~reputation,~~and ~~investor~~price

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~~confidence~~their ~~and~~climate-related ~~market~~risks, ~~share~~we ifhave wepreliminarily ~~are~~aligned ~~unable~~our toreporting ~~continue~~with ~~reducing~~Financial ~~our~~Stability ~~GHG~~Board’s ~~emissions~~Task atForce ~~levels~~on ~~satisfactory~~Climate-related toFinancial ~~our~~Disclosures ~~stakeholders~~requirements.

~~Increased~~Concern ~~raw~~regarding ~~material~~climate ~~costs,~~change ~~such~~has asalso ~~for~~led ~~fuel~~and is likely to continue leading to increasing demands by legislators and ~~electricity~~regulators, customers, consumers, investors, employees and ~~compliance~~non-~~related~~governmental ~~costs~~organizations ~~could~~for ~~also~~companies ~~impact~~to ~~customer~~reduce ~~demand~~their ~~for~~GHG emissions. We exceeded our ~~products.~~2025 ~~The~~sustainability ~~extent~~goal ofto ~~the~~achieve ~~impact~~a of26% ~~climate~~absolute ~~change~~cumulative onreduction in our ~~business~~GHG isemissions ~~uncertain,~~from asour it2015 ~~will~~baseline, ~~depend~~delivering onan ~~the~~absolute ~~limits~~cumulative ~~imposed~~reduction ~~by,~~of ~~and~~approximately ~~timing~~60%. As part of, ~~new~~our ormore ~~stricter~~ambitious ~~laws~~2030 ~~and~~sustainability ~~regulations~~goals, ~~more~~we ~~stringent~~are ~~environmental~~aiming ~~standards~~by ~~and~~2030 ~~expectations,~~to ~~and~~reduce ~~evolving~~our ~~customer~~Scope 1 and ~~consumer~~2 ~~preferences,~~GHG ~~but~~emissions itby is70% ~~likely~~compared to ~~increase~~ our ~~costs~~2015 baseline and work with our supply chain to reduce Scope 3 GHG emissions. We could ~~have~~face arisks ~~material~~to ~~adverse~~our ~~effect~~reputation, oninvestor confidence and market share if we are unable to continue reducing our ~~business~~GHG emissions at levels satisfactory to our stakeholders.

We have recently acquired companies and are likely to acquire other companies. Acquisitions come with significant risks and uncertainties, including those related to integration, technology and employees.

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. ~~Although~~In ~~we made no acquisitions in 2024~~2025, ~~in 2023,~~ we acquired ~~Silver~~Taylor ~~Crystal,~~Adhesives ~~Lion Brothers and Thermopatch~~ for ~~aggregate~~ purchase consideration of approximately $~~231~~390 million. The success of any acquisition depends on the ability of the combined company to realize the anticipated benefits from combining our businesses. Realizing these benefits depends, in part, on maintaining adequate focus on executing the business strategies of the combined company as well as the successful integration of assets, operations, functions and personnel. 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. While we have not experienced significant issues with our recent acquisitions, if management of our combined company is unable to minimize the potential disruption of the combined company’s ongoing business during the integration process, the anticipated benefits of any acquisition may not be fully realized. In addition, the inability to successfully manage the implementation of appropriate systems, policies, benefits and compliance programs for the combined company could have a material adverse effect on our business. We may not be able to retain key employees of an acquired company or achieve the projected performance targets for the business into which an acquired company is integrated. Both before and after the closing of an acquisition, our business and that of the acquired company may suffer due to uncertainty or diversion of management attention. Future acquisitions could result in increased debt, dilution, liabilities, interest expense, restructuring charges and amortization expenses related to intangible assets. There can be no assurance that acquisitions will be successful, contribute to our profitability or drive accretive returns. Further, we may not be able to identify additional value-accretive acquisition targets that can advance our strategies or be able to successfully execute additional acquisitions in the future.

A significant consolidation of our customer base could negatively impact our business.

A significant consolidation of our customer base could negatively impact our business. ~~While~~In ~~our~~2025, no single customer ~~base~~represented ~~tends~~10% toor bemore of our net sales, with our customer base highly fragmented,. inIn 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. Further consolidation may beincrease ~~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.

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. Changes in the financial or business conditions, including economic weakness, market trends or industry consolidation, or the purchasing decisions of these distributors or their customers, could materially adversely affect our business.

Our reputation, sales, and earnings could be materially adversely affected if the quality of our products and services does not meet customer expectations. In addition, product liability claims or regulatory actions could materially adversely affect our business and reputation.

There are times when we experience product quality issues resulting from defective materials, manufacturing, packaging or design. These issues are often discovered before shipping, causing delays in shipping, delays in the manufacturing process, or, occasionally, cancelled orders. When issues are discovered after shipment, they may result in additional shipping costs, discounts, refunds or loss of future sales. Both pre-shipping and post-shipping quality issues could have a material adverse effect on our business and negatively impact our reputation.

Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our business. Although we maintain product liability insurance coverage, claims are subject to a deductible or may not be covered under the terms of the policy. 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. 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.

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the terms of the policy. 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. 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. 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, or adjust our operational footprint. As we continue to develop and adjust our growth strategies, we may invest in new businesses that have short-term returns that are negative or low and whose ultimate business prospects are uncertain or could be unprofitable.

We engage in restructuring actions from time to time to reduce our costs and increase efficiencies. We expended approximately $4247 million in ~~2024~~2025 compared to approximately $7942 million ~~for~~related to restructuring actions in ~~2023~~2024. Our restructuring actions in ~~2024~~2025 related to various locations across our company, ~~primarily~~ in both our Solutions Group ~~reportable~~and ~~segment. Our restructuring actions in 2023 included a restructuring plan to further optimize the European footprint of our~~ Materials Group reportable ~~segment~~segments. We had incremental savings from restructuring actions, net of transition costs, of ~~approximately~~more than $6360 million in ~~2024~~2025. 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. For example, in 2025, we completed a European footprint optimization in Belgium for our Materials Group reportable segment, and in 2024, we consolidated our Solutions Group reportable segment's operations in Mexico. The success of these efforts is not assured and targeted savings may not be realized. 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~~savings onfrom ~~investments~~these actions could be lower than expected.

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. Many of our current products are the result of our research and development efforts, for which we expensed $~~138~~137 million in ~~2024~~2025. These efforts are directed primarily toward developing new products and solutions and operating techniques and improving product performance, often in close association with our customers or end users. These efforts include patent and product development work relating to printing and coating technologies, as well as adhesive, release and ink chemistries in our Materials Group reportable segment. We focus on research projects related to RFID, external embellishments and digital solutions in our Solutions Group reportable segment. Additionally, our research and development efforts include sustainable innovation and design of products that increase the use of recycled content, reduce waste, extend life or enable recycling. 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.

Our infrastructure needs impact our business and expenditures.

We continue to invest in our long-term growth and margin expansion plans, with approximately $~~240~~200 million in capital expenditures, including fixed assets and information technology, in ~~2024~~2025. We may not be able to recoup the costs of our infrastructure investments if actual demand is not as we anticipate. 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~~, including new facilities in Brazil and consolidated operations in Mexico~~. ~~In addition, we added capacity through our acquisitions of Silver Crystal, Lion Brothers and Thermopatch in 2023.~~ Infrastructure investments, which are long-term in nature, may not generate the expected return due to changes in the marketplace, ~~failures~~unanticipated challenges in execution, and other factors. 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.

Although we have processes to administer credit granted to customers and believe our allowance for credit losses is adequate, we have in the past had to increase the allowance due to, among other things, epidemics, pandemics or other outbreaks of illness, supply chain challenges, regulatory restrictions and inflationary pressures, and in the future may experience losses as a result of our inability to collect some of our accounts receivable. A customer’s financial difficulties are likely to result in reduced business with that customer. We may also assume higher credit risk relating to receivables of a customer experiencing financial difficulty. In January 2026, a large customer of our Materials Group reportable segment filed for prepackaged Chapter 11 bankruptcy protection; we currently expect to collect on our prepetition outstanding receivables from this customer. 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.

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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.

Investor and societal expectations with respect to sustainability or governance matters continue to evolve, with some stakeholders seeking companies to demonstrate progress with respect to environmental stewardship, human capital, corporate governance, support for our communities, and transparency, and other stakeholders suggesting that companies focus on delivering for their stockholders to the exclusion of focus in these other areas. A failure to adequately meet evolving stakeholder expectations and timely comply with competing regulatory requirements at the federal, state and local levels could result in loss of business, diluted market valuation, an inability to attract and retain customers and personnel, increased negative investor sentiment toward us and/or our customers and the diversion of investment to other industries, which could have a negative impact on our stock price and access to and cost of capital.

Risks Related to Information Technology

Significant disruption to the information technology infrastructure that stores our information and runs our operations could materially adversely affect our business.

We rely on the efficient and uninterrupted operation of a large and complex information technology infrastructure to link our global business. Like all information technology systems, ours are susceptible to a number of risks including, but not limited to, damage or interruptions resulting from obsolescence, natural disasters, power failures, human error, viruses, social engineering, phishing, ransomware or other malicious attacks and cybersecurity events. We upgrade and install new systems, which, if installed or programmed incorrectly or on a delayed timeframe, could cause delays or cancellations of customer orders, impede the manufacture or shipment of products, or disrupt the processing of transactions. We have continued to implement measures to mitigate our risk related to system and network disruptions, but if a significant disruption were to occur, we could incur losses and remediation costs that could have a material adverse effect on our business.

Additionally, we rely on services provided by third-party vendors for certain information technology processes, including system infrastructure management, application management, and software as a service. While we have matured our cybersecurity due diligence process, this reliance on third parties makes our operations vulnerable to a failure by any one of these vendors to perform adequately or maintain effective internal controls.

Cybersecurity or other security breaches could compromise our information and expose us to liability, which could have a material adverse effect on our business and reputation.

We maintain information necessary to conduct our business in digital form, which is stored in data centers and on our networks and third-party cloud services, including confidential and proprietary information as well as personal information regarding our customers and employees. The secure maintenance of this information is critical to our operations. Data maintained in digital form and on cloud services is subject to the risk of intrusion, tampering and theft. We develop and maintain systems and processes at significant cost to prevent this from occurring, and conduct ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. We experience non-material cybersecurity events each year that are escalated through our documented and tested security incident response plan, and although we have not experienced a significant breach in recent years, the possibility of intrusion, tampering and theft cannot be eliminated entirely. Our information technology and infrastructure are vulnerable to attacks by threat actors or system compromises due to employee error, malfeasance or other disruptions, and the threat landscape remains challenging with our digital business transformation, remote or hybrid employees, the increasing use of artificial intelligence (“AI”), and interconnected supply chains expanding the risk of attack. Threat actors are increasingly leveraging AI for cyberattacks, and our increasing use of AI carries risks related to data security, privacy events, and potential algorithmic bias. These AI risks could lead to operational disruptions, regulatory investigations or actions, data security events and potential financial loss.

We also perform cybersecurity due diligence and mitigate identified risks during our ~~M&A~~ 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. Additionally, we provide confidential, proprietary and personal information to third parties when it is necessary to pursue business objectives. 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~~that confidentiality of data held by third parties may be compromised.

Breaches or attacks can compromise our network, the network of a third party to whom we have disclosed confidential, proprietary or personal information, a data center where we have stored such information or a third-party cloud service provider, and the information stored there could be accessed, publicly disclosed, lost or stolen. Any access, disclosure or loss of information could disrupt our operations, impair our ability to conduct business, result in legal claims or proceedings, damage our reputation, or result in the loss or diminished value of profitable opportunities and the loss of revenue as a result of unlicensed use of our intellectual property. Contractual provisions with third parties, including cloud service providers, substantially limit our ability to fully recover ~~our~~these potential losses. 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~~

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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. Data privacy legislation and regulation have been increasing in recent years – including, for example, the General Data Protection Regulation in the EU, the Personal Information Protection Law in China, the General Data Protection Law in Brazil and the state of California’s Privacy Rights Act – and although we have made reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that we will not be subject to regulatory action in the event of a data privacy violation.

Cybersecurity risk and ransomware attacks on companies continue to significantly increase and there can be no assurance that we have fully protected our information, that third parties to whom we have disclosed such information or with whom we have stored such information (in data centers and in the cloud) have taken effective precautions, or that we will not experience hacking or intrusion attempts that could have a material adverse effect on our business. In 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~~maturing ~~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~~maturing ~~legacy~~our ~~systems~~operational totechnology ~~simplify~~security ~~and standardize business processes and applications~~program; implementing more robust cloud security across multiple platforms; ~~adopting~~establishing AI policies, governance and risk management; ~~continuously~~maturing ~~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.

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, orand changes in tax laws and regulations or their interpretation. The impact of these changes could materially impact our business.

Legislation implementing changes in taxation of business activities, adoption of other corporate tax policies, or other changes in tax legislation impact our business.

The prevention of base-erosion and tax transparency continue to be high priorities for many tax jurisdictions worldwide. 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.

~~Additionally,~~The ~~the~~amount ~~U.S.~~of ~~Congress~~income ~~and~~taxes ~~Presidential~~we ~~administration~~pay ~~are~~is ~~currently~~subject ~~controlled by the same political party, and have indicated a desire~~ to ~~extend~~ongoing orcompliance ~~make~~requirements ~~permanent certain tax provisions of the 2017 Tax Cuts~~ and ~~Jobs~~audits ~~Act~~by federal, asstate ~~well as potentially introduce other changes in tax laws~~ and ~~regulations.~~foreign ~~The timing and impact of such potential changes are uncertain and may materially impact our effective~~ tax ~~rate~~authorities.

~~The~~We ~~amount~~are subject to regular examinations of our income tax returns by various tax authorities. We regularly assess the likelihood of material adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. weIn ~~pay~~addition, tax enforcement has become increasingly aggressive in recent years focused primarily on transfer pricing and intercompany documentation. Our estimate of the potential outcome of uncertain tax issues requires significant judgment and is subject to ~~ongoing~~our ~~compliance~~assessment ~~requirements~~of relevant risks, facts and ~~audits~~circumstances byexisting ~~federal,~~at ~~state~~the time. We use these assessments to determine the adequacy of our provision for income taxes and ~~foreign~~other tax-related ~~authorities~~accounts. Our results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may materially adversely affect our effective tax rate.

We are subject to regular examinations of our income tax returns by various tax authorities. We regularly assess the likelihood of material adverse outcomes resulting from these examinations to determine the adequacy of our provision for taxes. In addition, tax enforcement has become increasingly aggressive in recent years focused primarily on transfer pricing and intercompany documentation. Our estimate of the potential outcome of uncertain tax issues requires significant judgment and is subject to our assessment of relevant risks, facts, and circumstances existing at the time. We use these assessments to determine the adequacy of our provision for income taxes and other tax-related accounts. Our results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, which may materially adversely affect our effective tax rate.

We have deferred tax assets that we may not be able to realize under certain circumstances.

If we are unable to generate sufficient taxable income in certain jurisdictions, or if there is a significant change in the time period within which the underlying temporary differences become taxable or deductible, we could be required to increase our valuation allowances against our deferred tax assets. This would increase our effective tax rate and could have a material adverse effect on our business. In addition, changes in statutory tax rates may change our deferred tax asset or liability balances, with either a favorable or unfavorable impact on our effective tax rate. A significant portion of our indefinite-lived net operating loss carryforwards is concentrated in Luxembourg and may require decades to be fully utilized under our current business model. Decreases in the statutory tax rate or changes in our ability to generate sufficient future taxable income in Luxembourg could materially adversely affect our effective tax rate. In addition, the computation and assessment of the realizability of our deferred tax assets may also be materially impacted by new legislation or regulations.

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Risks Related to Human Capital

For us to remain competitive, deliver on our business strategy and avoid business disruption, it is important to recruit high caliber talent, retain key management and highly-skilled employees and receive high quality service from all outsourced service providers. This includes providing market-competitive compensation and benefits and ensuring an engaged global team.

Competition to recruit and retain critical talent ~~has~~was ~~increased~~challenging in recent years. Our ongoing productivity efforts and restructuring actions can increase this challenge. When it comes to our outsourced service providers, we have experienced delays or errors and reduced resource availability and ~~manage~~managed ongoing risk when it comes to people, processes and software.

Executive succession planning is critical to our long-term success. We experienced several recent key management changes, including the appointments of our President, Materials Group, and Interim Chief Financial Officer in 2024 and our President/Chief Executive Officer and President, Solutions Group in 2023; in each case, the individuals appointed to these positions were long-serving and experienced leaders at our company. While we believe we have appropriate leadership development programs and succession plans in place that are regularly discussed with ~~our~~the ~~Board’s~~ 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.

We have various non-U.S. collective labor arrangements, which make us subject to potential work stoppages, as well as union and works council campaigns and other labor disputes, any of which could adversely impact our business.

Work interruptions or stoppages at our company or our suppliers could significantly impact our ability to deliver for our customers. In addition, collective bargaining agreements, union contracts and labor laws may impair our ability to ~~reduce~~close ~~labor costs by closing~~ or ~~downsizing~~downsize manufacturing facilities because of limitations on personnel and salary and other restrictions. A work stoppage at one or more of our facilities, or the facilities of our customers or suppliers, could have a material adverse effect on our business.

In addition, the recent and ongoing geopolitical unrest and weather-related effects of climate change in numerous regions could impact the safety and productivity of our employees. Those impacts could also hinder our ability to recruit and ~~grow~~retain ~~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 on acceptable terms and conditions.

At December 2831, ~~2024~~2025, we had approximately $3.1573 billion of debt. 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. A downgrade of our short-term credit ratings could impact our ability to access the commercial paper markets and increase our borrowing costs on commercial paper or alternative funding sources, including our revolving credit facility (the “Revolver”) or other credit facilities. 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~~expose inus ~~the same exposure~~ to variable interest rates.

An increase in interest rates adversely affects our business.

In ~~2024~~2025, our average variable-rate borrowings were approximately $~~400~~739 million. 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.

InAfter ~~recent~~several years, ~~the~~of ~~U.S.~~raising ~~Federal Reserve and similar monetary policymaking entities around the world significantly raised~~ interest rates in an effort to curb rising inflation across the globe, ~~beginning~~the toU.S. Federal Reserve and similar monetary policymaking entities around the world modestly ~~reduce~~reduced rates in ~~2024~~2025. As of December 2831, ~~2024~~2025, the U.S. Federal Reserve’s benchmark interest rate was between 43.2550% and 43.5075%, down from between 54.25% and 54.50% ~~the~~at ~~same~~year-end ~~time in 2023~~2024. 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.

Our credit facilities and the indentures governing our medium- and long-term notes contain, and any of our future indebtedness likely would contain, restrictive covenants that impose operating and financial restrictions on us. 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. “Management’s Discussion and Analysis of Financial Condition and Result of Operations”, ~~”Capital Resources”~~ of this Annual Report on Form 10-K for more information about this financial covenant. These restrictive covenants and ratios may limit or prohibit us from engaging in certain activities and transactions that may be in our best interest, which could materially adversely affect our business. The failure to comply with these or other covenants governing other indebtedness, including indebtedness incurred in the future,

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~~activities and transactions that may be in our best interest, which~~ could ~~materially adversely affect our business. 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 by triggering cross-defaults toin other debt facilities.

Risk Related to Ownership of Our Stock

Our stock price is subject to significant variability.

Changes in our stock price, among other things, affect our access to, or cost of financing from, capital markets, our stock-based compensation arrangements and our effective tax rate. Our stock price, which ~~increased~~declined ~~significantly~~ during the second half of ~~2023~~2024 and ~~the~~remained ~~first~~relatively ~~half~~stable ~~of 2024 but declined~~ during ~~the second half year of 2024~~2025, is influenced by changes in the overall stock market and demand for equity securities in general. 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~~the industries we serve, and other company-specific factors, may also materially adversely affect our stock price. There can be no assurance that our stock price will not continue to experience significant variability in the future.

We cannot guarantee that we will continue to repurchase shares of our common stock or pay dividends on our common stock or that repurchases will enhance long-term stockholder value. Changes in our levels of stock repurchases or dividends could affect our stock price and increase its variability.

In April ~~2022~~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 ~~2024~~2025, we repurchased 13.2 million shares of our common stock at an aggregate cost of $~~247~~575.56 million. As of December 2831, ~~2024~~2025, shares of our common stock in the aggregate amount of $~~346~~526.93 million remained authorized for repurchase under ~~this~~the 2025 Board authorization. We repurchase shares through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Our share repurchase authorizations do not obligate us to acquire any specific number of shares or to repurchase any specific number of shares for any fixed period. The timing and amount of our repurchases, if any, are subject to our capital allocation strategy as it may evolve from time to time, our view of intrinsic value coupled with a disciplined repurchase grid, market and economic conditions, applicable legal requirements and other relevant factors. We may limit, suspend or discontinue repurchasing shares at any time at our discretion without prior notice.

Paying a sustainable dividend is a key part of our capital allocation strategy. Although we increased our quarterly dividend rate by approximately 97% in April ~~2024~~2025, there can be no assurance that we will maintain this rate or approve further increases in the future. ~~Future dividends are subject to market and economic conditions, applicable legal requirements and other relevant factors.~~ We are not obligated to continue declaring dividends, and our payment of dividends could be suspended or discontinued at any time at ~~our~~the discretion of our Board. We will continue to retain future earnings to develop our business, as opportunities arise, and evaluate the amount and timing of future dividends based on our operating results, financial condition, capital allocation strategies and general business conditions. The amount and timing of any future dividends may vary, and the payment of any dividend does not assure that we will pay dividends in the future.

In addition, any future repurchases of our common stock or payment of dividends, or any determination to cease repurchasing stock or paying dividends, could affect our stock price and significantly increase its variability. Additionally, any future repurchases of our common stock or payment of dividends could impact our ability to invest in our businesses or pursue acquisitions and venture investments. Although our share repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so because the market price of our common stock may decline below the levels at which we repurchased shares of stock and short-term stock price fluctuations could reduce the program’s effectiveness.

Risks Related to Legal and Regulatory Matters

Infringing intellectual property rights of third parties or inadequately acquiring or protecting our intellectual property could harm our ability to compete or grow.

Because our products involve complex technology and chemistry, we are involved from time to time in litigation involving patents and other intellectual property. Parties have filed, and in the future may file, claims against us alleging that we have infringed their intellectual property rights. We were party to a litigation, which we settled in 2024, in which ADASA Inc. (“Adasa”), an unrelated third party, alleged that certain of our RFID products within our Solutions Group reportable segment infringed its patent. For more information on this litigation, see Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements. If we are held liable for infringement in other matters, we could be required to pay damages, obtain licenses or cease making or selling certain products. There can be no assurance that licenses would be available on commercially reasonable terms or at all. The defense of these claims, whether or not meritorious, or the development of new technologies iswould be costly and ~~diverts~~divert the attention of management.

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We also have valuable intellectual property upon which third parties may infringe. We seek to protect and restrict access to our intellectual property and proprietary information by relying on the patent, trademark, copyright and trade secret laws of the U.S. and other countries, as well as non-disclosure agreements. However, it may be possible for a third party to obtain our information without our authorization, independently develop similar technologies, or breach a non-disclosure agreement entered into with us. In addition, many of the countries in which we operate do not have intellectual property laws as protective as those in the U.S. The use of our intellectual property by someone else without our authorization could reduce or eliminate certain competitive advantages we have, cause us to lose sales or otherwise harm our business. Further, the costs associated with protecting our intellectual property rights could materially adversely impact our business.

We have obtained and applied for U.S. and foreign trademark registrations and patents, and will continue to evaluate whether to register additional trademarks and apply for additional patents. We cannot guarantee that any of our pending applications will be approved by the applicable governmental authorities. Further, we cannot assure that the validity of our patents or our trademarks will not be challenged. In addition, third parties may be able to develop competing products using technology that avoids our patents.

Unfavorable developments in legal proceedings, investigations and other legal and regulatory matters, could impact us in a materially adverse manner.

There can be no assurance that any outcome of any litigation, investigation or other legal, environmental, compliance and regulatory matter will be favorable. Our financial results could be materially adversely affected by an unfavorable outcome to pending or future litigation and investigations, and other legal, regulatory, environmental and compliance matters. See Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements for more information.

We are required to comply with anti-corruption and other compliance laws and regulations of the U.S. government and various international jurisdictions, and our failure to comply with these laws and regulations could have a material adverse effect on our business.

We are required to comply with the anti-corruption and other compliance laws and regulations of the U.S. government and various international jurisdictions, such as the U.S. Foreign Corrupt Practices Act and the UK’s Bribery Act of 2010. If we fail to comply with anti-corruption laws, we could be subject to substantial civil and criminal penalties, including fines, monetary damages and incarceration for responsible employees and managers. In addition, if our distributors or agents fail to comply with these laws, our business may also be materially adversely affected through reputational harm and penalties.

We are required to comply with environmental, health, and safety laws at our operations around the world. The costs of complying with these laws is significant and increasing.

We are subject to national, state, provincial and/or local environmental, health, and safety laws and regulations in the U.S. and other countries in which we operate, including those related to the disposal of hazardous waste and GHG emissions from our manufacturing processes. These laws, which ~~are~~continue ~~continually~~to ~~evolving~~evolve and ~~imposing~~impose additional requirements on our current and former manufacturing facilities, ~~impose~~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 ~~can be unclear and~~ is subject to the discretion of governmental agencies. Any failure to comply with existing and future environmental, health and safety laws could subject us to fees, penalties, costs or liabilities, impact our production capabilities, limit our ability to sell, expand or acquire facilities, and have a material adverse effect on our business. Laws and regulations related to the environment, product content and product safety are complex, change often, and can be open to different interpretations. In addition, we could be materially and adversely impacted by any environmental or product safety enforcement action affecting our suppliers, particularly in emerging markets.

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~~2025 fiscal year-end. Because of the uncertainties associated with environmental assessment and remediation activities, the actual expense to remediate currently identified sites could be higher than the liabilities accrued and additional sites could be identified in the future. See Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements for more information.

We are subject to export and import control laws and regulations in the jurisdictions in which we do business that could subject us to liability or impair our ability to compete in these markets.

Export control laws and economic sanctions prohibit the shipment of some of our products to embargoed or sanctioned countries, governments and persons. 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 ~~has~~can have negative consequences, including government investigations, penalties, fines, civil and criminal sanctions and/or reputational harm. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could decrease our ability to export or sell our products internationally. Any limitation on our ability to export or sell our products could materially adversely affect our business.

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Some of our products are subject to export control laws and regulations and may be exported only with an export license or through an applicable export license exception. If we fail to comply with export licensing, customs regulations, economic sanctions or other laws, we could be subject to substantial civil or criminal penalties, including fines, criminal charges against responsible employees and loss of export or import privileges. 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~~delayed ~~delay~~ or ~~loss~~lost of sales ~~opportunities~~.

Risks Related to Other Financial Matters

Our pension assets and liabilities are significant and subject to market, interest and credit risk that may reduce their asset values or increase their liability values, either of which could increase our net pension liability.

Changes in the value of our pension assets, which was approximately $~~660~~733 million as of December 2831, ~~2024~~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. In addition, our pension liabilities, which were approximately $~~709~~721 million as of December 2831, ~~2024~~2025, are subject to interest and inflation risk that may increase their value. We regularly evaluate options to better manage the volatility associated with our pension assets and liabilities and may continue taking actions to reduce the financial volatility associated with our pension liabilities, which could result in significant charges. 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~~in ~~valuation~~the ~~purposes~~measurement of our pension assets and liabilities affect our earnings and cash flows. Changes in accounting standards and government regulations could also affect our pension and postretirement plan expense and funding requirements.

We evaluate the assumptions used in determining projected benefit obligations and the fair value of plan assets for our non-U.S. pension plans and other postretirement benefit plans in consultation with outside actuaries. 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 orand mortality rates. Because of changing market conditions or changes in participant populations, the actuarial assumptions that we use may differ from actual results, which could have a significant impact on our pension and postretirement benefit obligations and related costs. 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~~laws or ~~regulation~~regulations. We are implementing plans to comply with the Dutch Pension Act passed in 2023, which requires traditional defined benefit plans to be phased out and transition to defined contribution plans before January 1, 2028. Our Dutch defined benefit plan includes a minimum guaranteed funding ratio that will have to be terminated as part of the transition, for which we will have to compensate the Dutch Pension Fund.

An impairment in the carrying value of goodwill could negatively impact our results of operations and net worth.

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 2831, ~~2024~~2025, the carrying value of our goodwill was $12.9827 billion. In ~~2024~~2025, we determined that the goodwill of our reporting units was not impaired. WeIn ~~review~~performing ~~goodwill~~impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. byIf the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative assessment. 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. In assessing fair value, we make estimates and assumptions about sales, ~~operating~~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. We could be required to evaluate the carrying value of goodwill prior to the annual assessment if we experience disruptions to our business, unexpected significant declines in operating results, divestiture of a significant component of our business or sustained market capitalization declines. 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.

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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~~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.

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.

Our cybersecurity risk management program ~~complements~~includes risk assessments designed to help identify potentially material cybersecurity risks to our ~~overall~~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 ~~management~~assessment ~~program~~processes, ~~using~~security ~~similar~~controls ~~methodologies~~and response to any cybersecurity events; the use of third party experts and ~~governance~~service ~~processes~~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 ~~mitigating~~vendor ~~strategies~~ecosystem, which includes initial security posture assessments, contractual security requirements and ongoing monitoring of critical third parties to address potential cybersecurity threats.

~~Our~~We ~~cybersecurity~~have ~~risk~~not ~~management~~experienced ~~program includes risk assessments designed to help identify potentially material~~ cybersecurity ~~risks~~events tothat ~~our~~have ~~critical~~materially ~~systems,~~affected ~~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~~operations, ~~security~~results ~~controls and response to any cybersecurity events; the use~~ of ~~third~~operations ~~party~~or ~~experts~~financial ~~and~~condition. ~~service providers~~However, ~~where~~we ~~appropriate,~~face toongoing ~~assess,~~risks ~~test~~from ~~and otherwise assist with protecting our security environment;~~ cybersecurity ~~awareness~~threats ~~training~~in ~~for~~an ~~our~~ever-evolving ~~employees~~threat ~~and~~landscape ~~further training for our incident response personnel and senior management; a cybersecurity incident response plan~~ that, ~~includes~~if ~~procedures~~realized, ~~for~~could ~~assessing~~be ~~and~~reasonably ~~coordinating~~likely ~~our response~~ to ~~cybersecurity~~materially ~~events;~~affect ~~and~~our ~~a third-party risk management process for service providers, suppliers and vendors~~business.

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.

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 ~~of Directors (our “Board”)~~ considers cybersecurity risk as part of its overall risk oversight. ~~function~~In ~~and~~2025, ~~has~~its ~~delegated to the~~ Audit Committee ~~primary~~was ~~responsibility~~primarily responsible for overseeing our ~~cybersecurity~~strategies, ~~risk~~policies ~~management program~~ and ~~engaging~~risk ~~with~~ management onpractices ~~cybersecurity and other risks~~ related to ~~our~~cybersecurity and information ~~technology~~security, ~~controls~~engaging ~~and~~with ~~security.~~management, ~~Our~~including our Chief Information Security Officer (“~~ISO~~CISO”), who reports ~~directly~~ to our Chief Information Officer (“CIO”), a member of our Company Leadership Team and a direct report of our Chief Executive Officer (“CEO”). ~~The~~During 2025, our CIO and ~~ISO~~CISO ~~together~~provided ~~provide~~semiannual updates ~~and~~on ~~discuss~~ our cybersecurity preparedness ~~with~~to the Audit Committee. atThese ~~least~~updates ~~semiannually~~covered the overall status of our cybersecurity program, ~~which~~results ~~its~~of ~~Chair~~risk ~~then~~assessments, ~~reports~~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. ~~Management~~In ~~updates~~addition, management updated the ~~Audit~~Cybersecurity ~~Committee~~Advisory Council, composed of members of our Board and management, to obtain additional insights into our cybersecurity risk management, and, if and as needed, to the Audit Committee regarding any significant cybersecurity events, as well as events that may have had lesser potential impact. Effective January 2026, our Board formed a standalone Cybersecurity Committee to be primarily responsible for overseeing our strategies, policies and risk management practices related to cybersecurity and information security and the Cybersecurity Advisory Council ceased operating.

Our cybersecurity leadership team ("CSLT"), — which includes leaders accountable for security operations, incident response, risk and compliance, data security, application security, digital solutions security, vulnerability management and operational technology security, — is responsible for assessing and managing our risks from cybersecurity threats. The ~~team~~CSLT, ~~has~~which ~~primary~~is ~~responsibility~~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 ~~our~~the external ~~cybersecurity~~ consultants advising our company on these matters. ~~Information~~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.

The CSLT ~~supervises~~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.

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Item 2. PROPERTIES

As of December 2831, ~~2024~~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. Soignies and Turnhout, Belgium; Vinhedo, Brazil; Guangzhou, Kunshan, and Zhuozhou, China; Champ-sur-Drac, France; Gotha, Germany; ~~Pune~~Noida and ~~Noida~~Pune, India; Longford, Ireland; Kibbutz Hanita, Israel; ~~Chungju, South Korea;~~ 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.

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 generally expand production capacity as needed to meet increased demand. Owned buildings and plant equipment are insured against major losses from fire and other usual business risks, subject to applicable deductibles. We are not aware of any material defects in title to, or significant encumbrances on, our properties, except for certain mortgage liens.

Item 3. LEGAL PROCEEDINGS

See Note 8, “Contingencies,” in the Notes to Consolidated Financial Statements.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

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~~2025. We have historically paid quarterly cash dividends. 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,~~391~~130 shareholders of record as of December 2831, ~~2024~~2025, the last day of our ~~2024~~2025 fiscal year.

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~~2025.

Total Return Analysis(1)

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Avery Dennison

100

~~121~~141

~~171~~120

~~145~~137

~~165~~128

~~155~~127

Dow Jones U.S. Container & Packaging Index

100

~~121~~112

~~135~~93

~~112~~99

~~120~~113

~~136~~101

S&P 500 Industrials Index

100

~~111~~121

~~135~~114

~~127~~135

~~150~~159

~~176~~190

S&P 500 Index

100

~~118~~129

~~152~~105

~~125~~133

~~158~~166

~~197~~196

(1) Assumes $100 invested on December 31, ~~2019~~2020 and reinvestment of dividends.

(b)Not applicable.

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(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 ~~2024~~2025 are shown in the table below. Repurchased shares may be reissued under our long-term incentive plan or used for other corporate purposes.

Period(1)	Total numberof sharespurchased(2)	Averageprice paidper share(3)		Total number ofsharespurchased aspart of publiclyannouncedplans(2)(4)	Approximatedollar valueof shares thatmay yet bepurchasedunder theplans(5)
September 29, 2024 – October 26, 2024	105.5	$	215.1	105.5	$	462.9
September 28, 2025 – October 25, 2025	265.4	$	160.9	265.4	$	604.4
October 27, 2024 – November 23, 2024	271.7	203.2		271.7	407.7
October 26, 2025 – November 22, 2025	256.4	173.6		256.4	559.9
November 24, 2024 – December 28, 2024	311.0	195.6		311.0	346.9
November 23, 2025 – December 31, 2025	191.9	175.4		191.9	526.3
Total	~~688~~713.27	$	~~201~~169.63	~~688~~713.27	$	~~346~~526.93

(1) The periods shown are our fiscal months during the ~~thirteen-week~~ quarter ended December 2831, ~~2024~~2025.

(2) Shares in thousands.

(3) Average price paid per share includes transaction costs to acquire the shares and excludes the non-deductible 1% excise tax on the net value of repurchases imposed under the Inflation Reduction Act of 2022.

(4) In April ~~2022~~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. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.

(5) Dollars in millions.

Item 6. RESERVED

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ORGANIZATION OF INFORMATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, provides management’s views on our financial condition and results of operations, should be read in conjunction with the Consolidated Financial Statements and related notes thereto, and includes the sections shown below.

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			3435
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. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results prepared in accordance with GAAP. We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate ~~comparison~~comparisons with the results of competitors for quarters and year-to-date periods, as applicable. Based on feedback from investors and financial analysts, we believe that the supplemental non-GAAP financial measures we provide are also useful to their assessments of our performance and operating trends, as well as liquidity. Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K.

Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. 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. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing.

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. Additionally, where applicable, sales change ex. currency is also adjusted for anthe estimated impact of extra ~~week~~days in our fiscal year and the calendar shift resulting from an extra ~~week~~days in the prior fiscal year. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior-period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations. 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.

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.

We believe that sales change ex. currency and organic sales change assist investors in evaluating the sales change from the ongoing activities of our businesses and enhance their ability to evaluate our results from period to period.

•Adjusted free cash flow refers to cash flow provided by operating activities, less payments for property, plant and equipment, less payments for software and other deferred charges, plus proceeds from company-owned life insurance policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments, less net cash used for Argentine Blue Chip Swap securities. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases, and acquisitions.

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•Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts receivable and inventories, net of accounts payable, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities divided by annualized current quarter net sales. We believe that operational working capital as a percentage of annualized current quarter net sales assists investors in assessing our working capital requirements because it excludes the impact of fluctuations attributable to our financing and other activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working capital as a percentage of sales from period to period. The items excluded from this measure are not significantly influenced by our day-to-day activities managed at the operating level and do not necessarily reflect the underlying trends in our operations.

OVERVIEW AND OUTLOOK

Fiscal Year

~~Our~~In ~~fiscal~~January ~~years~~2025, ~~have~~the ~~generally~~Audit ~~consisted~~Committee of 52our ~~weeks,~~Board ~~with~~of ~~every~~Directors ~~fifth~~approved a change to our previous 52- or ~~sixth~~53-week fiscal year ~~consisting~~generally ofending 53on ~~weeks;~~the ~~our~~Saturday ~~2024,~~closest ~~2023~~to ~~and~~December ~~2022~~31 to a fiscal ~~years~~year ~~consisted~~coincident ofwith ~~52-week~~the ~~periods~~calendar ~~ending~~year. ~~December 28,~~Our ~~2024,~~2025 fiscal year began on December 30 29, ~~2023~~2024 and ended on December 31, ~~2022~~2025, ~~respectively~~which resulted in four extra days compared to prior years; fiscal years 2026 and beyond will be coincident with the calendar year beginning on January 1 and ending on December 31.

~~Subsequent~~Our ~~to fiscal year-end~~ 2024, inand ~~January~~2023 ~~2025,~~fiscal ~~the~~years ~~Audit~~consisted ~~Committee~~ of ~~our Board of Directors approved a change to our previous~~ 52- ~~or 53-~~week ~~fiscal~~periods ~~year generally~~ ending ~~on the Saturday closest to~~ December ~~31 to a fiscal year coincident with the calendar year. Our 2025 fiscal year that began on December 29~~ 28, 2024 ~~will~~and ~~end on~~ December 30, 312023, ~~2025 and fiscal years 2026 and beyond will begin on January 1 and end on December 31~~respectively.

Net Sales

The factors impacting reported net sales change, as compared to the prior-year period, are shown in the table below.

	2024		2023
	2025		2024
Reported net sales change	51	%	~~(8)~~5	%
Foreign currency translation	—		1—
Sales change ex. currency(1)	5	%	(7)	%
Impact of extra days	—		—
Acquisitions	(1)		(1)
Sales change ex. currency(1)	—	%	5	%
Organic sales change(1)	5	%	(8)	%
Acquisitions	—		(1)
Organic sales change(1)	—	%	5	%

(1) Totals may not sum due to rounding.

In ~~2024~~2025, net sales ~~increased~~ on an organic basis ~~primarily~~were ~~due~~comparable to ~~higher~~the ~~volume~~prior year, ~~partially~~reflecting the impact of higher volume offset by the impact of raw material deflation-related price reductions. In ~~2023~~2024, net sales ~~decreased~~increased on an organic basis primarily due to ~~lower~~higher volume, partially offset by ~~pricing~~the ~~actions~~impact of raw material deflation-related price reductions.

Net Income

Net income ~~increased~~decreased from approximately $~~503~~705 million in ~~2023~~2024 to approximately $~~705~~688 million in ~~2024~~2025. The primary factors affecting this ~~increase~~decrease 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~~•Higher ~~Reduction~~employee-related ~~Actions~~ costs

~~2025~~•Higher ~~Actions~~interest expense

In•Growth the fourth quarter 2024, we recorded $13.1 million in restructuring charges related to our 2025 actions. These charges consisted of severance and related costs for the reduction of approximately 90 positions, as well as asset impairment charges, at numerous locations across our company, reflecting actions in our Solutions Group reportable segment.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

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Cost Reduction Actions

2025 Actions

During 2025, we recorded $48.8 million in restructuring charges, net of reversals, related to our 2025 actions. These charges consisted of severance and related costs for the reduction of approximately 1,200 positions, as well as asset impairment charges, at numerous locations across our company, as a result of actions taken to optimize our operational footprint.

In the fourth quarter of 2024, we recorded $13.1 million in restructuring charges related to our 2025 actions. 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.

The cumulative restructuring charges, net of reversals, related to our 2025 actions was approximately $62 million.

2023 Actions

During 2024, we recorded $28.8 million in restructuring charges, net of reversals, related to ~~our~~these ~~2023~~ 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 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 1,450 positions, as well as asset impairment charges, at numerous locations across our company.

InDuring ~~the third quarter of 2023~~2025, we approved a restructuring plan (the "2023 Plan") to further optimize the European footprint of our Materials Group reportable segment by reducing operations in a manufacturing facility in Belgium. The cumulative charges associated with the 2023 Plan consisted of severance and related costs for the reduction of approximately 210 positions, as well as asset impairment charges. We recorded $301.46 million inof ~~2023~~reversals ~~in restructuring charges~~ related to ~~the~~our 2023 ~~Plan.~~Actions ~~The~~that ~~activities~~were ~~related~~completed toin the ~~2023~~fourth ~~Plan~~quarter ~~are~~of ~~expected to be substantially completed by mid-~~2025.

WeSavings ~~realized approximately $63 million and $69 million in savings~~ from ~~restructuring~~Restructuring ~~actions, net of transition costs, in 2024 and 2023, respectively, primarily related to our 2023 actions.~~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.

Business Acquisitions

2025 Business Acquisition

On October 20, 2025, we completed our business acquisition of W.F. Taylor Holdings, Inc. ("Taylor Adhesives"), a Georgia-based flooring adhesives business, for the purchase price of approximately $390 million. This acquisition expanded the high-value category portfolio in our Materials Group reportable segment.

We funded the Taylor Adhesives acquisition using cash and proceeds from our issuance of senior notes in September 2025.

The final allocations of purchase consideration to assets and liabilities are ongoing as we continue to evaluate certain balances, estimates and assumptions during the measurement period (up to one year from the acquisition date). Our valuation of certain acquired assets and liabilities is currently pending finalization within the allowable time to complete our assessment.

The Taylor Adhesives acquisition was not material to the Consolidated Financial Statements.

2023 Business 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. On March 6, 2023, we completed our business acquisition of Thermopatch, Inc. ("Thermopatch"), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries. These acquisitions expanded the product portfolio in our Solutions Group reportable segment. The acquisitions of Silver Crystal, Lion Brothers and Thermopatch are referred to collectively as the "2023 Acquisitions."

The acquisitions of Silver Crystal, Lion Brothers and Thermopatch are referred to collectively as the "2023 Acquisitions."

The aggregate purchase consideration, including purchase consideration payable, for the 2023 Acquisitions was approximately $231 million. We funded the 2023 Acquisitions using cash and commercial paper borrowings. In addition to the cash paid at closing, the sellers in one of these acquisitions are eligible for earn-out payments of up to $5 million, subject to the acquired company achieving certain post-acquisition performance targets. As of the acquisition date, we included an estimate of the fair value of these earn-out payments in the aggregate purchase consideration.

The 2023 Acquisitions were not material, individually or in the aggregate, to the Consolidated Financial Statements.

Accounting Guidance Updates

Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for this information.

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. In 2024, adjusted free cash flow increased compared

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toCash ~~2023~~Flow ~~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 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. 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.

Outlook

~~Certain~~Beginning ~~factors~~in ~~that~~the first quarter of 2025, the U.S. announced tariffs on goods imported into the U.S. from numerous countries, many of which responded with reciprocal tariffs and other actions on goods imported from the U.S. The U.S. government continues to negotiate with countries regarding the tariffs. As it relates to the direct impact of these tariffs, a relatively small portion of our global materials purchases is impacted. To mitigate this direct impact to our operations, we ~~believe~~have ~~will~~implemented ~~contribute~~strategic sourcing adjustments and pricing actions. The indirect impact on demand for our products and solutions is more uncertain. While a majority of our products and solutions relates to less discretionary consumer staples, we also serve more discretionary and cyclical markets, such as industrials, durables and apparel. The indirect impact of tariffs resulted in an aggregate low single digit rate decrease in sales in our ~~2025~~overall ~~results~~apparel ~~are~~categories ~~described~~over ~~below~~the second, third and fourth quarters of 2025. While our outlook assumes that tariff-related uncertainty will persist, further developments in international trade relations and their broader impact to macroeconomic conditions could have a material adverse effect on our business.

~~•We~~Certain ~~anticipate~~factors ~~net~~that ~~sales~~we tobelieve ~~increase,~~will ~~driven~~contribute byto ~~volume~~our ~~growth~~2026 inresults ~~both~~are ~~the~~described ~~Solutions Group and Materials Group reportable segments~~below.

•We ~~expect~~anticipate ana ~~unfavorable~~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 ~~expect~~anticipate ~~our~~an ~~full-year~~unfavorable ~~effective~~impact ~~tax~~to ~~rate~~our tooperating beincome infrom normalization of the ~~mid-twenty~~majority ~~percent~~of ~~range~~our 2025 temporary cost savings, which was largely related to lower incentive compensation.

ANALYSIS OF RESULTS OF OPERATIONS

Income before Taxes

(In millions, except percentages)

~~2024~~2025

~~2023~~2024

~~2022~~2023

Net sales

8,~~755~~855.75

8,~~364~~755.37

98,~~039~~364.3

Cost of products sold

6,~~225~~309.02

6,~~086~~225.80

6,~~635~~086.18

Gross profit

2,~~530~~546.73

2,~~277~~530.57

2,~~404~~277.25

Marketing, general and administrative expense

1,~~415~~422.35

1,~~313~~415.73

1,~~330~~313.87

Other expense (income), net

7177.65

~~180~~71.96

(180.6)9

Interest expense

~~117~~135.04

~~119~~117.0

84119.10

Other non-operating expense (income), net

(2614.72)

(3026.87)

(930.48)

Income before taxes

~~953~~925.51

~~694~~953.75

~~999~~694.37

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.

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.

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 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.

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(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)

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.

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.

Marketing, General and Administrative Expense

Marketing, general and administrative expense increased in 2025 compared to 2024 primarily due to growth investments, partially offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and lower employee-related costs.

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.

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.

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.

Interest expense increased in 2023 compared to 2022 primarily as a result of higher interest rates on borrowings and higher debt balances.

Other Non-Operating Expense (Income), Net

Other non-operating income decreased in 2025 compared to 2024 primarily due to lower interest income and benefits from net actuarial gains in our defined benefit plans.

Other non-operating income decreased in 2024 compared to 2023 due to lower interest income, primarily in Argentina.

Other non-operating income increased in 2023 compared to 2022 due to higher interest income, primarily in Argentina.

Net Income and Earnings per Share

(In millions, except percentages and per share amounts)	2024			2023			2022
Income before taxes	$	953.5		$	694.7		$	999.3
Provision for income taxes	248.6			191.7			242.2
Net income	$	704.9		$	503.0		$	757.1
Net income per common share	$	8.77		$	6.23		$	9.28
Net income per common share, assuming dilution	8.73			6.20			9.21
Effective tax rate	26.1		%	27.6		%	24.2		%

Provision for Income Taxes

Our effective tax rate in 2024 decreased compared to 2023 primarily due to lower non-deductible expenses resulting from the impact of the Argentine peso remeasurement loss and lower tax charges from the recognition of uncertain tax positions in certain foreign jurisdictions, partially offset by higher tax charges from valuation allowances. Our effective tax rate in 2023 increased compared to 2022 primarily due to higher non-deductible expenses resulting from the impact of the Argentine peso remeasurement loss, higher tax charges from the recognition of uncertain tax positions in certain foreign jurisdictions, and lower U.S. federal return-to-provision benefits.

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~~Our~~Net ~~effective~~Income tax rate can vary from period to period due to a variety of factors, such as changes in our mix of earnings in countries with differing statutory tax rates, changes in our tax reserves, settlements of income tax audits, changes in tax laws and ~~regulations,~~Earnings ~~return-to-provision~~per ~~adjustments,~~Share ~~tax impacts related to stock-based payments, and our execution of tax planning strategies.~~


(In millions, except percentages and per share amounts)	2025			2024			2023
Income before taxes	$	925.1		$	953.5		$	694.7
Provision for income taxes	237.1			248.6			191.7

Net income	$	688.0		$	704.9		$	503.0
Net income per common share	$	8.81		$	8.77		$	6.23
Net income per common share, assuming dilution	8.79			8.73			6.20
Effective tax rate	25.6		%	26.1		%	27.6		%

Provision for Income Taxes

Our effective tax rate in 2025 decreased compared to 2024 primarily due to higher benefits from the release of valuation allowance as a result of completing a foreign restructuring transaction and a favorable ruling related to deductibility of interest expense, partially offset by lower excess tax benefits associated with stock-based payments. Our effective tax rate in 2024 decreased compared to 2023 primarily due to lower non-deductible expenses resulting from the impact of the Argentine peso remeasurement loss and lower tax charges from the recognition of uncertain tax positions in certain foreign jurisdictions, partially offset by higher tax charges from valuation allowances.

Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information.

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT

~~During~~Our ~~the~~CODM ~~fourth~~uses ~~quarter of 2024, we modified our~~ segment ~~performance~~adjusted ~~measure~~operating ~~to exclude other expense (~~income), ~~net.~~to ~~These~~evaluate ~~changes align with how our CODM evaluates~~ segment performance and ~~allocates~~allocate resources. ~~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.

Materials Group

(In millions)

~~2024~~2025

~~2023~~2024

~~2022~~2023

Net sales including intersegment sales

6,~~175~~267.83

56,~~968~~175.48

65,~~632~~968.24

Less intersegment sales

(~~162~~174.80)

(~~157~~162.18)

(~~137~~157.1)

Net sales

6,~~013~~093.03

56,~~811~~013.30

65,~~495~~811.13

Segment adjusted operating income(1)

~~924~~922.72

~~789~~924.27

~~845~~789.92

(1) Segment adjusted operating income excluded charges associated with restructuring actions and related costs in all years, loss on venture investment in 2024, losses from Argentine peso remeasurement and Blue Chip Swap transactions and outcomes of legal matters and settlements, net, in 2024 and 2023, loss on sale of assets in 2023, and gain on venture investment in 2022. These items were included in "Other expense (income), net."

40.4

88.3

(13.4)

(1) Segment adjusted operating income excluded other expense (income), net, and other items of $31.6 million, $40.4 million and $88.3 million in 2025, 2024, and 2023, respectively. Exclusions related to charges associated with restructuring actions, outcomes of legal matters and settlements, net, (gain) loss on venture and other investments, transaction and related costs, losses from Argentine peso remeasurement and Blue Chip Swap transactions and (gain) loss on sales of assets.

Net Sales

The factors impacting reported net sales change are shown in the table below.

	2024		2023
	2025		2024
Reported net sales change	41	%	~~(11)~~4	%
Foreign currency translation	—		—
Reclassification of sales between segments	(1)		—
Sales change ex. currency(1)	4		(10)
Foreign currency translation	(1)		—
Organic sales change(1)	4	%	(10)	%
Impact of extra days	—		—
Sales change ex. currency(1)	—		4
Acquisitions	—		—
Organic sales change(1)	(1)	%	4	%

(1) Totals may not sum due to rounding.

In ~~2024~~2025, net sales ~~increased~~ on an organic basis decreased compared to the prior year primarily due to ~~higher volume, partially offset by~~ the impact of raw material deflation-related price reductions, partially offset by favorable volume/mix. On an organic basis, net sales increased by a low single digit ~~rates~~rate in North America, and ~~Western~~decreased ~~Europe~~by ~~and~~low ~~a high~~ single digit ~~rate~~rates in ~~emerging~~Europe, ~~markets~~the Middle East and North Africa, Asia Pacific and Latin America.

In 2023, net sales decreased on an organic basis compared to the prior year due to lower volume driven primarily by inventory destocking, partially offset by the impact of pricing actions. On an organic basis, net sales decreased by a low double-digit rate in North America, a high teens rate in Western Europe and a high single digit rate in emerging markets.

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 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.

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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. On an organic basis, net sales increased by low single digit rates in North America and Europe, the Middle East and North Africa and mid-single digit rates in Asia Pacific and Latin America.

Segment 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.

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.

Solutions Group

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Net sales including intersegment sales	$	2,~~795~~817.03	$	2,~~588~~795.50	$	2,~~581~~588.65
Less intersegment sales	(5255.31)		(3552.53)		(3735.45)
Net sales	$	2,~~742~~762.72	$	2,~~553~~742.07	$	2,~~544~~553.20
Segment adjusted operating income(1)	~~289~~286.3		~~252~~289.03		~~310~~252.10
(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. These items were included in "Other expense (income), net."	$	30.8	$	86.3	$	7.8

(1) Segment adjusted operating income excluded other expense (income), net, and other items of $39.0 million, $37.5 million and $86.3 million in 2025, 2024, and 2023, respectively. Exclusions related to charges associated with restructuring actions, outcomes of legal matters and settlements, net, (gain) loss on venture and other investments, (gain) loss on sales of assets and transaction and related costs.

Net Sales

The factors impacting reported net sales change are shown in the table below.

	2024		2023
	2025		2024
Reported net sales change	71	%	—7	%
Foreign currency translation	1		2
Reclassification of sales between segments	2		—
Sales change ex. currency(1)	8		2
Foreign currency translation	—		1
Acquisitions	(2)		(3)
Impact of extra days	—		—
Organic sales change(1)	6	%	(1)	%
Sales change ex. currency(1)	2		8
Acquisitions	—		(2)
Organic sales change(1)	2	%	6	%

(1) Totals may not sum due to rounding.

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.

In 2024, on an organic basis, net sales increased by a low single digit rate in high-value categories and 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 high single digit rate compared to the prior year.

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.

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.

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 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.

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FINANCIAL CONDITION

Liquidity

Operating Activities

(In millions)

~~2024~~2025

~~2023~~2024

~~2022~~2023

Net income

~~704~~688.90

~~503~~704.09

~~757~~503.10

Depreciation

~~197~~206.14

~~187~~197.41

~~177~~187.4

Amortization

~~115~~121.18

~~111~~115.01

~~113~~111.30

Provision for credit losses and sales returns

4751.42

4947.94

5049.19

Stock-based compensation

2827.79

2228.37

4722.43

Deferred taxes and other non-cash taxes

(1819.59)

(2418.45)

18(24.4)

Other non-cash expense and loss (income and gain), net

6748.28

3767.12

2337.51

Trade accounts receivable

~~(107~~44.3)0

(16107.73)

(2216.17)

Inventories

~~(90~~53.7)2

~~111~~(90.7)

~~(140~~111.7)

Accounts payable

~~106~~(144.74)

~~(87~~106.6)7

68(87.26)

Taxes on income

40(5.21)

~~(18~~40.7)2

(18.97)

Other assets

~~(48~~3.0)8

37(48.70)

1537.37

Other liabilities

(~~104~~194.03)

(86104.70)

(~~165~~86.87)

Net cash provided by operating activities

~~938~~881.84

~~826~~938.08

~~961~~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.

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 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.

Investing Activities

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Purchases of property, plant and equipment	$	(~~208~~169.80)	$	(~~265~~208.38)	$	(~~278~~265.13)
Purchases of software and other deferred charges	(31.04)		(1931.80)		(2019.48)
Proceeds from company-owned life insurance policies	—		~~48.1~~—		—48.1
Purchases of Argentine Blue Chip Swap securities	~~(34.2)~~—		—(34.2)		—
Proceeds from sales of Argentine Blue Chip Swap securities	~~24.0~~—		—24.0		—
Proceeds from sales of property, plant and equipment	22.6		1.06		21.30
Proceeds from insurance and sales (purchases) of investments, net	103.15		110.91		1.9
Proceeds from sale of venture investment	—		—		1.1
Proceeds from settlement of net investment hedges	6.2		—		—
Payments for acquisitions, net of cash acquired, and venture investments	(3.8)		(224.9)		(39.5)
Payments for settlement of net investment hedges	(26.1)		—		—
Net cash used in investing activities	$	(243.1)	$	(459.0)	$	(332.7)
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)

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Purchases of Property, Plant and Equipment

In ~~2024~~2025, 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. In 2023, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in~~ certain countries in Asia Pacific, primarily ~~Malaysia, the U.S. and certain countries in Latin America, primarily Mexico~~China; 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. 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~~Mexico.

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.

In 2023, in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, primarily 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.

Purchases of Software and Other Deferred Charges

In ~~2024~~2025, ~~2023~~we primarily invested in information technology upgrades in the U.S. In 2024 and ~~2022~~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.

Purchases and Proceeds from Argentine Blue Chip Swap Securities

In 2024, we entered into Blue Chip Swap transactions that resulted in losses of approximately $10 million. Refer to Note 16, “Supplemental Financial Information,” to the Consolidated Financial Statements for more information.

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.

Settlement of Net Investment Hedges

In 2025, we settled €920 million notional amount of net investment hedges.

Payments for Acquisitions, Net of Cash Acquired, and Venture Investments

We paid consideration, net of cash acquired, of approximately $~~223~~390 million for the ~~2023~~2025 ~~Acquisitions~~acquisition of Taylor Adhesives and $30223 million for the ~~acquisitions~~2023 ~~we completed in 2022~~Acquisitions. We funded the ~~2023~~Taylor ~~Acquisitions~~Adhesives acquisition using cash and ~~the~~proceeds ~~acquisitions~~from weour ~~completed~~issuance of senior notes in ~~2022~~September 2025. We funded the 2023 Acquisitions using cash and commercial paper borrowings. We also made certain venture investments in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023.

Refer to Note 2, “Business Acquisitions,” to the Consolidated Financial Statements for more information.

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.

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InFinancing ~~November~~Activities 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. 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.


(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.

In September 2025, we issued €500 million of senior notes, due September 11, 2035, which bear an interest rate of 4.000% per year, payable annually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were approximately €494 million ($577 million), which we used in part to finance the Taylor Adhesives acquisition and repay existing indebtedness under our commercial paper program. Refer to Note 2, “Business Acquisitions,” to the Consolidated Financial Statements for more information regarding our acquisition of Taylor Adhesives.

In the third quarter of 2025, we repaid our $5 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings.

In the second quarter of 2025, we repaid our $25 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings.

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.

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. 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.

In August 2024, we repaid our $300 million of senior notes at maturity using cash flows from operations and commercial paper borrowings.

In March 2023, we issued $400 million of senior notes, due March 15, 2033, which bear an interest rate of 5.750% per year, payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were $394.9 million, which we used to repay indebtedness under our commercial paper programs and our $250 million of senior notes that matured on April 15, 2023.

Refer to Note 4, "Debt" to the Consolidated Financial Statements for more information.

Dividends Paid

We paid dividends per share of $3.4570, $3.1845 and $23.9318 in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively. In April ~~2024~~2025, we increased our quarterly dividend rate to $0.8894 per share, representing an increase of approximately 97% from our previous quarterly dividend rate of $0.8188 per share. In April ~~2023~~2024, we increased our quarterly dividend to $0.8188 per share, representing an increase of approximately 89% from our previous dividend rate of $0.7581 per share.

Share Repurchases

From time to time, our Board authorizes the repurchase of shares of our outstanding common stock. Repurchased shares may be reissued under our long-term incentive plan or used for other corporate purposes. In ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, we repurchased approximately 13.2 million, 01.82 million and 20.28 million shares of our common stock, respectively.

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. 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. 31

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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. 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.

Settlement of Fair Value Hedges

In 2025, we settled €920 million notional amount of fair value hedges.

Analysis of Selected Balance Sheet Accounts

Long-lived Assets

Property, plant and equipment, net, ~~decreased~~increased by approximately $3921 million to $1.5961 billion at year-end ~~2024~~2025, which primarily reflected ~~depreciation~~purchases ~~expense~~of property, plant and equipment and the impact of foreign currency translation, partially offset by ~~purchases~~current ofyear ~~property,~~depreciation ~~plant and equipment~~expense.

Goodwill ~~decreased~~increased by approximately $37296 million to $12.9827 billion at year-end ~~2024~~2025, which primarily reflected the acquired goodwill associated with the Taylor Adhesives acquisition and the impact of foreign currency translation.

Other intangibles resulting from business acquisitions, net, ~~decreased~~increased by approximately $9472 million to $~~755~~827.35 million at year-end ~~2024~~2025, primarily reflecting the valuation of intangible assets associated with the Taylor Adhesives acquisition, partially offset by current year amortization expense.

Refer to Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” to the Consolidated Financial Statements for more information.

Other assets increased by approximately $8881 million to $~~897~~978.34 million at year-end ~~2024~~2025, primarily reflecting an increase in the funded status of certain of our non-U.S. pension plans and higher capitalized implementation costs associated with our cloud computing arrangements ~~and higher operating lease assets~~.

Long-term Retirement Benefits and Other Liabilities

Other long-term retirement benefits and other liabilities decreased by approximately $66 million to $434.6 million at year-end 2024, primarily reflecting the settlement payment for the Adasa legal matter.

Shareholders’ Equity Accounts

The balance of our shareholders’ equity ~~increased~~decreased by approximately $~~184~~70 million to $2.3124 billion at year-end ~~2024~~2025. Refer to Note 11, “Supplemental Equity and Comprehensive Income Information,” to the Consolidated Financial Statements for more information.

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Impact of Foreign Currency Translation

(In millions)

~~2024~~2025

~~2023~~2024

Change in net sales

~~(33)~~29

(5833)

In ~~2024~~2025, international operations generated approximately 7069% of our net sales. Our future results are subject to changes in ~~geopolitical~~worldwide economic conditions, tariffs, social, geopolitical, and ~~economic~~market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates.

The ~~unfavorable~~favorable impact of foreign currency translation on net sales in ~~2024~~2025 compared to ~~2023~~2024 was primarily related to ~~sales~~euro-denominated ~~in China and Brazil~~sales, partially offset by ~~the~~sales ~~favorable~~in ~~impact~~India ofand ~~euro-denominated sales~~Brazil.

Effect of Foreign Currency Transactions

The impact on net income from foreign currency transactions is largely mitigated because the costs of our products are generally denominated in the same currencies in which they are sold. In addition, to reduce our income and cash flow exposure to transactions in foreign currencies, we enter into foreign currency exchange forward, option and swap contracts where available and appropriate. Refer to Note 5, “Financial Instruments,” to the Consolidated Financial Statements for more information.

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 ~~was~~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. Refer to Note 16, “Supplemental Financial Information,” to the Consolidated Financial Statements for more information.

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Analysis of Selected Financial Ratios

We utilize the financial ratios discussed below to assess our financial condition and operating performance. We believe this information assists our investors in understanding the factors impacting our cash flow other than net income and capital expenditures.

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. Operational working capital, as a percentage of annualized current-quarter net sales, in ~~2024~~2025 ~~was~~increased ~~comparable~~compared ~~with~~to ~~2023~~2024. Further information regarding the components of operational working capital is provided below.

(In millions, except percentages)

~~2024~~2025

~~2023~~2024

(A)Working capital

~~216~~336.17

96216.51

Reconciling items:

Cash and cash equivalents

(~~329~~202.18)

(~~215~~329.01)

Other current assets

(~~305~~307.38)

(~~245~~305.43)

Short-term borrowings and current portion of long-term debt and finance leases

~~592~~522.39

~~622~~592.23

Current income taxes payable and other current accrued liabilities

~~929~~869.60

~~800~~929.26

(B)Operational working capital

1,~~103~~218.60

1,~~058~~103.56

(C)Fourth-quarter net sales, annualized

89,~~742~~084.8

8,~~442~~742.08

Operational working capital, as a percentage of annualized current-quarter net sales (B) ÷ (C)

1213.64

12.56

Accounts Receivable Ratio

The average number of days sales outstanding was 6163 days in ~~both~~2025 ~~2024~~compared ~~and~~to ~~2023~~61 days in 2024, calculated using the accounts receivable balance at year-end divided by the average daily sales in the fourth quarter of ~~2024~~2025 and ~~2023~~2024, 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 ~~2024~~both ~~compared~~2025 toand ~~6.6 in 2023~~2024, calculated using the annualized fourth-quarter cost of products sold in ~~2024~~2025 and ~~2023~~2024, respectively, and divided by the inventory balance at the respective year-end. ~~The decrease in average inventory turnover primarily reflected higher inventory balances, partially offset by the impact of foreign currency translation.~~

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Accounts Payable Ratio

The average number of days payable outstanding was 7774 days in ~~both~~2025 ~~2024~~compared ~~and~~to ~~2023~~77 days in 2024, calculated using the accounts payable balance at year-end divided by the annualized fourth-quarter cost of products sold in ~~2024~~2025 and ~~2023~~2024, respectively. The decrease in average number of days payable outstanding primarily reflected the timing of vendor payments, partially offset by the impact of foreign currency translation.

Capital Resources

Capital resources include cash flows from operations, cash and cash equivalents and debt financing, including access to commercial paper borrowings supported by our revolving credit facility (the "Revolver"). We use these resources to fund our operational needs.

At year-end ~~2024~~2025, we had cash and cash equivalents of $~~329~~202.18 million held in accounts at third-party financial institutions in numerous locations throughout the world. At year-end ~~2024~~2025, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in the Asia Pacific region.

To meet our U.S. cash requirements, we have several cost-effective liquidity options available. These options include borrowing funds at reasonable rates, including borrowings from our foreign subsidiaries, and repatriating foreign earnings and profits. However, if we were to repatriate foreign earnings and profits, a portion would be subject to cash payments of withholding taxes imposed by foreign tax authorities. Additional U.S. taxes may also result from the impact of foreign currency fluctuations related to these earnings and profits.

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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. The Revolver refinanced the prior revolving credit facility under the Fifth Amended and Restated Credit Agreement dated as of February 13, 2020, as amended. Pursuant to the Credit Agreement, the commitments under the Revolver may be increased by up to $600 million, subject to lender approvals and customary requirements. Under certain circumstances, we may request that the commitments under the Revolver be extended for one-year periods in accordance with the terms and conditions of the Credit Agreement. We use the Revolver as a back-up facility for our commercial paper program and for other corporate purposes.

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. As of December 2831, ~~2024,~~2025 ~~our~~and ~~ratio was substantially below the maximum ratio allowed by the Revolver. As of~~ December 3028, ~~2023~~2024, our ratio was substantially below the maximum ~~rate~~ratio allowed by ~~our~~the ~~previous revolving credit facility~~Revolver.

In addition to the Revolver, we have short-term lines of credit available in various countries of approximately $~~261~~222 million in the aggregate at December 2831, ~~2024~~2025. These lines may be cancelled at any time by us or the issuing banks. Borrowings under our short-term lines of credit were not material as of December 2831, ~~2024~~2025 ~~and~~or December 3028, ~~2023~~2024.

We are exposed to financial market risk resulting from changes in interest and foreign currency exchange rates, and to possible liquidity and credit risks of our counterparties.

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.

Capital from Debt

The carrying value of our total debt ~~decreased~~increased by approximately $92581 million to $3.1573 billion at year-end ~~2024~~2025 from year-end ~~2023~~2024, primarily ~~due~~reflecting toour ~~the~~September ~~repayment~~2025 issuance of ~~our~~€500 ~~$300~~ million of senior notes ~~that~~due ~~matured~~ in ~~August 2024~~2035, ahigher ~~net decrease in~~ commercial paper borrowings and the revaluation of our euro-denominated ~~senior notes~~debt, partially offset by our ~~issuance~~repayment of €500 million of senior notes, $25 million of medium-term notes and $5 million of medium term notes at their maturity in ~~November~~the ~~2024~~first, second and third quarters of 2025, respectively.

Credit ratings are a significant factor in our ability to raise short- and long-term financing. The credit ratings assigned to our company also impact the interest rates we pay and our access to commercial paper, credit facilities, and other borrowings. A downgrade of our short-term credit ratings could impact our ability to access commercial paper markets. If our access to commercial paper markets were to become limited, the Revolver and our other credit facilities would be available to meet our short-term funding requirements. When determining our credit rating, we believe that rating agencies primarily consider our competitive position, business outlook, consistency of cash flows, debt level and liquidity, geographic footprint and management team. We remain committed to maintaining an investment grade rating.

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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. 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 $3.0167 billion at December 2831, ~~2024~~2025 and $3.1101 billion at December 3028, ~~2023~~2024. Fair value amounts were determined based primarily on Level 2 inputs. 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~~2025

We have short- and long-term material cash requirements related to our contractual obligations that arise in the normal course of business. 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 2831, ~~2024~~2025. Future interest payments for long-term debt as of December 2831, ~~2024~~2025 are approximately $~~106~~124 million in ~~2025~~2026; $97124 million in ~~2026~~2027; $97124 million in ~~2027~~2028; $9799 million in ~~2028~~2029; $7394 million in ~~2029~~2030; and $~~243~~302 million from ~~2030~~2031 through maturity. Refer to Note 7, "Commitments and Leases," to the Consolidated Financial Statements for a summary of our lease obligations as of December 31, 2025.

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 6, “Pension and Other Postretirement Benefits,” to the Consolidated Financial Statements for information regarding our defined benefit pension plan contributions and future benefit payments, deferred compensation plan benefit payments and unfunded termination indemnity benefits.

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.

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CRITICAL ACCOUNTING ESTIMATES

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

Critical accounting estimates are those that are important to our financial condition and results, and which require us to make difficult, subjective and/or complex judgments. Critical accounting estimates cover accounting matters that are inherently uncertain because their future resolution is unknown. We believe our critical accounting estimates include accounting for goodwill, business combinations, pension and postretirement benefits, taxes based on income and long-term incentive compensation.

Goodwill

Business combinations are accounted for using the acquisition method, with the excess of the acquisition cost over the fair value of acquired net tangible assets and identified intangible assets considered goodwill. 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. 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~~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. In performing impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative assessment.

A quantitative assessment primarily consists of using the present value (discounted cash flow) method to determine the fair value of reporting units with goodwill. We compare the fair value of each reporting unit to its carrying amount, and, to the extent the carrying amount exceeds the unit’s fair value, we recognize an impairment of goodwill for the excess up to the amount of goodwill of that reporting unit.

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~~profit margins and growth rates, as well as discount rates. 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. We base our fair value estimates on projected financial information and assumptions that we believe are reasonable. However, actual future results may differ materially from these estimates and projections. The valuation methodology we use to estimate the fair value of reporting units requires inputs and assumptions that reflect current market conditions, as well as the impact of planned business and operational strategies that require management judgment. The estimated fair value could increase or decrease depending on changes in the inputs and assumptions.

34In 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. Therefore, the goodwill of our reporting units was not impaired.

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discount rates. 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. We base our fair value estimates on projected financial information and assumptions that we believe are reasonable. However, actual future results may differ materially from these estimates and projections. The valuation methodology we use to estimate the fair value of reporting units requires inputs and assumptions that reflect current market conditions, as well as the impact of planned business and operational strategies that require management judgment. The estimated fair value could increase or decrease depending on changes in the inputs and assumptions.

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. Therefore, the goodwill of our reporting units was not impaired.

Business Combinations

The results of acquired businesses are included in our Consolidated Financial Statements from their acquisition date. Assets and liabilities of an acquired business are recorded at their estimated fair values on the acquisition date. We engage third-party valuation specialists to assist us in determining these fair values where necessary. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.

The allocation of purchase price requires management to make significant estimates and assumptions. While we believe our assumptions and estimates are reasonable, they are inherently uncertain and based in part on our experience, market conditions, our projections of future performance, and information obtained from management of the acquired companies. Critical estimates include, but are not limited to, the following:

•Future revenue and profit margins;

•Royalty rates;

•Discount rates;

•Customer retention rates;

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•Technology migration curves; and

•Useful lives assigned to acquired intangible assets.

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.

Pension and Postretirement Benefits

The assumptions we use in determining projected benefit obligations and the fair value of plan assets for our defined benefit pension plans and other postretirement benefit plans are evaluated by management in consultation with outside actuaries. In the event that we determine that changes are warranted in the assumptions we use, such as the discount rate, expected long-term rate of return or health care costs, future pension and postretirement benefit expenses could increase or decrease. Due to changes in market conditions or participant population, the actuarial assumptions we use may differ from actual results, which could have a significant impact on our pension and postretirement liabilities and related costs.

Discount Rate

In consultation with our actuaries, we annually review and determine the discount rates to use in valuing our postretirement obligations. The assumed discount rates for our non-U.S. pension plans reflect market rates for currently available 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 projected pension benefit payment streams are then matched with the bond portfolios to determine a rate that reflects the liability duration unique to our pension and postretirement benefit plans. As of December 2831, ~~2024~~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 $2726 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 $2726 million and would not have a significant impact on expected periodic benefit cost for the coming year.

We use the full yield curve approach to estimate the service and interest cost components of net periodic benefit cost for our pension and other postretirement benefit plans. Using this approach, we apply multiple discount rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. 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.

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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. 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% onin 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.

Taxes Based on Income

Because we are subject to income tax in the U.S. and multiple foreign jurisdictions, judgment is required in evaluating and estimating our worldwide provision for income taxes, accruals for taxes, deferred taxes and tax positions. Our provision for income taxes is determined using the asset and liability approach in accordance with GAAP. Under this approach, deferred tax assets represent amounts available to reduce income taxes payable in future years. These assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating losses and tax credit carryforwards. These amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when the temporary differences reverse. We evaluate the realizability of these future tax deductions and credits by assessing the period over which recoverability is allowed by law and the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. Our assessment of these sources of income relies heavily on estimates. Our forecasted earnings by jurisdiction are determined by how we operate our business and any changes to our operations may affect our effective tax rate. For example, our future income tax rate could be adversely affected by earnings being lower than anticipated in jurisdictions in which we have significant deferred tax assets that are dependent on such earnings to be realized. We use our historical experience and operating forecasts to evaluate expected future taxable income. To the extent we do not consider it more-likely-than-not that a deferred tax asset will be recovered, a valuation allowance is established in the period we make that determination.

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

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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. Our estimate of the potential outcome of any uncertain tax issue is subject to our assessment of relevant facts and circumstances existing at the balance sheet date, taking into consideration existing laws, regulations and practices of the governmental taxing authorities exercising jurisdiction over our operations. We recognize and measure our uncertain tax positions following the more-likely-than-not threshold for recognition and measurement for tax positions we take or expect to take on a tax return.

Refer to Note 14, “Taxes Based on Income,” to the Consolidated Financial Statements for more information.

Long-Term Incentive Compensation

Valuation of Stock-Based Awards

We base our stock-based compensation expense on the fair value of awards, adjusted for estimated forfeitures, amortized on a straight-line basis over the requisite service period for stock options and restricted stock units (“RSUs”). We base compensation expense for performance units (“PUs”) on the fair value of awards, adjusted for estimated forfeitures, and amortized on a straight-line basis as these awards cliff-vest at the end of the requisite performance period. We base compensation expense related to market-leveraged stock units (“MSUs”) on the fair value of awards, adjusted for estimated forfeitures, and amortized on a graded-vesting basis over their respective performance periods.

Compensation expense for awards with a market condition as a performance objective, which includes PUs and MSUs, is not adjusted if the condition is not met, as long as the requisite service period is met.

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 date, adjusted for foregone dividends. Over the performance period of the PUs, the estimated number of shares of our common stock issuable upon vesting is adjusted upward or downward based on the probability of achieving the target performance objectives established for the award.

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.

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Forfeiture Rate

Changes in estimated forfeiture rates are recorded as cumulative adjustments in the period estimates are revised.

Certain of our assumptions are based on management’s estimates, in consultation with outside specialists. Significant changes in assumptions for future awards and actual forfeiture rates could materially impact our stock-based compensation expense and results of operations.

Valuation of Cash-Based Awards

Cash-based awards consist of long-term incentive units (“LTI Units”) ~~granted to eligible employees~~. LTI Units are classified as liability awards and remeasured at each quarter-end over the applicable vesting or performance period. In addition to LTI Units with terms and conditions that mirror those of RSUs, we also grant certain employees LTI Units with terms and conditions similar to those of PUs and MSUs.

RECENT ACCOUNTING REQUIREMENTS

Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for this information.

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Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

We are exposed to the impact of changes in foreign currency exchange rates and interest rates. We generally do not purchase or hold foreign currency or interest rate or commodity contracts for trading purposes.

Our objective in managing our exposure to foreign currency changes is to reduce the risk to our earnings and cash flow associated with foreign currency exchange rate changes. As a result, we enter into foreign currency exchange forward, option and swap contracts to reduce risks associated with the value of our existing foreign currency assets, liabilities, firm commitments and anticipated foreign revenues and costs, when available and appropriate. The gains and losses on these contracts are intended to offset changes in the related exposures. We do not hedge our foreign currency translation exposure in a manner that would entirely eliminate the effects of changes in foreign currency exchange rates on our net income.

Our objective in managing our exposure to interest rate changes is to reduce the impact of interest rate changes on earnings and cash flows. To achieve this objective, we may periodically use interest rate contracts to manage our exposure to interest rate changes.

Additionally, we enter into certain natural gas futures contracts to reduce the risks associated with natural gas we anticipate using in our manufacturing operations. These amounts are not material to our financial statements.

In the normal course of operations, we also face other risks that are either non-financial or non-quantifiable. These risks principally include changes in economic or political conditions, other risks associated with international operations, commodity price risk, and legal and compliance risk, which are not reflected in the analyses described below.

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~~instruments. Forecasted transactions, firm commitments, accounts receivable and accounts payable denominated in foreign currencies, which certain of these instruments are intended to hedge, are excluded from the model.

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~~2025 and ~~2023~~2024, the VAR was estimated using a variance-covariance methodology. 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~~2025 or ~~2023~~2024.

Interest Rate Sensitivity

An assumed 4429 and 4144 basis point increase in interest rates affecting our variable-rate borrowings (10% of our weighted average interest rate on floating rate debt) in ~~2024~~2025 and ~~2023~~2024, respectively, would not have had a significant impact on interest expense.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			3940
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 28, 2024 and December 30, 2023			41
Consolidated Balance Sheets as of December 31, 2025 and December 28, 2024			42
Consolidated Statements of Income for 2024, 2023 and 2022			42
Consolidated Statements of Income for 2025, 2024 and 2023			43
Consolidated Statements of Comprehensive Income for 2024, 2023 and 2022			43
Consolidated Statements of Comprehensive Income for 2025, 2024 and 2023			44
Consolidated Statements of Shareholders’ Equity for 2024, 2023 and 2022			44
Consolidated Statements of Shareholders’ Equity for 2025, 2024 and 2023			45
Consolidated Statements of Cash Flows for 2024, 2023 and 2022			45
Consolidated Statements of Cash Flows for 2025, 2024 and 2023			46
Notes to Consolidated Financial Statements			4647

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Avery Dennison Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Avery Dennison Corporation and its subsidiaries (the “Company”) as of December 2831, ~~2024~~2025 and December 3028, ~~2023~~2024, and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended December 2831, ~~2024~~2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 2831, ~~2024~~2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 2831, ~~2024~~2025 and December 3028, ~~2023~~2024, and the results of its operations and its cash flows for each of the three years in the period ended December 2831, ~~2024~~2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 2831, ~~2024~~2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition from Certain Product Revenue

As described in Notes 1 and 15 to the consolidated financial statements, revenue is recognized for an amount that reflects the consideration which is expected from the sale of products when the Company satisfies a performance obligation by transferring control of products to a customer. Management considers a number of factors in determining when control has been transferred to a customer, including the following: (i) the Company’s present right to payment; (ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Control generally transfers to a customer upon shipment or delivery, depending on the specific terms of sale with the customer. The Company’s consolidated net sales were $8,~~755~~855.75 million for the year ended December 2831, ~~2024~~2025, of which a majority relates to certain product revenue in the Company’s Materials Group and Solutions Group reportable segments.

The principal consideration for our determination that performing procedures relating to revenue recognition from certain product revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition from certain product revenue.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the recognition of certain product revenue for an amount that reflects the consideration which is expected from the sale of products when the Company satisfies a performance obligation. These procedures also included, among others (i) testing certain product revenue transactions, on a sample basis, by obtaining and inspecting source documents, such as purchase orders, invoices, contracts, proof of shipment or delivery, and subsequent payment receipts; ~~(ii) testing certain product revenue transactions by developing an independent expectation of revenue~~ and ~~comparing the independent expectation to the amount recorded; and~~ (~~iii~~ii) confirming, on a sample basis, outstanding customer invoice balances as of December 2831, ~~2024~~2025 and, for confirmations not returned, obtaining and inspecting source documents, such as purchase orders, invoices, proof of shipment or delivery, and subsequent payment receipts.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California February 2625, ~~2025~~2026

We have served as the Company’s auditor since at least 1960, which ~~were~~is when the Company’s ~~first~~became ~~financial statements~~ subject to SEC reporting requirements. We have not been able to determine the specific year we began serving as auditor of the Company or a predecessor company.

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Consolidated Balance Sheets

(Dollars in millions, except per share amount)

December 2831, ~~2024~~2025

December 3028, ~~2023~~2024

Assets

Current assets:

Cash and cash equivalents

~~329~~202.18

~~215~~329.01

Trade accounts receivable, less allowances of $29.0 and $34.4 at year-end 2024 and 2023, respectively

1,466.2

1,414.9

Trade accounts receivable, less allowances of $28.1 and $29.0 at year-end 2025 and 2024, respectively

1,503.9

1,466.2

Inventories

~~978~~975.18

~~920~~978.71

Other current assets

~~305~~307.38

~~245~~305.43

Total current assets

32,~~078~~990.73

23,~~796~~078.07

Property, plant and equipment, net

1,~~586~~607.7

1,~~625~~586.87

Goodwill

12,~~976~~272.25

21,~~013~~976.62

Other intangibles resulting from business acquisitions, net

~~755~~827.35

~~849~~755.13

Deferred tax assets

~~110~~125.03

~~115~~110.70

Other assets

~~897~~978.34

~~809~~897.63

Total assets

8,~~404~~801.27

8,~~209~~404.82

Liabilities and Shareholders’ Equity

Current liabilities:

Short-term borrowings and current portion of long-term debt and finance leases

~~592~~522.39

~~622~~592.23

Accounts payable

1,~~340~~261.7

1,~~277~~340.17

Accrued payroll and employee benefits

~~288~~232.97

~~213~~288.49

Accrued trade rebates

~~157~~169.98

~~142~~157.49

Income taxes payable

7486.71

5774.67

Other current liabilities

~~408~~380.14

~~386~~408.81

Total current liabilities

2,~~862~~653.6

2,~~699~~862.56

Long-term debt and finance leases

23,~~559~~210.90

2,~~622~~559.19

Long-term retirement benefits and other liabilities

~~434~~432.60

~~500~~434.36

Deferred tax liabilities and income taxes payable

~~234~~264.80

~~260~~234.08

Commitments and contingencies (see Notes 7 and 8)

Shareholders’ equity:

Common stock, $1 par value per share, authorized – 400,000,000 shares at year-end 2024 and 2023; issued – 124,126,624 shares at year-end 2024 and 2023; outstanding – 79,800,396 and 80,495,585 shares at year-end 2024 and 2023, respectively

124.1

Common stock, $1 par value per share, authorized – 400,000,000 shares at year-end 2025 and 2024; issued – 124,126,624 shares at year-end 2025 and 2024; outstanding – 76,877,487 and 79,800,396 shares at year-end 2025 and 2024, respectively

124.1

Capital in excess of par value

~~840~~834.63

~~854~~840.56

Retained earnings

5,~~151~~597.25

45,~~691~~151.82

Treasury stock at cost, 44,326,228 and 43,631,039 shares at year-end 2024 and 2023, respectively

(3,347.5)

(3,134.4)

Treasury stock at cost, 47,249,137 and 44,326,228 shares at year-end 2025 and 2024, respectively

(3,904.1)

(3,347.5)

Accumulated other comprehensive loss

(~~456~~409.17)

(~~408~~456.1)

Total shareholders’ equity

2,~~312~~242.31

2,~~127~~312.93

Total liabilities and shareholders' equity

8,~~404~~801.27

8,~~209~~404.82

See Notes to Consolidated Financial Statements

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Consolidated Statements of Income

(In millions, except per share amounts)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Net sales	$	8,~~755~~855.75	$	8,~~364~~755.37	$	98,~~039~~364.3
Cost of products sold	6,~~225~~309.02		6,~~086~~225.80		6,~~635~~086.18
Gross profit	2,~~530~~546.73		2,~~277~~530.57		2,~~404~~277.25
Marketing, general and administrative expense	1,~~415~~422.35		1,~~313~~415.73		1,~~330~~313.87
Other expense (income), net	7177.65		~~180~~71.96		(180.6)9
Interest expense	~~117~~135.04		~~119~~117.0		84119.10
Other non-operating expense (income), net	(2614.72)		(3026.87)		(930.48)
Income before taxes	~~953~~925.51		~~694~~953.75		~~999~~694.37
Provision for income taxes	~~248~~237.61		~~191~~248.76		~~242~~191.27
Net income	$	~~704~~688.90	$	~~503~~704.09	$	~~757~~503.10
Per share amounts:
Net income per common share	$	8.7781	$	68.2377	$	96.2823
Net income per common share, assuming dilution	$	8.7379	$	68.2073	$	96.2120
Weighted average number of shares outstanding:
Common shares	8078.41		80.74		8180.67
Common shares, assuming dilution	8078.73		8180.17		8281.21

See Notes to Consolidated Financial Statements

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Consolidated Statements of Comprehensive Income

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Net income	$	~~704~~688.90	$	~~503~~704.09	$	~~757~~503.10
Other comprehensive income (loss), net of tax:
Foreign currency translation:
Translation gain (loss)	~~(46~~16.9)5		(1446.69)		(9614.6)
Pension and other postretirement benefits:
Net gain (loss) recognized from actuarial gain/loss and prior service cost/credit	(126.3)7		(251.23)		6(25.32)
Reclassifications to net income	2.81		(1.0)8		2(1.80)
Cash flow hedges:
Gain (loss) recognized on cash flow hedges	(51.4)9		(75.04)		4(7.90)
Reclassifications to net income	2.8		32.78		13.57
Fair value hedges:
Changes in excluded components of fair value hedges	2(3.06)		—2.0		—
Other comprehensive income (loss), net of tax	~~(48~~46.0)4		(4448.10)		(8144.1)
Total comprehensive income, net of tax	$	~~656~~734.94	$	~~458~~656.9	$	~~676~~458.09

See Notes to Consolidated Financial Statements

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Consolidated Statements of Shareholders’ Equity

(Dollars in millions, except per share amounts)	Commonstock, $1par value		Capital inexcessofpar value		Retainedearnings		Treasurystock		Accumulatedothercomprehensiveloss		Total
Balance as of January 1, 2022	$	124.1	$	862.3	$	3,880.7	$	(2,659.8)	$	(282.9)	$	1,924.4
Net income	—		—		757.1		—		—		757.1
Other comprehensive income (loss), net of tax	—		—		—		—		(81.1)		(81.1)
Repurchase of 2,173,416 shares for treasury	—		—		—		(379.5)		—		(379.5)
Issuance of 223,676 shares under stock-based compensation plans	—		17.0		(4.4)		10.6		—		23.2
Contribution of 153,803 shares to 401(k) plan	—		—		20.1		6.9		—		27.0
Dividends of $2.93 per share	—		—		(238.9)		—		—		(238.9)
Balance as of December 31, 2022	$	124.1	$	879.3	$	4,414.6	$	(3,021.8)	$	(364.0)	$	2,032.2
Net income	—		—		503.0		—		—		503.0
Other comprehensive income (loss), net of tax	—		—		—		—		(44.1)		(44.1)
Repurchase of 780,721 shares for treasury	—		—		—		(137.5)		—		(137.5)
Issuance of 297,885 shares under stock-based compensation plans	—		(24.8)		8.9		16.5		—		.6
Contribution of 168,404 shares to 401(k) plan	—		—		22.0		8.4		—		30.4
Dividends of $3.18 per share	—		—		(256.7)		—		—		(256.7)
Balance as of December 30, 2023	$	124.1	$	854.5	$	4,691.8	$	(3,134.4)	$	(408.1)	$	2,127.9
Net income	—		—		704.9		—		—		704.9
Other comprehensive income (loss), net of tax	—		—		—		—		(48.0)		(48.0)
Repurchase of 1,184,780 shares for treasury	—		—		—		(247.5)		—		(247.5)
Issuance of 340,048 shares under stock-based compensation plans	—		(13.9)		7.7		26.8		—		20.6
Contribution of 149,543 shares to 401(k) plan	—		—		24.3		7.6		—		31.9
Dividends of $3.45 per share	—		—		(277.5)		—		—		(277.5)
Balance as of December 28, 2024	$	124.1	$	840.6	$	5,151.2	$	(3,347.5)	$	(456.1)	$	2,312.3
Cumulative-effect adjustment upon adoption of accounting standard update(1)	—		—		10.2		—		—		10.2
Net income	—		—		688.0		—		—		688.0
Other comprehensive income (loss), net of tax	—		—		—		—		46.4		46.4
Repurchase of 3,236,106 shares for treasury	—		—		—		(575.6)		—		(575.6)
Issuance of 119,495 shares under stock-based compensation plans	—		(6.3)		13.2		8.4		—		15.3
Contribution of 193,703 shares to 401(k) plan	—		—		23.3		10.6		—		33.9
Dividends of $3.70 per share	—		—		(288.4)		—		—		(288.4)
Balance as of December 31, 2025	$	124.1	$	834.3	$	5,597.5	$	(3,904.1)	$	(409.7)	$	2,242.1

(1) In the first quarter of 2025, we adopted accounting guidance that requires crypto assets to be measured at fair value, which resulted in an adjustment to reflect the difference between the carrying value of our holdings in crypto assets and their fair value as of the beginning of 2025. Crypto assets were not material to the Consolidated Financial Statements.

See Notes to Consolidated Financial Statements

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Consolidated Statements of Cash Flows

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Operating Activities
Net income	$	~~704~~688.90	$	~~503~~704.09	$	~~757~~503.10
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	~~197~~206.14		~~187~~197.41		~~177~~187.4
Amortization	~~115~~121.18		~~111~~115.01		~~113~~111.30
Provision for credit losses and sales returns	4751.42		4947.94		5049.19
Stock-based compensation	2827.79		2228.37		4722.43
Deferred taxes and other non-cash taxes	(1819.59)		(2418.45)		18(24.4)
Other non-cash expense and loss (income and gain), net	6748.28		3767.12		2337.51
Changes in assets and liabilities and other adjustments:
Trade accounts receivable	~~(107~~44.3)0		(16107.73)		(2216.17)
Inventories	~~(90~~53.7)2		~~111~~(90.7)		~~(140~~111.7)
Accounts payable	~~106~~(144.74)		~~(87~~106.6)7		68(87.26)
Taxes on income	40(5.21)		~~(18~~40.7)2		(18.97)
Other assets	~~(48~~3.0)8		37(48.70)		1537.37
Other liabilities	(~~104~~194.03)		(86104.70)		(~~165~~86.87)
Net cash provided by operating activities	~~938~~881.84		~~826~~938.08		~~961~~826.0
Investing Activities
Purchases of property, plant and equipment	(~~208~~169.80)		(~~265~~208.38)		(~~278~~265.13)
Purchases of software and other deferred charges	(31.04)		(1931.80)		(2019.48)
Proceeds from company-owned life insurance policies	—		~~48.1~~—		—48.1
Purchases of Argentine Blue Chip Swap securities	~~(34.2)~~—		—(34.2)		—
Proceeds from sales of Argentine Blue Chip Swap securities	~~24.0~~—		—24.0		—
Proceeds from sales of property, plant and equipment	22.6		1.06		21.30
Proceeds from insurance and sales (purchases) of investments, net	103.15		110.91		1.9
Proceeds from sale of venture investment	—		—		1.1
Proceeds from settlement of net investment hedges	6.2		—		—
Payments for acquisitions, net of cash acquired, and venture investments	(3.8)		(224.9)		(39.5)
Payment for settlement of net investment hedges	(26.1)		—		—
Net cash used in investing activities	(243.1)		(459.0)		(332.7)
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)
Financing Activities
Net increase (decrease) in borrowings with maturities of three months or less	~~(269~~422.0)5		(36269.60)		34(36.6)
Additional long-term borrowings	~~539~~576.25		~~394~~539.92		—394.9
Repayments of long-term debt and finance leases	(~~308~~559.14)		(~~255~~308.91)		(6255.39)
Dividends paid	(~~277~~288.54)		(~~256~~277.75)		(~~238~~256.97)
Share repurchases	(~~247~~572.53)		(~~137~~247.5)		(~~379~~137.5)
Net (tax withholding) proceeds related to stock-based compensation	(812.48)		(~~23.~~8.4)		(2523.18)
Other	(4.8)		(1.6)		—
Proceeds from settlement of fair value hedges	32.8		—		—
Net cash used in financing activities	(576.1)		(317.2)		(615.2)
Payments for settlement of fair value hedges	(13.5)		—		—
Effect of foreign currency translation on cash balances	(5.5)		(2.0)		(8.6)
Other	(.3)		(4.8)		(1.6)
Increase (decrease) in cash and cash equivalents	114.1		47.8		4.5
Net cash used in financing activities	(414.9)		(576.1)		(317.2)
Cash and cash equivalents, beginning of year	215.0		167.2		162.7
Effect of foreign currency translation on cash balances	3.2		(5.5)		(2.0)
Cash and cash equivalents, end of year	$	329.1	$	215.0	$	167.2
Increase (decrease) in cash and cash equivalents	(126.3)		114.1		47.8
Cash and cash equivalents, beginning of year	329.1		215.0		167.2
Cash and cash equivalents, end of year	$	202.8	$	329.1	$	215.0

See Notes to Consolidated Financial Statements

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Notes to Consolidated Financial Statements

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Principles of Consolidation

Our Consolidated Financial Statements include the accounts of majority-owned and controlled subsidiaries. Intercompany accounts, transactions and profits are eliminated in consolidation.

Fiscal Year

Accounting Guidance Updates

~~Segment~~Crypto ~~Disclosures~~Assets

In the ~~fourth~~first quarter of ~~2024~~2025, we adopted guidance related to the accounting for and disclosure of crypto assets that requires ~~additional~~crypto ~~disclosures~~assets ~~about~~to ~~significant~~be ~~segment~~measured ~~expenses.~~at ~~See~~fair ~~Note 15~~value, ~~“Segment~~which resulted in an adjustment to reflect the difference between the carrying value of our crypto assets and ~~Disaggregated~~their ~~Revenue~~fair ~~Information,”~~value ~~for~~as ~~more~~of ~~information~~the beginning of 2025. The impact of our adoption of this guidance was not material to our financial statements or disclosures.

Income Taxes

In the fourth quarter of 2025, we prospectively adopted guidance that requires additional disclosures in the income tax rate reconciliation and income taxes paid. See Note 14, “Taxes Based on Income,” for more information.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions for the reporting period and as of the date of our financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenue and expense. As the effects of future events cannot be determined, actual results could differ significantly from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents generally consist of cash on hand, deposits in banks, cash-in-transit, and bank drafts and short-term investments with maturities of three months or less when purchased or received. The carrying value of these assets approximates fair value due to the short maturity of these instruments.

Inventories

We state inventories at the lower of cost or net realizable value and categorize them as raw materials, work-in-progress or finished goods. Cost is determined using the first-in, first-out method. We record inventory that is damaged, obsolete, excess and slow-moving to cost of products sold and establish a lower cost basis for that inventory. Slow-moving inventory is reviewed by category and may be recognized partially or fully to cost of products sold depending on the type of product, level of usage and length of time the product has been included in inventory.

~~Trade Accounts Receivable~~ 47

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~~condition~~Trade ofAccounts ~~customers;~~Receivable ~~the aging of receivable balances; our historical collection experience; and current and expected future macroeconomic and market conditions.~~

We record trade accounts receivable at the invoiced amount. Our allowances for credit losses reflect customer trade accounts receivable that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable values. We record these allowances based on estimates related to the financial condition of customers; the aging of receivable balances; our historical collection experience; and current and expected future macroeconomic and market conditions.

Property, Plant and Equipment

We generally compute depreciation using the straight-line method over the estimated useful lives of the respective assets, ranging from ten to 45 years for buildings and improvements and three to 15 years for machinery and equipment. Leasehold improvements are depreciated over the shorter of the asset's useful life ~~of the asset~~ and the ~~term of the~~ associated lease term. We expense maintenance and repair costs as incurred; we capitalize renewals and improvements. Upon the sale or retirement of assets, the accounts are relieved of the cost and the related accumulated depreciation, with any resulting gain or loss included in net income.

Leases

Our leases primarily relate to office and warehouse space, machinery, transportation, and equipment for information technology. We determine if an arrangement is a lease or contains a lease at inception. For lease accounting purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and liabilities for short-term leases. We have options to renew or terminate some of our leases. We evaluate renewal and termination options at the lease commencement date and over the lease term to determine if we are reasonably certain to exercise these options. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred.

Software

We capitalize software costs incurred during the application development stage of software development, including costs incurred for design, coding, installation to hardware, testing, and upgrades and enhancements that provide the software or hardware with additional functionalities and capabilities. We expense software costs, including internal and external training costs and maintenance costs, incurred during the preliminary project stage and the post-implementation and/or operation stage. Capitalized software, which is included in “Other assets” in the Consolidated Balance Sheets, is amortized on a straight-line basis over the estimated useful life of the software, which is generally between five and ten years.

Cloud Computing Arrangements

We capitalize certain costs incurred during the application development stage of implementation under a hosting arrangement that is a service contract. We expense costs incurred during the preliminary project stage and the post-implementation and/or operation stage. Capitalized implementation costs, which are included in “Other assets” in the Consolidated Balance Sheets, are amortized on a straight-line basis over the term of the hosting arrangement plus optional renewal periods, which is generally between five and ten years.

Venture Investments

We primarily invest in privately held companies and utilize the measurement alternative for ~~equity~~venture investments that do not have readily determinable fair values, measuring them at cost less impairment plus or minus observable price changes in an orderly transaction. Venture investments that are publicly traded companies are recorded at fair value using Level 1 inputs. The carrying value of our venture investments is included in “Other assets” in the Consolidated Balance Sheets.

See Note 9, “Fair Value Measurements,” for more information.

Impairment of Long-lived Assets

We record impairment charges when the carrying amounts of long-lived assets are determined not to be recoverable. We measure recoverability by comparing the undiscounted cash flows expected from the applicable asset or asset group’s use and eventual disposition to its carrying value. We calculate the amount of impairment loss as the excess of the carrying value over the fair value. Historically, changes in market conditions and management strategy have caused us to reassess the carrying amount of our long-lived assets.

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Goodwill and Other Intangibles Resulting from Business Acquisitions

We account for business combinations using the acquisition method, with the excess of the acquisition cost over the fair value of acquired net tangible assets and identified intangible assets considered goodwill. As a result, we disclose goodwill separately from other intangible assets. Other identifiable intangibles include customer relationships, patented and other developed technology, and trade names and trademarks.

47We perform an annual impairment test of goodwill during the fourth quarter and, as necessary, if changes in facts and circumstances that indicate the fair value of a reporting unit may be less than its carrying value. Factors that may cause us to perform an impairment test outside of our annual assessment include 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 our decision to divest a portion of a reporting unit. In performing impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative assessment. A quantitative assessment primarily uses the present value (discounted cash flow) method to determine the fair value of reporting units with goodwill.

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We perform an annual impairment test of goodwill during the fourth quarter and, as necessary, if changes in facts and circumstances that indicate the fair value of a reporting unit may be less than its carrying value. Factors that may cause us to perform an impairment test outside of our annual assessment include 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 our decision to divest a portion of a reporting unit. In performing impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill impairment. If the qualitative assessment indicates that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, we perform a quantitative assessment. A quantitative assessment primarily uses the present value (discounted cash flow) method to determine the fair value of reporting units with goodwill.

We compare the fair value of each reporting unit to its carrying amount, and, to the extent the carrying amount exceeds the unit’s fair value, we recognize an impairment of goodwill for the excess up to the amount of goodwill of that reporting unit.

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 ~~respective~~ forecasted sales, ~~operating~~profit margins and growth rates, as well as discount rates. Our assumptions about discount rates are based on the weighted average cost of capital ~~for~~of comparable companies. Our assumptions about sales, ~~operating~~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. We base our fair value estimates on projected financial information and assumptions that we believe are reasonable. However, actual future results may differ materially from these estimates and projections. The valuation methodology we use to estimate the fair value of reporting units requires inputs and assumptions that reflect current market conditions, as well as the impact of planned business and operational strategies that require management judgment. The estimated fair value could increase or decrease depending on changes in the inputs and assumptions.

We test indefinite-lived intangible assets, consisting of trade names and trademarks, for impairment in the fourth quarter or whenever events or circumstances indicate that it is more-likely-than-not that their carrying amounts exceed their fair values. In performing the impairment tests, we have the option first to assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for indefinite-lived intangible asset impairment. If we decide not to perform a qualitative assessment, or if the qualitative assessment indicates that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is less than its carrying value, we perform a quantitative assessment. Fair value is estimated as the discounted value of future revenues using a royalty rate that a third party would pay to use the asset. Variation in the royalty rates could impact our estimate of fair value. If the carrying amount of an asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

We amortize finite-lived intangible assets, consisting of customer relationships, patented and other developed technology, trade names and trademarks, and other intangibles, on a straight-line basis over their estimated useful lives.

See Note 3, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” for more information.

Foreign Currency

We translate asset and liability accounts of international operations into U.S. dollars at current rates. Revenues and expenses are translated at the weighted average currency rate for the fiscal year. We record gains and losses resulting from hedging the value of investments in certain international operations and from the translation of balance sheet accounts directly as a component of other comprehensive income.

We account for our operations in Argentina as highly inflationary because the country’s three-year cumulative inflation rate exceeds 100%. As a result, the functional currency of our Argentine subsidiary is the U.S. dollar.

Financial Instruments

We enter into foreign currency exchange derivative ~~contracts~~instruments to reduce our risk from exchange rate fluctuations associated with receivables, payables, loans and firm commitments denominated in certain foreign currencies that arise primarily as a result of our operations outside the U.S. From time to time, we enter into interest rate contracts to help manage our exposure to certain interest rate fluctuations. We also enter into futures contracts to hedge certain price fluctuations for a portion of our anticipated domestic purchases of natural gas. The maximum length of time for which we hedge our exposure to the variability in future cash flows is 36 months for forecasted foreign currency exchange and commodity transactions and 10ten years for cross-currency swap transactions.

On the date we enter into a derivative contract, we determine whether the derivative will be designated as a hedge. Other derivatives not designated as hedges are recorded at fair value, with changes in fair value recognized in earnings. Our policy is not to purchase or hold any foreign currency, interest rate or commodity contracts for trading purposes.49

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~~All~~On ~~derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in~~ the ~~Consolidated~~date ~~Balance~~we ~~Sheets.~~enter ~~Accounting~~into ~~for the gain or loss resulting from the changes in the fair value of~~ a derivative ~~financial~~ instrument, ~~depends~~we ondetermine whether the it ~~has~~will ~~been~~be designated as ~~part of~~ a ~~hedging~~hedge. ~~relationship~~Other ~~and~~derivative isinstruments ~~highly~~not ~~effective,~~designated as ~~well~~hedges asare ~~the~~recorded ~~nature~~at offair ~~the~~value, ~~hedging~~with ~~activity.~~changes Wein ~~formally~~fair ~~document~~value ~~all~~recognized ~~relationships~~in ~~between~~earnings. ~~derivative~~Our ~~financial~~policy ~~instruments~~is ~~accounted~~not ~~for~~to aspurchase ~~designated~~or ~~hedges,~~hold ~~the~~any ~~hedged~~foreign ~~item~~currency, ~~the~~interest ~~method~~rate ~~for~~or ~~assessing~~commodity ~~effectiveness~~contracts ~~and~~for ~~the~~trading ~~treatment of excluded components~~purposes. ~~These financial instruments can be designated as:~~

~~•Fair~~All ~~value~~derivative ~~hedges~~instruments -are ~~Hedges~~accounted offor ~~the~~at ~~change in the~~ fair value ofand a recognized ~~asset~~as orassets ~~liability. The gain~~ or ~~loss~~liabilities ~~from~~in the ~~derivative,~~Consolidated asBalance ~~well~~Sheets. asAccounting for the ~~offsetting~~ gain or loss onresulting ~~the~~from ~~hedged~~changes ~~item~~in ~~attributable~~the tofair ~~the~~value ~~hedged~~of ~~risk,~~a ~~are~~derivative ~~recognized~~instrument independs ~~income~~on ~~during~~whether ~~the~~it ~~period~~has ofbeen ~~the~~designated ~~change~~as inpart ~~fair~~of ~~value.~~a ~~Hedge~~hedging ~~effectiveness~~relationship and is ~~based~~highly oneffective, ~~the~~as ~~spot~~well ~~method~~as ~~and~~the ~~expected~~nature toof bethe ~~perfectly~~hedging ~~effective~~activity. ~~Excluded~~We ~~components~~formally ~~are~~document ~~not~~all ~~included~~relationships inbetween ~~the~~derivative ~~effectiveness~~instruments ~~assessment,~~accounted ~~recognized~~for inas adesignated ~~systematic~~hedges, ~~and~~the ~~rational~~hedged ~~method~~item, ~~over~~ the ~~term~~method offor ~~the~~assessing ~~contracts~~effectiveness and ~~recorded~~the totreatment ~~the~~of ~~same~~excluded ~~income~~components. ~~statement~~These ~~line~~financial asinstruments ~~the~~can ~~item~~be ~~being~~designated ~~hedged.~~as:

•~~Cash~~Fair ~~flow~~value hedges - Hedges toof ~~reduce~~the change in the ~~variability~~fair value of ~~future~~a ~~expected~~recognized ~~cash~~asset ~~flows~~or liability. ~~For~~The ~~derivative~~gain ~~instruments~~or ~~that~~loss ~~are~~from ~~designated~~the ~~and~~derivative ~~qualify~~instrument, as ~~cash~~well ~~flow~~as ~~hedges,~~ the ~~entire~~offsetting gain or loss on the ~~derivative~~hedged isitem ~~reported~~attributable asto athe ~~component~~hedged ofrisk, ~~“Accumulated~~are ~~other~~recognized ~~comprehensive~~in ~~loss”~~income ~~and~~during ~~reclassified~~the ~~into~~period ~~earnings~~of the change in ~~the~~fair ~~same~~value. ~~period(s)~~Hedge ~~during~~effectiveness ~~which~~is based on the ~~hedged~~spot ~~transaction~~method ~~impacts~~and ~~earnings~~expected to be perfectly effective. ~~Gains~~Excluded ~~and~~components ~~losses~~are onnot ~~these~~included ~~derivatives~~in the effectiveness assessment, ~~representing~~recognized ~~hedge~~in ~~components~~a ~~excluded~~systematic ~~from~~and rational method over the ~~assessment~~term of ~~effectiveness,~~the ~~are~~contracts ~~recognized~~and inrecorded ~~current~~to ~~earnings~~the same income statement line as the item being hedged.

•~~Net~~Cash ~~investment~~flow hedges - Hedges ofto reduce the ~~currency~~variability ~~exposure~~of ~~related~~future toexpected acash ~~net~~flows. ~~investment~~For inderivative ainstruments ~~foreign~~that ~~operation.~~are ~~The~~designated and qualify as cash flow hedges, the entire gain or loss ~~from~~on the derivative ~~financial~~ instrument is ~~recognized~~reported as ~~foreign~~a ~~currency~~component ~~translation~~of ~~in "~~“Accumulated other comprehensive loss"” ~~until~~and ~~the~~reclassified ~~hedged~~into ~~net~~earnings ~~investment~~in ~~is either sold or substantially liquidated. Hedge effectiveness is based on~~ the ~~spot~~same ~~method,~~period(s) ~~with~~during nowhich ~~ineffectiveness expected over~~ the ~~duration~~hedged oftransaction ~~the~~impacts ~~hedging relationship~~earnings. ~~Excluded~~Gains ~~components~~and ~~are~~losses ~~not~~on ~~included~~these inderivative ~~the effectiveness assessment~~instruments, ~~recorded~~representing inhedge acomponents ~~systematic~~excluded ~~and~~from ~~rational basis over~~ the ~~term~~assessment of ~~the contracts and recorded to “Marketing~~effectiveness, ~~general~~are ~~and~~recognized ~~administrative expense”~~ in ~~the~~current ~~Consolidated Statements of Income~~earnings.

We•Net ~~assess,~~investment ~~both~~hedges at- ~~the~~Hedges ~~inception~~ of ~~any~~the ~~hedge~~currency ~~and~~exposure onrelated anto ~~ongoing~~a ~~basis,~~net ~~whether~~investment ~~our~~in ~~hedges~~a ~~are~~foreign ~~highly effective~~operation. IfThe wegain ~~determine~~or ~~that~~loss afrom ~~hedge~~the isderivative ~~not~~instrument ~~highly~~is ~~effective,~~recognized weas ~~prospectively~~foreign ~~discontinue~~currency ~~hedge~~translation ~~accounting.~~in ~~For~~"Accumulated ~~cash flow hedges, we record gains and losses as components of~~ other comprehensive ~~income~~loss" ~~and~~until ~~reclassify them into earnings in~~ the ~~same~~hedged ~~period~~net ~~during~~investment ~~which~~is ~~the~~either ~~hedged~~sold ~~transaction~~or ~~affects~~substantially ~~earnings~~liquidated. InHedge ~~the~~effectiveness ~~event~~is ~~that~~based on the ~~anticipated~~spot ~~transaction~~method, iswith no ~~longer~~ineffectiveness ~~highly~~expected ~~probable~~over ~~to occur, we recognize~~ the ~~change~~duration ~~in fair value~~ of the hedging ~~instrument~~relationship. inExcluded ~~current~~components ~~period~~are ~~earnings.~~not Weincluded ~~recognize changes~~ in ~~fair~~the ~~value~~effectiveness ~~hedges~~assessment, recorded in ~~current~~a ~~period~~systematic ~~earnings.~~and Werational ~~also~~basis ~~recognize~~over ~~changes in~~ the ~~fair~~term ~~value~~ of ~~underlying~~the ~~hedged~~contracts ~~items~~and ~~(such~~recorded asto ~~recognized~~“Marketing, ~~assets~~general ~~or liabilities) in current period earnings~~ and ~~offset~~administrative ~~the~~expense” ~~changes~~ in the ~~fair~~Consolidated ~~value~~Statements of ~~the derivative~~Income.

We assess, both at the inception of any hedge and on an ongoing basis, whether our hedges are highly effective. If we determine that a hedge is not highly effective, we prospectively discontinue hedge accounting. For cash flow hedges, we record gains and losses as components of other comprehensive income and reclassify them into earnings in the same period during which the hedged transaction affects earnings. In the event that the anticipated transaction is no longer highly probable to occur, we recognize the change in fair value of the hedging instrument in current period earnings. We recognize changes in fair value hedges in current period earnings. We also recognize changes in the fair value of underlying hedged items (such as recognized assets or liabilities) in current period earnings and offset the changes in the fair value of the derivative instrument.

In the Consolidated Statements of Cash Flows, hedges are classified in the same category as the hedged item.

See Note 5, “Financial Instruments,” for more information.

Fair Value Measurements

We define fair value as the price that would be received from selling an asset or paid for transferring a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability.

We determine fair value based on a three-tier fair value hierarchy, which we use to prioritize the inputs used in measuring fair value. These tiers consist of Level 1, which are observable inputs such as quoted prices in active markets; Level 2, which are inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, which are unobservable inputs for which little or no market data exists, requiring us to develop our own assumptions to determine the best estimate of fair value.

~~Revenue Recognition~~50

Substantially all of our revenue is derived from the sale of products. Our Materials Group reportable segment sells pressure-sensitive label materials, films, performance tapes and fasteners. Our Solutions Group reportable segment sells a wide variety of branding and information solutions-oriented products, such as tickets, tags, labels (including RFID inlays), as well as related equipment, services and supplies, that provide our customers with solutions to optimize branding and engagement with their consumers and enable item visibility and traceability. We recognize revenue for an amount that reflects the consideration which we expect from the sale of our products when we satisfy a performance obligation by transferring control of our products to a customer. We consider a number of factors in determining when we have transferred control to a customer, including the following: (i) our present right to payment; (ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Generally, there are no substantive differences in revenue recognition considerations among our various products. Control generally transfers to a customer upon shipment or delivery, depending on the specific terms of sale with the customer.

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Revenue Recognition

Substantially all of our revenue is derived from the sale of products. Our Materials Group reportable segment sells pressure-sensitive label materials (including label materials with RFID inlays), films for graphic and reflective products, performance tapes and other adhesive products for industrial, medical and other applications, as well as fastener solutions. Our Solutions Group reportable segment sells a wide variety of branding and information solutions-oriented products, such as tickets, tags, labels (including RFID inlays), as well as related equipment, services and supplies. We recognize revenue in an amount that reflects the consideration which we expect from the sale of our products when we satisfy a performance obligation by transferring control of our products to a customer. We consider a number of factors in determining when we have transferred control to a customer, including the following: (i) our present right to payment; (ii) the customer’s legal title to the asset; (iii) physical possession of the asset; (iv) the customer’s significant risks and rewards of ownership of the asset; and (v) the customer’s acceptance of the asset. Generally, there are no substantive differences in revenue recognition considerations among our various products. Control generally transfers to a customer upon shipment or delivery, depending on the specific terms of sale with the customer.

Our payment terms with customers are generally consistent with those used in the industries and regions in which we operate.

We accept sales returns in certain limited circumstances. We record a liability for estimated returns and a corresponding reduction to sales in the amount we expect to repay or credit customers, which we base on historical returns and outstanding customer claims. We update our estimates each reporting period.

Sales rebates, discounts and other customer concessions represent variable consideration and are common in the industries and regions in which we operate, which we account for as a reduction to sales based on estimates at the time at which products are sold. We base these estimates on our historical experience, as well as current information such as sales forecasts. We regularly review our estimates and adjust the revenue recognized from sales as necessary as additional information becomes available.

We exclude sales ~~tax~~, value-added ~~tax~~ and other taxes we collect from customers from sales. We account for shipping and handling activities after control of a product is transferred to a customer as fulfillment costs and not as separate performance obligations. As a practical expedient, we have elected not to disclose the value of unsatisfied performance obligations for contracts with an expected length of less than one year. We ~~generally~~ expense sales commissions when incurred because their expected amortization period is one year or less. We record these costs in “Marketing, general and administrative expense” in the Consolidated Statements of Income.

Research and Development

Research and development costs are related to research, design and testing of new products and applications, which we expense as incurred.

Long-Term Incentive Compensation

No long-term incentive compensation expense was capitalized in ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023.

Valuation of Stock-Based Awards

We base our stock-based compensation expense on the fair value of awards, adjusted for estimated forfeitures, amortized on a straight-line basis over the requisite service period for stock options and restricted stock units (“RSUs”). We base compensation expense for performance units (“PUs”) on the fair value of awards, adjusted for estimated forfeitures, and amortized on a straight-line basis as these awards cliff-vest at the end of the requisite service period. We base compensation expense related to market-leveraged stock units (“MSUs”) on the fair value of awards, adjusted for estimated forfeitures, and amortized on a graded-vesting basis over their respective performance periods.

Compensation expense for awards with a market condition as a performance objective, which includes MSUs and a component of PUs, is not adjusted if the condition is not met, as long as the requisite service period is met.

We estimate the fair value of stock options as of the ~~date of~~ grant date using the Black-Scholes option-pricing model. This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest rate and expected option term.

We determine the fair value of RSUs and the component of PUs that is subject to the achievement of a performance objective using a financial performance condition based on the fair market value of our common stock as of the ~~date of~~ grant date, adjusted for foregone dividends. Over the performance period of the PUs, the estimated number of shares of our common stock issuable upon vesting is adjusted upward or downward from the target shares ~~at the time of grant~~ based on the probability of the performance objectives established for the award being achieved.

We determine the fair value of stock-based awards that are subject to the achievement of performance objectives based on a market condition, which includes MSUs and the other component of PUs, using the Monte-Carlo simulation method, 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 performance objectives established for the award.

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Certain of these assumptions are based on management’s estimates, in consultation with outside specialists. Significant changes in assumptions for future awards and actual forfeiture rates could materially impact stock-based compensation expense and our results of operations.

Valuation of Cash-Based Awards

Cash-based awards consist of long-term incentive units (“LTI Units”) ~~granted to eligible employees~~. We classify LTI Units as liability awards and remeasure them at each quarter-end over the applicable vesting or performance period. In addition to LTI Units with terms and conditions that mirror those of RSUs, we also grant certain employees LTI Units with terms and conditions that mirror those of PUs and MSUs.

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Forfeitures

We estimate expected forfeitures in determining the compensation cost to be recognized each period, rather than accounting for forfeitures as they occur. We record changes in estimated forfeiture rates as cumulative adjustments in the period estimates are revised.

See Note 12, “Long-term Incentive Compensation,” for more information.

Taxes Based on Income

See Note 14, “Taxes Based on Income,” for more information.

Reclassifications

Certain prior-period amounts have been reclassified to conform to the current-year presentation. Refer to Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information.

Recent Accounting Requirements

In ~~November~~September ~~2024~~2025, the Financial Accounting Standards Board (“FASB”) issued guidance ~~expanding~~changing the ~~disclosure~~capitalization ~~requirements~~criteria for ~~certain~~internal-use ~~expenses~~software, ineliminating ~~notes~~references to ~~consolidated~~project ~~financial~~stages ~~statements~~and requiring that projects meet completion probability before costs can be capitalized. ~~The~~This guidance is effective for ~~annual~~fiscal ~~reporting~~years ~~periods~~ beginning after December 15, ~~2026~~2027, ~~and~~including interim ~~reporting~~ periods ~~beginning~~within ~~after~~those ~~December~~fiscal ~~15, 2027~~years. Early adoption is permitted. We are currently assessing the impact of adopting this guidance on our consolidated financial ~~statement disclosures~~statements.

In November 2024, the FASB issued guidance expanding the disclosure requirements for certain expenses in notes to consolidated financial statements. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently assessing the impact of adopting this guidance on our consolidated financial statement disclosures.

NOTE 2. BUSINESS ACQUISITIONS

2025 Business Acquisition

We funded the Taylor Adhesives acquisition using cash and proceeds from our issuance of senior notes in September 2025.

The Taylor Adhesives acquisition was not material to the Consolidated Financial Statements.

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2023 Business Acquisitions

The acquisitions of Silver Crystal, Lion Brothers and Thermopatch are referred to collectively as the "2023 Acquisitions."

The 2023 Acquisitions were not material, individually or in the aggregate, to the Consolidated Financial Statements.

2022 Business Acquisitions

In January 2022, we completed our business acquisitions of TexTrace AG ("TexTrace"), a Switzerland-based technology developer specializing in custom-made woven and knitted RFID products that can be sewn onto or inserted into garments, and Rietveld Serigrafie B.V. and Rietveld Screenprinting Serigrafi Baski Matbaa Tekstil Ithalat Ihracat Sanayi ve Ticaret Limited Sirketi (collectively, "Rietveld"), a Netherlands-based provider of external embellishment solutions and application and printing methods for performance brands and team sports in Europe. These acquisitions expanded the product portfolio in our Solutions Group reportable segment. The acquisitions of TexTrace and Rietveld are referred to collectively as the "2022 Acquisitions."

The aggregate purchase consideration for the 2022 Acquisitions was approximately $35 million. We funded the 2022 Acquisitions using cash and commercial paper borrowings. In addition to the cash paid at closing, the sellers in one of these acquisitions are eligible for earn-out payments of up to $30 million, subject to the acquired company achieving certain post-acquisition performance targets. As of the acquisition date, we included an estimate of the fair value of these earn-out payments in the aggregate purchase consideration.

The 2022 Acquisitions were not material, individually or in the aggregate, to the Consolidated Financial Statements.

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NOTE 3. GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS

Goodwill

Results from our annual goodwill impairment test in the fourth quarter of ~~2024~~2025 indicated that no impairment occurred during ~~2024~~2025. The assumptions used in our assessment were primarily based on Level 3 inputs.

Changes in the net carrying amount of goodwill for ~~2024~~2025 and ~~2023~~2024 by reportable segment are shown below.

(In millions)	Materials Group		Solutions Group		Total
Goodwill as of December 31, 2022	$	618.7	$	1,243.7	$	1,862.4
Goodwill as of December 30, 2023	$	630.7	$	1,382.9	$	2,013.6
Acquisitions(1)	—		135.0		135.0
Acquisition adjustments(1)	—		(2.7)		(2.7)
Translation adjustments	12.0		4.2		16.2
Goodwill as of December 30, 2023	630.7		1,382.9		2,013.6
Acquisition adjustments(2)	—		(2.7)		(2.7)
Translation adjustments	(24.6)		(10.1)		(34.7)
Goodwill as of December 28, 2024	$606.1	~~606.1~~	$1,370.1	~~1,370.1~~	$1,976.2	~~1,976.2~~
Acquisition(2)	237.6		—		237.6
Translation adjustments	42.3		16.4		58.7
Goodwill as of December 31, 2025	$	886.0	$	1,386.5	$	2,272.5

(1)~~Goodwill~~ ~~acquired~~Measurement period adjustments related to the ~~2023~~finalization ~~Acquisitions. We expect substantially all~~ of the ~~recognized~~purchase ~~goodwill~~price ~~related~~allocation tofor ~~the~~our 2023 Acquisitions ~~not to be deductible for income tax purposes~~.

(2)~~Measurement~~ ~~period~~Goodwill ~~adjustments~~acquired related to ~~the~~our ~~finalization~~2025 acquisition of Taylor Adhesives. We expect nearly all of the ~~purchase~~recognized ~~price~~goodwill ~~allocation~~related to this acquisition not to be deductible for ~~our~~income ~~2023~~tax ~~Acquisitions~~purposes.

The carrying amounts of goodwill at December 2831, ~~2024~~2025 and December 3028, ~~2023~~2024 were net of accumulated impairment losses of approximately $820 million recognized in fiscal year 2009 by our Solutions Group reportable segment.

Indefinite-Lived Intangible Assets

~~Results~~In ~~from~~connection with our ~~annual~~acquisition of Taylor Adhesives, we acquired $18.7 million of identifiable indefinite- lived intangible assets, ~~impairment~~consisting ~~test~~of intrade names and trademarks. We utilized the ~~fourth~~income ~~quarter~~approach ~~indicated~~to ~~that~~estimate nothe ~~impairment~~fair ~~occurred~~values inof ~~2024~~intangible assets, primarily using Level 3 inputs. ~~The~~We ~~carrying~~applied significant judgment in determining the fair value of ~~indefinite-lived~~ intangible assets, ~~resulting~~which ~~from~~included ~~business~~our ~~acquisitions,~~estimates ~~consisting~~and ofassumptions ~~trade~~with ~~names~~respect ~~and~~to ~~trademarks,~~the ~~was~~estimated ~~$154.5~~future ~~million~~revenue and ~~$155.3~~related ~~million~~profit atmargins, ~~December 28~~royalty rates, ~~2024~~discount rates and ~~December 30,~~economic ~~2023,~~lives ~~respectively~~assigned to the acquired intangible assets.

Results from our annual indefinite-lived intangible assets impairment test in the fourth quarter indicated that no impairment occurred during 2025. The carrying value of indefinite-lived intangible assets resulting from business acquisitions, consisting of trade names and trademarks, was $174.8 million and $154.5 million at December 31, 2025 and December 28, 2024, respectively.

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Finite-Lived Intangible Assets

In connection with ~~the~~our ~~2023~~acquisition ~~Acquisitions~~of Taylor Adhesives, we acquired ~~approximately~~ $94139.6 million of identifiable finite-lived intangible assets, which consisted of customer relationships, ~~patented~~ and ~~other~~ developed technology~~, and trade names and trademarks~~. We utilized the income approach to estimate the fair value of acquired identifiable intangibles, primarily using Level 3 inputs. We applied significant judgment in determining the fair value of intangible assets, which included our estimates and assumptions with respect to estimated future revenue and related profit margins, customer retention rates, technology migration curves, royalty rates, discount rates and economic lives assigned to the acquired intangible assets.

The table below summarizes the amounts and ~~weighted average~~ useful lives of the intangible assets associated with ~~the~~our ~~2023~~acquisition ~~Acquisitions~~of Taylor Adhesives as of ~~their~~the ~~respective~~ acquisition ~~dates~~date.

	Amount(in millions)		~~Weighted averageamortizationperiod~~Amortizationperiod(in years)
Customer relationships	$	68112.85	119
Patented and other developed technology	22.2		7
Developed technology	27.1		8
Trade names and trademarks	3.0		6

Refer to Note 2, “Business Acquisitions,” for more information.

52The table below sets forth our finite-lived intangible assets resulting from business acquisitions at December 31, 2025 and December 28, 2024, which continue to be amortized.

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	2025						2024
(In millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	1,040.8	$	509.5	$	531.3	$	916.0	$	438.5	$	477.5
Patented and other developed technology	305.0		187.2		117.8		275.2		156.8		118.4
Trade names and trademarks	17.5		14.0		3.5		17.1		12.8		4.3
Other intangibles	3.3		3.2		.1		3.2		2.6		.6
Total	$	1,366.6	$	713.9	$	652.7	$	1,211.5	$	610.7	$	600.8

~~The~~Amortization ~~table~~expense ~~below~~for ~~sets forth our~~ finite-lived intangible assets resulting from business acquisitions atwas ~~December 28,~~$92.8 ~~2024~~million ~~and~~for ~~December 30~~2025, ~~2023,~~$89.4 ~~which~~million ~~continue~~for to2024 beand ~~amortized~~$86.3 million for 2023.

	2024						2023
(In millions)	GrossCarryingAmount		AccumulatedAmortization		NetCarryingAmount		GrossCarryingAmount		AccumulatedAmortization		NetCarryingAmount
Customer relationships	$	916.0	$	438.5	$	477.5	$	922.5	$	383.7	$	538.8
Patented and other developed technology	275.2		156.8		118.4		278.3		130.2		148.1
Trade names and trademarks	17.1		12.8		4.3		17.4		11.7		5.7
Other intangibles	3.2		2.6		.6		3.2		2.0		1.2
Total	$	1,211.5	$	610.7	$	600.8	$	1,221.4	$	527.6	$	693.8

Amortization expense for finite-lived intangible assets resulting from business acquisitions was $89.4 million for 2024, $86.3 million for 2023 and $81.8 million for 2022.

We expect estimated amortization expense for finite-lived intangible assets resulting from business acquisitions for each of the next five fiscal years and thereafter to be as follows:

(In millions)	EstimatedAmortizationExpense
2025	$	88.2
2026	$	102.0
2026	85.4
2027	101.7
2027	85.0
2028	93.6
2028	77.2
2029	78.4
2029	61.8
2030	76.5
2030 and thereafter	203.2
2031 and thereafter	200.5

5354

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NOTE 4. DEBT

Short-Term Borrowings

We had no$101.5 million in outstanding borrowings from U.S. commercial paper as of December 2831, ~~2024~~2025 ~~and~~with ~~$112~~a ~~million~~weighted average interest rate of 3.93% and no outstanding borrowings from U.S. commercial paper ~~issuances~~ as of December 3028, ~~2023 with a weighted average interest rate of 5~~2024.~~54%.~~

We have a Euro-Commercial Paper Program under which we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $500 million. Proceeds from issuances under this program may be used for general corporate purposes. The maturities of the notes vary, but may not exceed 364 days from the date of issuance. Our payment obligations with respect to any notes issued under this program are backed by our revolving credit facility (the “Revolver”). There are no financial covenants under this program. WeUnder ~~had~~this ~~no outstanding balance as of December 28~~program, ~~2024~~we ~~and~~had a $~~199~~415.25 million outstanding ~~under~~balance ~~this program~~ as of December 3031, ~~2023~~2025 with a weighted average interest rate of 42.1319% and no outstanding balance as of December 28, 2024.

Short-Term Credit Facilities

In June 2024, we entered into a Credit Agreement (the "Credit Agreement") related to the Revolver to borrow up to an aggregate of $1.2 billion through its maturity date of June 26, 2029. The Revolver refinanced the prior revolving credit facility under the Fifth Amended and Restated Credit Agreement dated as of February 13, 2020, as amended. Pursuant to the Credit Agreement, the commitments under the Revolver may be increased by up to $600 million, subject to lender approvals and customary requirements. Under certain circumstances, we may request that the commitments under the Revolver be extended for one-year periods in accordance with the terms and conditions of the Credit Agreement. We use the Revolver as a back-up facility for our commercial paper program and for other corporate purposes.

No balance was outstanding under the Revolver as of December 2831, ~~2024~~2025 or ~~our prior revolving credit facility as of~~ December 3028, ~~2023~~2024. Commitment fees associated with revolving credit facilities in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023 were $1.53 million, $1.25 million and $01.92 million, respectively.

From time to time, we provide guarantees on certain arrangements with banks. Our exposure to these guarantees is not material.

Long-Term Borrowings

In ~~November~~September ~~2024~~2025, we issued €500 million of senior notes, due ~~November 4~~September 11, ~~2034~~2035, which bear an interest rate of 34.~~750~~000% per year, payable annually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and offering expenses, were approximately €~~495~~494 million ($~~539~~ 577 million), which we ~~intend~~used toin ~~use~~part to finance the Taylor Adhesives acquisition and repay existing indebtedness under our ~~€500 million~~commercial ofpaper ~~senior~~program. ~~notes~~Refer ~~maturing~~to inNote ~~March~~2, ~~2025~~“Business ~~and~~Acquisitions,” to the Consolidated Financial Statements for ~~general~~more ~~corporate~~information ~~purposes~~regarding our acquisition of Taylor Adhesives.

In the third quarter of 2025, we repaid our $5 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings.

In the second quarter of 2025, we repaid our $25 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings.

In August 2024, we repaid our $300 million of senior notes at maturity using cash flows from operations and commercial paper borrowings.

During 2024, we reclassified our $5 million of medium-term notes due in the third quarter of 2025, $25 million of medium-term notes due in the second quarter of 2025 and €500 million of senior notes due in the first quarter of 2025 from "Long-term debt and finance leases" to "Short-term borrowings and current portion of long-term debt and finance leases" in the Consolidated Balance Sheets.

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~~Our~~In ~~long-term~~March ~~debt~~2023, ~~and~~we ~~related~~issued ~~interest~~$400 million ~~rates~~of senior notes, atdue March 15, 2033, which bear an interest rate of 5.750% per year~~-end~~, ~~2024~~payable semiannually in arrears. Our net proceeds from this issuance, after deducting underwriting discounts and ~~2023~~offering isexpenses, ~~shown~~were ~~below~~$394.9 million, which we used to repay indebtedness under our commercial paper programs and our $250 million of senior notes that matured on April 15, 2023.

(In millions)	2024		2023
Long-term debt
Medium-term notes:
Series 1995 due 2025	$	30.0	$	30.0
Long-term notes:
Senior notes due 2024 at 0.85%	—		299.6
Senior notes due 2025 at 1.25%(1)	521.1		552.6
Senior notes due 2028 at 4.875%	497.4		496.7
Senior notes due 2030 at 2.650%	496.7		496.1
Senior notes due 2032 at 2.25%	495.7		495.1
Senior notes due 2033 at 6.0%	149.3		149.2
Senior notes due 2033 at 5.75%	395.8		395.3
Senior notes due 2034 at 3.75%(1)	515.9		—
Less amount classified as current	(551.1)		(299.6)
Total long-term debt(2)	$	2,550.8	$	2,615.0

Our long-term debt, and related interest rates, at year-end 2025 and 2024 is shown below.

(1) These senior notes are euro-denominated. The senior notes due in 2025 and 2034 each have a face value of €500 million.


(In millions)	2025		2024
Long-term debt
Medium-term notes:
Series 1995 due 2025	$	—	$	30.0
Long-term notes:


Senior notes due 2025 at 1.250%(1)	—		521.1
Senior notes due 2028 at 4.875%	498.0		497.4
Senior notes due 2030 at 2.650%	497.4		496.7
Senior notes due 2032 at 2.250%	496.3		495.7
Senior notes due 2033 at 6.000%	149.4		149.3
Senior notes due 2033 at 5.750%	396.3		395.8
Senior notes due 2034 at 3.750%(1)	582.0		515.9
Senior notes due 2035 at 4.000%(1)	579.6		—
Less amount classified as current	—		(551.1)
Total long-term debt(2)	$	3,199.0	$	2,550.8

(21) ~~Included~~These ~~unamortized~~senior ~~debt~~notes ~~issuance~~are ~~costs~~euro-denominated, ~~and~~each ~~debt~~with ~~discounts~~a offace ~~$12.6~~value ~~million and $7.9 million, respectively, as~~ of ~~year-end~~€500 ~~2024 and $11.3~~ million ~~and $7~~.~~4 million, respectively, as of year-end 2023.~~

At(2) ~~year-end~~Included ~~2024~~unamortized debt issuance costs and ~~2023~~debt discounts of $14.6 million and $10.2 million, ~~our~~respectively, ~~medium-term~~as ~~notes~~of ~~had~~year-end ~~accrued~~2025 ~~interest~~and at$12.6 amillion ~~weighted~~and ~~average~~$7.9 ~~fixed~~million, ~~rate~~respectively, as of 7year-end 2024.~~5%.~~

At year-end 2024, our medium-term notes had accrued interest at a weighted average fixed rate of 7.5%.

We expect maturities of our long-term debt for each of the next five fiscal years and thereafter to be as follows:

Year	(In millions)
2025	$	551.2
2026	$	—
2026	—
2027	—
2028	500.0
2029	—
2030 and thereafter	2,071.2
2030	500.0
2031 and thereafter	2,223.8

Refer to Note 7, “Commitments and Leases,” for information related to finance leases.

Other

The Revolver contains a financial covenant requiring that we maintain a specified ratio of total debt minus unrestricted cash and cash equivalents in excess of $50 million to a certain measure of income. As of December 2831, ~~2024~~2025 and December 3028, ~~2023~~2024, we were in compliance with this financial covenant.

Our total interest costs in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023 were $~~124~~138.03 million, $~~126~~124.50 million and $89126.85 million, respectively, of which $72.09 million, $7.50 million and $5.7.5 million, respectively, was capitalized as part of the cost of property, plant and equipment, capitalized software and capitalized implementation costs associated with cloud computing arrangements.

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NOTE 5. FINANCIAL INSTRUMENTS

We use various derivative ~~financial~~ instruments to manage risks in foreign currency exchange rates, commodity prices and interest rates. We recognize derivative ~~financial~~ instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets.

Fair Value Hedges

~~During~~We ~~2024,~~enter ~~we entered~~ into foreign currency forward contracts to hedge ~~a portion of~~ our ~~€500 million~~euro-denominated ofdebt ~~senior~~to ~~notes~~offset ~~due~~changes in the ~~first~~fair ~~quarter~~value of ~~2025~~the ~~and~~hedged ~~€500 million~~item ofattributable ~~senior~~to ~~notes~~foreign ~~due~~currency inrisk. ~~the~~As ~~fourth quarter~~ of ~~2034~~December to31, ~~offset~~2025, ~~changes~~the inforeign ~~the~~currency ~~fair~~forward ~~value~~contracts ofhedging ~~the~~our ~~hedged~~€500 ~~item~~million ~~attributable~~of tosenior ~~foreign~~notes ~~currency~~due ~~risk.~~in ~~The~~the ~~foreign~~third ~~currency~~quarter ~~forward~~of ~~contracts~~2035 ~~hedging~~and our €500 million of senior notes due in the fourth quarter of 2034 ~~have~~mature ain ~~maturity~~September ~~date~~2026 ofand December ~~2025~~2026, respectively.

Cash Flow Hedges

~~During~~We ~~2020, we~~ entered into U.S. dollar to euro cross-currency swap contracts with a total notional amount of $250 million to effectively convert our fixed-rate U.S. dollar-denominated debt into euro-denominated debt, including semiannual interest payments and the payment of principal at maturity. During the term of the ~~contract~~contracts, which ~~ends~~end on April 30, 2030, we pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars.

We designate commodity forward contracts on forecasted purchases of commodities as cash flow hedges.

During 2025 and 2024, we entered into interest rate forward-starting swap contracts that we designated as cash flow hedges that were terminated upon the issuance of our €500 million of senior notes due in the third quarter of 2035 and our €500 million of senior notes due in the fourth quarter of 2034. The resulting ~~gain~~gains and losses will be amortized to interest expense over the term of the hedged fixed-rate interest payments.

Net Investment Hedges

~~During~~We ~~2024,~~enter ~~we entered~~ into foreign currency ~~forward~~ contracts and zero-cost collars, ~~combining~~which ~~each~~are ~~pair~~combined as net investment hedges for accounting purposes. The ~~objective~~net ofinvestment ~~the~~hedges ~~hedging activity is to~~ minimize the effect of foreign currency exchange rates on our net investment in certain foreign operations between the sold put strike and ~~the~~bought ~~purchased~~ call strike rates of the contracts. ~~The~~As of December 31, 2025, the notional ~~amount~~value of these hedges ~~are~~totaled ~~approximately~~ €~~420~~1.0 ~~million~~billion, ~~and~~consisting of two €500 million ~~with~~tranches ~~maturity~~that ~~dates~~mature in ~~March~~September ~~2025~~2026 and December ~~2025, respectively~~2026.

Other ~~Derivatives~~Derivative Instruments

Our outstanding foreign currency exchange contracts as of December 2831, ~~2024~~2025 were recorded in various currencies, primarily the U.S. dollar, Canadian dollar, euro, Chinese renminbi, British pound sterling and Hong Kong dollar. We enter into foreign currency exchange contracts to reduce the risk from foreign currency exchange rate fluctuations associated with our receivables, payables, loans and firm commitments denominated in certain foreign currencies that arise primarily as a result of our operations outside the U.S. For other derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings.

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Derivative Instrument Financial Statement Impacts

The following table shows the fair value and balance sheet locations of ~~other~~our ~~derivatives~~derivative instruments as of December 2831, ~~2024~~2025 and December 3028, ~~2023~~2024:

(In millions)	Notional Amount		Other Current Assets		Other Non-Current Assets		Other Current Liabilities		Other Non-Current Liabilities		Type of Hedge
December 31, 2025
Derivatives designated as hedges:
Foreign currency forward contracts	$	1,173.8	$	—	$	—	$	—	$	4.5	Fair value
Cross-currency swap contracts	250.0		—		—		—		9.9		Cash flow
Commodity contracts	1.7		—		—		.3		—		Cash flow
Foreign currency forward contracts with collars	1,173.8		—		2.6		—		—		Net investment
Total			$	—	$	2.6	$	.3	$	14.4
Derivatives not designated as hedges:
Foreign currency exchange contracts	$	1,467.5	$	4.2	$	—	$	3.4	$	—
December 28, 2024
Derivatives designated as hedges:
Foreign currency forward contracts	$	958.9	$	.2	$	—	$	36.7	$	—	Fair value
Cross-currency swap contracts	250.0		—		10.9		—		—		Cash flow
Commodity contracts	2.9		.4		—		.4		—		Cash flow
Foreign currency forward contracts with collars	958.9		17.8		—		.2		—		Net investment
Total			$	18.4	$	10.9	$	37.3	$	—
Derivatives not designated as hedges:
Foreign currency exchange contracts	$	1,741.8	$	11.9	$	—	$	4.2	$	—
December 30, 2023
Derivatives designated as hedges:
Cross-currency swap contracts	$	250.0	$	—	$	2.3	$	—	$	—	Cash flow
Commodity contracts	5.8		—		—		1.4		.2		Cash flow
Total			$	—	$	2.3	$	1.4	$	.2
Derivatives not designated as hedges:
Foreign currency exchange contracts	$	1,336.6	$	6.3	$	—	$	6.0	$	—

The following tables show the components of the net gains (losses) recognized in income related to derivative instruments designated as fair value hedges:

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Gain (loss) on derivatives designated as fair value hedges:
Foreign currency forward contracts - Marketing, general and administrative expense	$	~~(36~~70.4)2	$	—(36.4)	$	—

The impact of the hedged items associated with the derivative instrument in the table above are recorded to the same income statement line as the derivative instrument. The net gains (losses) recognized in income related to our cross-currency swap contracts and commodity contracts were not material in ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023.

The ~~gain~~loss recognized in translation for net investment hedges was approximately $49 million for the year ended December 31, 2025. The gain recognized in translation for net investment hedges was approximately $15 million for the year ended December 28, 2024.

The following table shows the components of the net gains (losses) recognized in income related to the derivative instruments not designated as hedges:

(In millions)	Statements of Income Location	~~2024~~2025		~~2023~~2024		~~2022~~2023
Foreign currency exchange contracts	Cost of products sold	$	3(.29)	$	3.42	$	53.64
Foreign currency exchange contracts	Marketing, general and administrative expense	~~(15~~1.2)9		5(15.52)		(45.3)5
		$	~~(12~~1.0)	$	8(12.90)	$	18.39

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NOTE 6. PENSION AND OTHER POSTRETIREMENT BENEFITS

Defined Benefit Plans

We sponsor a number of defined benefit plans, the accrual of benefits under some of which has been frozen, covering eligible employees in the U.S. and certain other countries. Benefits payable to an employee are based primarily on years of service and the employee’s compensation during the course of his or her employment with our company.

We are also obligated to pay unfunded termination indemnity benefits to certain employees outside the U.S., which are subject to applicable agreements, laws and regulations. No costs related to these benefits have been included in the disclosures below because they have not been significant.

Plan Assets

Assets in our non-U.S. plans are invested in accordance with locally accepted practices and primarily include equity securities, fixed income securities, insurance contracts and cash. Asset allocations and investments vary by country and plan. Our target plan asset investment allocation for our non-U.S. plans in the aggregate is approximately 2526% in equity securities, 6158% in fixed income securities and cash, and 1416% in insurance contracts and other investments, subject to periodic fluctuations among these asset classes.

Fair Value Measurements

The valuation methodologies we use for assets measured at fair value are described below.

Cash is valued at nominal value. Cash equivalents and mutual funds are valued at fair value as determined by quoted market prices, based upon the net asset value (“NAV”) of shares held at year-end. Pooled funds are structured as collective trusts, not publicly traded and valued by calculating NAV per unit based on the NAV of the underlying funds/trusts as a practical expedient for the fair value of the pooled funds. The pooled funds are categorized by the investment strategy, which is primarily equity and fixed income securities. The pooled funds categorized as other investments are primarily investments in real estate funds. Insurance contracts are valued at book value, which approximates fair value and is calculated using the prior-year balance plus or minus investment returns and changes in cash flows.

These methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While we believe these valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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The following table sets forth, by level within the fair value hierarchy (as applicable), non-U.S. plan assets at fair value:

			Fair Value Measurements Using
(In millions)	Total		QuotedPricesin ActiveMarkets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantOtherUnobservableInputs(Level 3)
2025
Cash	$	1.6	$	1.6	$	—	$	—
Insurance contracts	52.6		—		—		52.6
Pooled funds – real estate investment trusts	4.2		—		—		4.2
Pooled funds – fixed income securities(1)	412.4
Pooled funds – equity securities(1)	198.6
Pooled funds – other investments(1)	63.1
Total non-U.S. plan assets at fair value	$	732.5
2024
Cash	$	2.1	$	2.1	$	—	$	—
Insurance contracts	39.0		—		—		39.0
Pooled funds – real estate investment trusts	5.3		—		—		5.3
Pooled funds – fixed income securities(1)	381.0
Pooled funds – equity securities(1)	174.2
Pooled funds – other investments(1)	57.9
Total non-U.S. plan assets at fair value	$	659.5
2023
Cash	$	1.3	$	1.3	$	—	$	—
Insurance contracts	42.6		—		—		42.6
Pooled funds – real estate investment trusts	6.4		—		—		6.4
Pooled funds – fixed income securities(1)	389.8
Pooled funds – equity securities(1)	169.4
Pooled funds – other investments(1)	53.7
Total non-U.S. plan assets at fair value	$	663.2

(1) Pooled funds that are measured at fair value using the NAV per unit (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table reconcile to total non-U.S. plan assets.

The following table presents a reconciliation of Level 3 non-U.S. plan asset activity during ~~2024~~2025 and ~~2023~~2024:

	Level 3 Assets
(In millions)	Insurance Contracts		Pooled Funds –Real EstateInvestment Trusts		Total
Balance at December 31, 2022	$	37.1	$	8.3	$	45.4
Balance at December 30, 2023	$	42.6	$	6.4	$	49.0
Net realized and unrealized gain (loss)	1.3		(2.3)		(1.0)
Purchases	3.5		—		3.5
Settlements	(2.8)		—		(2.8)
Acquisition	1.1		—		1.1
Impact of changes in foreign currency exchange rates	2.4		.4		2.8
Balance at December 30, 2023	42.6		6.4		49.0
Net realized and unrealized gain (loss)	1.1		(1.0)		.1
Purchases	3.7		—		3.7
Settlements	(5.8)		—		(5.8)
Impact of changes in foreign currency exchange rates	(2.6)		(.1)		(2.7)
Balance at December 28, 2024	$39.0	~~39.0~~	$5.3	~~5.3~~	$44.3	~~44.3~~
Net realized and unrealized gain (loss)	1.2		(1.5)		(.3)
Purchases	5.5		—		5.5
Settlements	(2.6)		—		(2.6)
Transfer	4.4		—		4.4
Impact of changes in foreign currency exchange rates	5.1		.4		5.5
Balance at December 31, 2025	$	52.6	$	4.2	$	56.8

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Plan Assumptions

Discount Rate

In consultation with our actuaries, we annually review and determine the discount rates used to value our pension and other postretirement obligations. The assumed discount rate for each pension plan reflects market rates for currently available high quality corporate bonds ~~currently available~~. Our discount rate is determined by evaluating yield curves consisting of large populations of high quality corporate bonds. The projected pension benefit payment streams are then matched with bond portfolios to determine a rate that reflects the liability duration unique to our plans.

We use the full -yield curve approach to estimate the service and interest cost components of net periodic benefit cost for our pension and other postretirement benefit plans. Under this approach, we apply multiple discount rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. We believe that this approach provides a more precise measurement of service and interest cost by aligning the timing of a plan’s liability cash flows to its corresponding rates on the yield curve.

Long-term Return on Assets

Measurement Date

WeWhen applicable, we measure the actuarial value of our benefit obligations and plan assets using the calendar month-end closest to our fiscal year-end and adjust for any contributions or other significant events between the measurement date and our fiscal year-end.

Plan Balance Sheet Reconciliations

The following table provides a reconciliation of benefit obligations, plan assets, funded status of the plans and accumulated other comprehensive loss for our non-U.S. defined benefit plans:

Plan Benefit Obligations

	~~Pension Benefits~~		Pension Benefits
	2024				2023
(In millions)			2025				2024
(In millions)	U.S.		Non-U.S.		U.S.		Non-U.S.
Change in projected benefit obligations
Projected benefit obligations at beginning of year	$	~~49.3~~	$	~~679~~664.94	$	~~51.8~~	$	~~586~~679.9
Service cost	—		1314.87		—		1013.58
Interest cost	~~2.2~~		2426.12		~~2.4~~		24.71
Participant contributions	—		45.71		—		4.57
Amendments	—		5.1.4		—		(5.1)
Actuarial (gain) loss	~~(.5)~~		2(82.82)		~~1.4~~		512.38
Acquisition	—		—		—		1.2
Transfer			4.1				—
Benefits paid	~~(6.4)~~		(2427.52)		~~(6.3)~~		(2524.35)
Settlements	—		~~(6.0)~~—		—		(.6.0)
Foreign currency translation	—		~~(35~~73.5)7		—		26(35.85)
Projected benefit obligations at end of year	$	~~44.6~~	$	~~664~~680.42	$	~~49.3~~	$	~~679~~664.94
Accumulated benefit obligations at end of year	$	~~44.6~~	$	~~608~~629.04	$	~~49.3~~	$	~~628~~608.70

60The actuarial gain we recorded in 2025 was primarily due to higher discount rates used to measure our projected benefit obligations at the end of the year.

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Plan Assets

	~~Pension Benefits~~		Pension Benefits
	2024				2023
(In millions)			2025				2024
(In millions)	U.S.		Non-U.S.		U.S.		Non-U.S.
Change in plan assets
Plan assets at beginning of year	$	—	$	~~663~~659.25	$	—	$	~~585~~663.32
Actual return on plan assets	—		41(4.68)		—		5441.6
Acquisition	—		—		—		1.1
Transfer			4.4				—
Employer contributions	~~6.4~~		1519.52		~~6.3~~		1715.25
Participant contributions	—		45.71		—		4.57
Benefits paid	~~(6.4)~~		(2427.52)		~~(6.3)~~		(2524.35)
Settlements	—		~~(6.0)~~—		—		(.6.0)
Foreign currency translation	—		~~(35~~76.0)3		—		26(35.40)
Plan assets at end of year	$	—	$	~~659~~732.5	$	—	$	~~663~~659.25

Funded Status

	~~Pension Benefits~~		Pension Benefits
	2024				2023
(In millions)			2025				2024
(In millions)	U.S.		Non-U.S.		U.S.		Non-U.S.
Funded status of the plans
Other assets	$	—	$	84138.7	$	—	$	6784.87
Other accrued liabilities	~~(6.1)~~		(34.24)		~~(6.1)~~		(3.2)
Long-term retirement benefits and other liabilities(1)	(38.5)		(86.4)		(43.2)		(84.3)
Long-term retirement benefits and other liabilities			(82.0)				(86.4)
Plan assets less than benefit obligations	$	(44.6)	$	(4.9)	$	(49.3)	$	(16.7)
Plan assets more (less) than benefit obligations			$	52.3			$	(4.9)

(1) In accordance with our funding strategy, we have the option to fund certain of our U.S. liabilities with proceeds from our company-owned life insurance policies.


	Pension Benefits
	2025		2024
Weighted average assumptions used to determine year-end benefit obligations
Discount rate	4.57	%	3.95	%
Compensation rate increase	2.68		2.80

	Pension Benefits
	2024				2023
	U.S.		Non-U.S.		U.S.		Non-U.S.
Weighted average assumptions used to determine year-end benefit obligations
Discount rate	5.43	%	3.95	%	4.86	%	3.78	%
Compensation rate increase	—		2.80		—		2.73

For non-U.S. plans, the projected benefit obligations and fair values of plan assets for pension plans with projected benefit obligations in excess of plan assets were approximately $268 million and $181 million, respectively, at year-end 2025 and approximately $245 million and $156 million, respectively, at year-end 2024.

For ~~U.S. and~~ non-U.S. plans ~~combined~~, the ~~projected~~accumulated benefit obligations and fair values of plan assets for pension plans with ~~projected~~accumulated benefit obligations in excess of plan assets were approximately $~~290~~227 million and $~~156~~152 million, respectively, at year-end ~~2024~~2025 and approximately $~~210~~230 million and $76151 million, respectively, at year-end ~~2023~~2024.

For U.S. and non-U.S. plans combined, the accumulated benefit obligations and fair values of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $274 million and $151 million, respectively, at year-end 2024 and $162 million and $43 million, respectively, at year-end 2023.

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Accumulated Other Comprehensive Loss

The ~~following~~pre-tax ~~table~~amounts ~~shows~~related ~~the~~to ~~pre~~our non-~~tax~~U.S. ~~amounts~~defined benefit plans recognized in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets are detailed below:

	~~Pension Benefits~~		Pension Benefits
	2024				2023
(In millions)			2025				2024
(In millions)	U.S.		Non-U.S.		U.S.		Non-U.S.
Net actuarial loss			$	31.2			$	69.4
Net actuarial loss	$	8.9	$	69.4	$	9.6	$	73.2
Prior service cost			3.7				2.3
Prior service (credit) cost	—		2.3		—		(3.4)
Net amount recognized in accumulated other comprehensive loss			$	34.9			$	71.7
Net amount recognized in accumulated other comprehensive loss	$	8.9	$	71.7	$	9.6	$	69.8

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The following table shows the pre-tax amounts recognized in “Other comprehensive loss (income)”:

	~~Pension Benefits~~		Pension Benefits
	2024				2023				2022
(In millions)			2025				2024				2023
(In millions)	U.S.		Non-U.S.		U.S.		Non-U.S.		U.S.		Non-U.S.
Net actuarial (gain) loss			$	(36.8)			$	(3.4)			$	32.6
Net actuarial (gain) loss	$	(.2)	$	(3.4)	$	.9	$	32.6	$	(5.6)	$	(.8)
Prior service credit			1.4				5.1				(.1)
Prior service credit	—		5.1		—		(.1)		—		—
Amortization of unrecognized:
Net actuarial (gain) loss	~~(.5)~~		(1.45)		~~(.4)~~		2(.14)		~~(.8)~~		(2.5)1
Prior service credit (cost)	—		.5		—		.4		—		.4
Prior service cost			.1				.5				.4
Settlements	—		.1—		—		.1		~~(.1)~~		.1
Net amount recognized in other comprehensive loss (income)	$	~~(.7)~~	$	1(36.98)	$	.5	$	~~35.~~1.9	$	~~(6.5)~~	$	(235.8)1

Plan Income Statement Reconciliations

The following table shows the components of net periodic benefit cost for our non-U.S. defined benefit plans:

	~~Pension Benefits~~		Pension Benefits
	2024				2023				2022
(In millions)			2025				2024				2023
(In millions)	U.S.		Non-U.S.		U.S.		Non-U.S.		U.S.		Non-U.S.
Service cost			$	14.7			$	13.8			$	10.5
Service cost	$	—	$	13.8	$	—	$	10.5	$	—	$	16.5
Interest cost			26.2				24.1				24.7
Interest cost	2.2		24.1		2.4		24.7		1.2		10.8
Expected return on plan assets			(36.6)				(37.4)				(33.2)
Actuarial (gain) loss	(.2)		—		.5		—		(3.5)		—
Amortization of actuarial (gain) loss			1.5				.4				(2.1)
Expected return on plan assets	—		(37.4)		—		(33.2)		—		(21.9)
Amortization of prior service cost			(.1)				(.5)				(.4)
Amortization of actuarial loss	.5		.4		.4		(2.1)		.8		2.5
Recognized gain on settlements			—				(.1)				(.1)
Amortization of prior service (credit) cost	—		(.5)		—		(.4)		—		(.4)
Net periodic benefit cost (credit)			$	5.7			$	.3			$	(.6)
Recognized loss (gain) on settlements	—		(.1)		—		(.1)		.1		(.1)
Net periodic benefit cost (credit)	$	2.5	$	.3	$	3.3	$	(.6)	$	(1.4)	$	7.4

Service cost and components of net periodic benefit cost other than service cost were included in “Marketing, general and administrative expense” and “Other non-operating expense (income), net” in the Consolidated Statements of Income, respectively.

The following table shows the weighted average assumptions used to determine net periodic cost:

	~~Pension Benefits~~		Pension Benefits
	2024				2023				2022
			2025				2024				2023
	U.S.		Non-U.S.		U.S.		Non-U.S.		U.S.		Non-U.S.
Discount rate			3.95	%			3.78	%			4.36	%
Discount rate	4.86	%	3.78	%	5.06	%	4.36	%	2.19	%	1.57	%
Expected return on assets			4.72				5.04				4.71
Expected return on assets	—		5.04		—		4.71		—		3.00
Compensation rate increase			2.80				2.73				2.75
Compensation rate increase	—		2.73		—		2.75		—		2.33

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Plan Contributions

We make contributions to our defined benefit plans sufficient to meet the minimum funding requirements of applicable laws and regulations, plus additional amounts, if any, we determine to be appropriate. ~~The~~Our ~~following~~expected ~~table~~contributions ~~sets~~in ~~forth~~2026 for our ~~expected~~non-U.S. ~~contributions~~defined inbenefit ~~2025:~~plans is $21.3 million.

(In millions)
U.S. pension plans	$	6.2
Non-U.S. pension plans	17.5

Future Benefit Payments

The future benefit payments of our non-U.S. defined benefit plans shown below reflect the expected service periods for eligible participants.

	PensionBenefits
(In millions)			PensionBenefits
(In millions)	U.S.		Non-U.S.
2026			$	34.1
2025	$	6.2	$	23.5
2027			29.0
2026	5.7		29.3
2028			31.6
2027	5.5		27.3
2029			29.6
2028	5.0		26.6
2030			31.8
2029	4.7		26.6
2031-2035			176.2
2030-2034	17.0		152.5

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U.S. Defined Benefit Pension Plans

Our U.S. defined benefit plans, the accrual of benefits which has been frozen, cover certain eligible employees in the U.S. Benefits payable to an employee were based primarily on years of service and the employee’s compensation during the course of his or her employment with our company. Our policy is to fund the cost of these benefits from operating cash flows. At year-end 2025, our U.S. defined pension benefit obligation and related loss recorded in “Accumulated other comprehensive loss” were approximately $41 million and $8 million, respectively. At year-end 2024, our U.S. defined pension benefit obligations and related loss recorded in “Accumulated other comprehensive loss” were approximately $45 million and $9 million, respectively. Net periodic benefit cost was not material in 2025, 2024 or 2023.

Postretirement Health Benefits

We provide postretirement health benefits to certain of our retired U.S. employees up to the age of 65 under a cost-sharing arrangement and provide supplemental Medicare benefits to certain of our U.S. retirees over the age of 65. Our postretirement health benefit plan was closed to new participants retiring after December 31, 2021. Our policy is to fund the cost of these postretirement benefits from operating cash flows. While we do not intend to terminate these postretirement health benefits, we may do so at any time, subject to applicable laws and regulations. At year-end ~~2024~~2025, our postretirement health benefits obligation and related loss recorded in “Accumulated other comprehensive loss” were approximately $2 million and $9 million, respectively. At year-end ~~2023~~2024, our postretirement health benefits obligation and related loss recorded in “Accumulated other comprehensive loss” were approximately $2 million and $109 million, respectively. Net periodic benefit cost was not material in ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023.

Defined Contribution Plans

We sponsor various defined contribution plans worldwide, the largest of which is the Avery Dennison Corporation Employee Savings Plan (“Savings Plan”), a 401(k) plan for our U.S. employees.

We recognized expense of $3134.90 million, $3031.39 million and $2730.3 million in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively, related to our employer contributions and employer match of participant contributions to the Savings Plan.

Other Retirement Plans

We have deferred compensation plans and programs that permit eligible employees to defer a portion of their compensation. The compensation voluntarily deferred by the participant, together with certain employer contributions, earns specified and variable rates of return. As of year-end ~~2024~~2025 and ~~2023~~2024, we had accrued $99.08 million and $8899.20 million, respectively, for our obligations under these plans. A portion of the interest on certain of our contributions may be forfeited by participants if their employment terminates before age 55 other than by reason of death or disability.

Our Directors Deferred Equity Compensation Program allows our non-employee directors to elect to receive their cash compensation in deferred stock units (“DSUs”) issued under our equity plan. Additionally, two legacy deferred compensation plans had DSUs that were issued under our then-active equity plans. Dividend equivalents, representing the value of dividends per share paid on shares of our common stock and calculated with reference to the number of DSUs held as of a quarterly dividend record date, are credited in the form of additional DSUs on the applicable dividend payable date. DSUs are converted into shares of our common stock, less fractional shares, and issued to a participating director upon his or her separation from our Board. ~~Approximately~~DSUs in the amount of 0.0403 million and 0.104 million ~~DSUs~~ were outstanding as of year-end ~~2024~~2025 and ~~2023~~2024, respectively, with an aggregate value of approximately $85 million and $198 million, respectively.

63We hold company-owned life insurance policies, the proceeds from which are payable to us upon the death of covered participants. The cash surrender values of these policies, net of outstanding loans, which are included in “Other assets” in the Consolidated Balance Sheets, were $259.7 million and $247.4 million at year-end 2025 and 2024, respectively.

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We hold company-owned life insurance policies, the proceeds from which are payable to us upon the death of covered participants. The cash surrender values of these policies, net of outstanding loans, which are included in “Other assets” in the Consolidated Balance Sheets, were $247.4 million and $228.4 million at year-end 2024 and 2023, respectively.

NOTE 7. COMMITMENTS AND LEASES

Supplemental cost information related to leases is shown below.

(In millions)						~~2024~~2025						~~2023~~2024						~~2022~~2023
Operating lease costs						$	7577.17					$	7375.61					$	7073.86

Lease costs related to finance leases were not material in ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023.

Supplemental balance sheet information related to leases is shown below.

(In millions)

Balance Sheet Location

~~2024~~2025

~~2023~~2024

Assets

Operating

Other assets

~~227~~215.58

~~200~~227.25

Finance(1)

Property, plant and equipment, net

3215.59

2932.65

Total leased assets

~~260~~231.07

~~229~~260.80

Liabilities

Current:

Operating

Other current liabilities

4953.61

4549.46

Finance

Short-term borrowings and current portion of long-term debt and finance leases

45.32

64.3

Non-current:

Operating

Long-term retirement benefits and other liabilities

~~176~~167.16

~~152~~176.31

Finance

Long-term debt and finance leases

911.10

79.01

Total lease liabilities

~~239~~236.19

~~211~~239.01

(1) Finance lease assets are net of accumulated amortization of $1816.70 million and $1418.67 million as of ~~December 28,~~year-end ~~2024~~2025 and ~~December 30~~2024, ~~2023,~~ respectively.

Supplemental cash flow information related to leases is shown below.

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Cash paid for amounts included in measurement of operating lease liabilities	$	6163.08	$	5561.80	$	6055.58
Operating lease assets obtained in exchange for operating lease liabilities	9347.06		9293.40		3792.24

Cash flows related to finance leases were not material in ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023.

Weighted average remaining lease term and discount rate information related to leases as of December 2831, ~~2024~~2025 and December 3028, ~~2023~~2024 is shown below.

	2024		2023
	2025		2024
Weighted average remaining lease term (in years):
Operating	6.75		76.17
Finance	3.6		3.16
Weighted average discount rate (percentage):
Operating	4.67	%	4.16	%
Finance	4.7		4.27

6465

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Operating and finance lease liabilities by maturity date from December 2831, ~~2024~~2025 are shown below.

(In millions)	Operating Leases		Finance Leases
2025	$	55.6	$	5.3
2026	$	59.7	$	6.0
2026	47.8		3.6
2027	46.9		5.0
2027	37.0		2.8
2028	33.6		3.3
2028	26.3		1.8
2029	28.1		2.3
2029	21.8		.9
2030	22.2		1.0
2030 and thereafter	72.5		.5
2031 and thereafter	66.9		.3
Total lease payments	~~261~~257.04		1417.9
Less: imputed interest	(3536.37)		(1.67)
Present value of lease liabilities	$	~~225~~220.7	$	1316.32

As of December 2831, ~~2024~~2025, we had no significant operating or finance leases that had not yet commenced.

NOTE 8. CONTINGENCIES

Legal Proceedings

We are involved in various lawsuits, claims, inquiries and other regulatory and compliance matters, most of which are routine to the nature of our business. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these claims could affect future results of operations should our exposure be materially different from our estimates or should we incur liabilities that were not previously accrued. Probable insurance reimbursements are not offset against potential liabilities.

Because of the uncertainties associated with claims resolution and litigation, future expenses to resolve legal proceedings could be higher than the liabilities we have accrued. If information were to become available that allowed us to reasonably estimate an amount higher or lower than what we have accrued in the range of potential expenses determined to be probable, we would adjust our accrued liabilities accordingly. Additional lawsuits, claims, inquiries and other regulatory and compliance matters could arise in the future. The range of expenses for resolving any future matters would be assessed as they arise; until then, a range of potential expenses for their resolution cannot be determined. Based upon current information, we believe that the impact of the resolution of legal proceedings would not be, individually or in the aggregate, material to our financial position, results of operations or cash flows.

We were party to a patent infringement litigation infiled ~~which~~by ADASA Inc. (“Adasa”), an unrelated third party, ~~alleged~~in ~~that~~2017 regarding certain ~~of the~~ RFID products within our Solutions Group reportable segment ~~infringed its patent~~. ~~The~~We ~~case~~recorded ~~was~~a ~~filed~~contingent onliability ~~October 24, 2017~~ in the ~~United~~amount ~~States District Court in the District~~ of ~~Oregon~~$26.6 ~~(Eugene~~million ~~Division)~~related ~~and~~to ~~was~~this ~~captioned~~matter ~~ADASA~~in ~~Inc~~2021. ~~v. Avery Dennison Corporation.~~ We ~~recorded~~increased aour contingent liability into ~~the amount of~~ $2682.69 million ~~related~~as toof ~~this~~December ~~matter~~30, in2023, ~~the~~reflecting ~~second~~our ~~quarter~~best estimate of ~~2021~~the ~~based~~anticipated onjudgment following a July 2023 jury ~~verdict~~retrial ~~issued~~that onaffirmed ~~May~~the ~~14,~~patent's ~~2021~~validity.

WeOn ~~appealed~~April ~~the~~25, ~~first~~2024, ~~instance~~we ~~judgment~~entered ~~associated~~into ~~with~~a ~~the~~Settlement ~~jury~~Agreement, ~~verdict~~License –and ~~which~~Mutual ~~resulted~~Release inwith ~~additional~~Adasa ~~potential~~pursuant ~~liability~~to ~~for~~which, ~~the~~among ~~RFID~~other ~~tags~~things, ~~sold~~(i) ~~during~~we ~~the~~agreed ~~period~~to ~~from~~pay ~~the~~$75.0 ~~jury~~million ~~verdict~~ to ~~the~~Adasa ~~issuance~~without ofany ~~the~~concessions ~~first~~or ~~instance~~admissions ~~judgment,~~of aliability; ~~higher~~(ii) ~~royalty~~Adasa ~~applicable~~agreed to ~~tags~~grant ~~sold~~us ~~after the judgment and~~ a ~~royalty on additional late-disclosed tags~~worldwide, ~~as well as sanctions~~nonexclusive, ~~prejudgment~~nontransferable ~~interest,~~fully-paid ~~costs~~up, and ~~attorneys’ fees, as well as an~~ ongoing royalty-free onperpetual ~~in-scope~~license, ~~tags~~without ~~sold~~the ~~after~~right ~~October~~to 14sublicense, ~~2021 –~~ to the ~~United~~patents ~~States~~at ~~Court~~issue ofin ~~Appeals for~~ the ~~Federal~~litigation; ~~Circuit~~and (~~the “CAFC”~~iii). ~~During~~ the ~~fourth~~parties ~~quarter~~mutually ofreleased ~~2022,~~all ~~the~~claims ~~CAFC~~against ~~issued~~one ~~its~~another. ~~opinion,~~We ~~reversing~~paid the ~~grant~~agreed-upon ofsettlement ~~summary~~amount ~~judgment~~to ofAdasa ~~validity~~on asApril to26, ~~anticipation~~2024 and ~~obviousness,~~Adasa ~~vacating~~filed ~~the~~a ~~sanctions~~Stipulation ~~ruling,~~of ~~and~~Satisfaction ~~remanding~~of ~~the~~Judgment ~~case for retrial~~ with ~~respect~~the totrial ~~validity~~court ~~for~~on ~~anticipation~~April ~~and~~29, ~~obviousness over the prior art~~2024. The ~~CAFC~~settlement ~~affirmed~~payment ~~subject-matter eligibility~~ and ~~damages~~adjustments ~~if liability was determined on retrial. On remand, the trial court was required~~ to ~~reconsider~~our ~~the~~prior ~~amount~~contingent ofliability ~~sanctions~~are ~~consistent~~reflected ~~with~~in ~~the~~our ~~CAFC's~~fiscal ~~instruction~~2024 toand ~~limit~~2023 ~~sanctions~~consolidated tofinancial ~~the late-disclosed tags~~statements.

After the U.S. Supreme Court denied our writ of certiorari petition on May 30, 2023, the retrial began on July 10, 2023. On July 18, 2023, the jury in the retrial issued a verdict that Adasa’s patent is valid. We increased our contingent liability to reflect our then-best estimate of the anticipated judgment to $80.4 million as of July 1, 2023, with an expectation to continue adjusting our accrual quarterly, as appropriate. As of December 30, 2023, our contingent liability for this matter was $82.9 million.

On January 25, 2024, the district court issued a revised sanctions order lowering the sanctions against us from approximately $20 million to $5.2 million based on a rate of $0.0025/late-reported tag, which was consistent with the amount we had accrued. In February 2024, the district court issued its decision denying our motion for judgment as a matter of law

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and our motion for a new trial. On March 7, 2024, the Court issued an amended final judgment, assessing damages, pre- and post-judgment interest, costs, attorneys' fees, sanctions, and ongoing royalties.

On April 25, 2024, we entered into a Settlement Agreement, License and Mutual Release with Adasa pursuant to which, among other things, (i) we agreed to pay $75.0 million to Adasa without any concessions or admissions of liability; (ii) Adasa agreed to grant us a worldwide, nonexclusive, nontransferable fully-paid up, and ongoing royalty-free perpetual license, without the right to sublicense, to the patents at issue in the litigation; and (iii) the parties mutually released all claims against one another. We paid the agreed-upon settlement amount to Adasa on April 26, 2024. No court approval of the settlement was required; however, as required by the settlement agreement, Adasa filed a Stipulation of Satisfaction of Judgment with the trial court on April 29, 2024.

Environmental Expenditures

Environmental expenditures are generally expensed. When it is probable that a loss will be incurred and where a range of the loss can be reasonably estimated, the best estimate within the range is accrued. When the best estimate within the range cannot be determined, the low end of the range is accrued. The ultimate resolution of these matters could affect future results of operations should our exposure be materially different from our estimates or should we incur liabilities that were not previously accrued. Probable insurance reimbursements are not offset against potential liabilities. We review our estimates of the costs of complying with environmental laws related to the remediation and cleanup of various sites, including sites in which governmental agencies have designated us as a potentially responsible party (“PRP”). However, environmental expenditures for newly acquired assets and those that extend or improve the economic useful life of existing assets are capitalized and amortized over the shorter of the estimated useful life of the acquired asset or the remaining life of the existing asset.

As of December 28, 2024, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a PRP at ten waste disposal or waste recycling sites that are the subject of separate investigations or proceedings concerning alleged soil and/or groundwater contamination. No settlement of our liability related to any of these sites has been agreed upon. We are participating with other PRPs at these sites and anticipate that our share of remediation costs will be determined pursuant to agreements that we negotiate with the EPA or other governmental authorities.

These estimates could change as a result of changes in planned remedial actions, remediation technologies, site conditions, the estimated time to complete remediation, environmental laws and regulations, and other factors. Because of the uncertainties associated with environmental assessment and remediation activities, our future expenses to remediate these sites could be higher than the liabilities we have accrued. If information were to become available that allowed us to reasonably estimate an amount higher or lower than what we have accrued in the range of potential expenses, we would adjust our environmental liabilities accordingly. In addition, we may be identified as a PRP at additional sites in the future. The range of expenses for remediation of any future-identified sites would be addressed as they arise; until then, a range of expenses for their remediation cannot be determined.

The activity related to our environmental liabilities in 2024 and 2023 is shown below:

(In millions)	2024		2023
Balance at beginning of year	$	24.5	$	24.3
Charges, net of reversals	1.9		2.5
Payments	(13.4)		(2.3)
Balance at end of year	$	13.0	$	24.5

Approximately $5 million and $11 million, respectively, of this balance was classified as short-term and included in “Other current liabilities” in the Consolidated Balance Sheets as of December 28, 2024 and December 30, 2023.

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As of December 31, 2025, we have been designated by the U.S. Environmental Protection Agency (“EPA”) and/or other responsible state agencies as a PRP at ten waste disposal or waste recycling sites that are the subject of separate investigations or proceedings concerning alleged soil and/or groundwater contamination. No settlement of our liability related to any of these sites has been agreed upon. We are participating with other PRPs at these sites and anticipate that our share of remediation costs will be determined pursuant to agreements that we negotiate with the EPA or other governmental authorities.

The activity related to our environmental liabilities in 2025 and 2024 is shown below:


(In millions)	2025		2024
Balance at beginning of year	$	13.0	$	24.5
Charges, net of reversals	2.9		1.9
Payments	(5.9)		(13.4)
Balance at end of year	$	10.0	$	13.0

Approximately $2 million and $5 million of this balance was classified as short-term and included in “Other current liabilities” in the Consolidated Balance Sheets as of December 31, 2025 and December 28, 2024, respectively.

NOTE 9. FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

Assets and liabilities carried at fair value, measured on a recurring basis, as of December 2831, ~~2024,~~2025 were as follows:

			Fair Value Measurements Using
(In millions)	Total		QuotedPrices inActiveMarkets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantOtherUnobservableInputs(Level 3)
Assets
Investments	$	4849.01	$	24.21	$	2325.80	$	—
Derivative assets	417.2		.4—		407.82		—
Bank drafts	57.25		57.25		—		—
Liabilities
Derivative liabilities	$	4118.50	$	.43	$	4117.17	$	—
Contingent consideration liabilities	42.87		—		—		42.87

Assets and liabilities carried at fair value, measured on a recurring basis, as of December 30, 2023 were as follows:

			Fair Value Measurements Using
(In millions)	Total		QuotedPrices inActiveMarkets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantOtherUnobservableInputs(Level 3)
Assets
Investments	$	37.8	$	19.6	$	18.2	$	—
Derivative assets	8.6		—		8.6		—
Bank drafts	5.3		5.3		—		—
Liabilities
Derivative liabilities	$	7.6	$	1.6	$	6.0	$	—
Contingent consideration liabilities	10.0		—		—		10.0

Investments included fixed income securities (primarily U.S. government and corporate debt securities) measured at fair value using quoted prices/bids and a money market fund measured at fair value using NAV. As of December 28, 2024, investments of $1.5 million, $38.1 million, and $8.4 million were included in “Cash and cash equivalents,” “Other current assets,” and "Other assets," respectively, in the Consolidated Balance Sheets. As of December 30, 2023, investments of $2.7 million and $35.1 million were included in “Cash and cash equivalents” and “Other current assets,” respectively, in the Consolidated Balance Sheets. Derivatives that are exchange-traded are measured at fair value using quoted market prices and classified within Level 1 of the valuation hierarchy. Derivatives measured based on foreign currency exchange rate inputs that are readily available in public markets are classified within Level 2 of the valuation hierarchy. Bank drafts (maturities greater than three months) are valued at face value due to their short-term nature and were included in “Other current assets” in the Consolidated Balance Sheets.

Contingent consideration liabilities relate to estimated earn-out payments associated with certain acquisitions completed in 2023, 2022 and 2021, which are subject to the acquired companies achieving certain post-acquisition performance targets. These liabilities were recorded based on the expected payments and have been classified as Level 3. Activity related to contingent consideration was immaterial in 2024 and 2023.

In addition to the investments described above, we hold venture investments that had a total carrying value of approximately $45 million and $71 million as of December 28, 2024 and December 30, 2023, respectively, which was included in “Other assets” in the Consolidated Balance Sheets. Starting in the second quarter of 2024, we began revaluing certain venture investments based on Level 1 inputs; the fair value of these investments was $8.4 million as of December 28, 2024. Related to these investments, we recognized $19.2 million in net losses in 2024, no net gains or losses in 2023 and net gains of $13.5 million in 2022 in “Other expense (income), net” in the Consolidated Statements of Income.

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Assets and liabilities carried at fair value, measured on a recurring basis, as of December 28, 2024 were as follows:


			Fair Value Measurements Using
(In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets
Investments	$	48.0	$	24.2	$	23.8	$	—
Derivative assets	41.2		.4		40.8		—
Bank drafts	5.2		5.2		—		—

Liabilities
Derivative liabilities	$	41.5	$	.4	$	41.1	$	—
Contingent consideration liabilities	4.8		—		—		4.8

Investments included fixed income securities (primarily U.S. government and corporate debt securities) measured at fair value using quoted prices/bids and a money market fund measured at fair value using NAV. As of December 31, 2025, investments of $1.1 million, $46.9 million, and $1.1 million were included in “Cash and cash equivalents,” “Other current assets,” and "Other assets," respectively, in the Consolidated Balance Sheets. As of December 28, 2024, investments of $1.5 million, $38.1 million, and $8.4 million were included in “Cash and cash equivalents,” “Other current assets,” and "Other assets," respectively, in the Consolidated Balance Sheets. Derivative instruments that are exchange-traded are measured at fair value using quoted market prices and classified within Level 1 of the valuation hierarchy. Derivative instruments measured based on foreign currency exchange rate inputs that are readily available in public markets are classified within Level 2 of the valuation hierarchy. Bank drafts (maturities greater than three months) are valued at face value due to their short-term nature and were included in “Other current assets” in the Consolidated Balance Sheets.

Contingent consideration liabilities relate to estimated earn-out payments associated with an acquisition completed in 2022, which is subject to the acquired company achieving certain post-acquisition performance targets. This liability was recorded based on the expected payments and has been classified as Level 3. Activity related to contingent consideration was immaterial in 2025 and 2024.

In addition to the investments described above, we hold venture investments that had a total carrying value of approximately $58 million and $45 million as of December 31, 2025 and December 28, 2024, respectively, which was included in “Other assets” in the Consolidated Balance Sheets. We hold certain venture investments based on Level 1 inputs; the fair value of these investments was $1.1 million as of December 31, 2025, and $8.4 million as of December 28, 2024. We recognized $23.3 million and $19.2 million in net losses in 2025 and 2024, respectively, and no net gains or losses in 2023 in our venture and other investments. These net gains or losses were recorded in “Other expense (income), net” in the Consolidated Statements of Income.

NOTE 10. NET INCOME PER COMMON SHARE

Net income per common share was computed as follows:

(In millions, except per share amounts)	~~2024~~2025		~~2023~~2024		~~2022~~2023
(A) Net income	$	~~704~~688.90	$	~~503~~704.09	$	~~757~~503.10
(B) Weighted average number of common shares outstanding	8078.41		80.74		8180.67
Dilutive shares (additional common shares issuable under stock-based awards)	.32		.43		.64
(C) Weighted average number of common shares outstanding, assuming dilution	8078.73		8180.17		8281.21
Net income per common share (A) ÷ (B)	$	8.7781	$	68.2377	$	96.2823
Net income per common share, assuming dilution (A) ÷ (C)	$	8.7379	$	68.2073	$	96.2120

Certain stock-based compensation awards were excluded from the computation of net income per common share, assuming dilution, because they would not have had a dilutive effect. Stock-based compensation awards excluded from the computation totaled 0.1 million shares in 2025, 2024 and 2023 ~~and were not significant in 2022~~.

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NOTE 11. SUPPLEMENTAL EQUITY AND COMPREHENSIVE INCOME INFORMATION

Common Stock and Share Repurchase Program

Our Amended and Restated Certificate of Incorporation, as amended, authorizes five million shares of $1 par value preferred stock (of which no shares are outstanding), with respect to which our Board may fix the series and terms of issuance, and 400 million shares of $1 par value voting common stock.

From time to time, our Board authorizes the repurchase of shares of our outstanding common stock. Repurchased shares may be reissued under our long-term incentive plan or used for other corporate purposes. In ~~2024~~2025, we repurchased approximately 13.2 million shares of our common stock at an aggregate cost of $~~247~~575.56 million. In ~~2023~~2024, we repurchased approximately 01.82 million shares of our common stock at an aggregate cost of $~~137~~247.5 million.

In April ~~2022~~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 ~~any~~the amount outstanding under our previous Board authorization. Shares of our common stock in the aggregate amount of $~~346~~526.93 million remained authorized for repurchase under this Board authorization as of December 2831, ~~2024~~2025. Board authorizations remain in effect until shares in the amount authorized thereunder have been repurchased.

Treasury Shares Reissuance

We fund a portion of our employee-related costs using shares of our common stock held in treasury. We reduce capital in excess of par value based on the grant date fair value of vesting awards and record net gains or losses associated with using treasury shares to retained earnings.

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Accumulated Other Comprehensive Loss

The changes in “Accumulated other comprehensive loss” (net of tax) for ~~2024~~2025 and ~~2023~~2024 were as follows:

(In millions)	ForeignCurrencyTranslation(1)		Pension andOtherPostretirementBenefits		Cash FlowHedges		Fair Value Hedges		Total
Balance as of December 31, 2022	$	(314.0)	$	(51.3)	$	1.3	$	—	$	(364.0)
Other comprehensive income (loss) before reclassifications, net of tax	(14.6)		(25.2)		(7.0)		—		(46.8)
Reclassifications to net income, net of tax	—		(1.0)		3.7		—		2.7
Net current-period other comprehensive income (loss), net of tax	(14.6)		(26.2)		(3.3)		—		(44.1)
Balance as of December 30, 2023	$	(328.6)	$	(77.5)	$	(2.0)	$	—	$	(408.1)
Other comprehensive income (loss) before reclassifications, net of tax	(46.9)		(1.3)		(5.4)		2.0		(51.6)
Reclassifications to net income, net of tax	—		.8		2.8		—		3.6
Net current-period other comprehensive income (loss), net of tax	(46.9)		(.5)		(2.6)		2.0		(48.0)
Balance as of December 28, 2024	$	(375.5)	$	(78.0)	$	(4.6)	$	2.0	$	(456.1)
Other comprehensive income (loss) before reclassifications, net of tax	16.5		26.7		1.9		(3.6)		41.5
Reclassifications to net income, net of tax	—		2.1		2.8		—		4.9
Net current-period other comprehensive income (loss), net of tax	16.5		28.8		4.7		(3.6)		46.4
Balance as of December 31, 2025	$	(359.0)	$	(49.2)	$	.1	$	(1.6)	$	(409.7)

(1) ~~The~~Included ~~2024~~the ~~changes~~impact inof ~~foreign~~our ~~currency translation included a pretax gain related to the~~ foreign currency forward contracts and zero-cost collars, accounted for as net investment hedges. Refer to Note 5, "Financial Instruments," to the Consolidated Financial Statements for more information.

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The following table sets forth the income tax expense (benefit) allocated to each component of other comprehensive income (loss):

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Foreign currency translation:
Translation gain (loss)	$	(4.19)	$	1.21	$	(71.0)2
Pension and other postretirement benefits:
Net gain (loss) recognized from actuarial gain/loss and prior service cost/credit	(8.6)		(8.26)		(8.52)
Reclassifications to net income	.47		(.3)4		1(.13)
Cash flow hedges:
Gain (loss) recognized on cash flow hedges	(1.7)5		(21.27)		1(2.62)
Reclassifications to net income	1.90		1.29		1.42
Fair value hedges:
Changes in excluded components of fair value hedges	(1.61)		—.6		—
Income tax expense (benefit) allocated to components of other comprehensive income (loss)	$	(4.3)8	$	(8.3)	$	(38.43)

NOTE 12. LONG-TERM INCENTIVE COMPENSATION

Stock-Based Awards

Stock-Based Compensation

We generally grant our annual stock-based compensation awards to eligible employees in March and non-employee directors in May. Certain awards granted to retirement-eligible employees one or more years before their retirement date vest upon retirement; these awards are accounted for as fully vested one year from the ~~date of~~ grant date.

Our 2017 Incentive Award Plan, a long-term incentive plan for employees and non-employee directors, allows us to grant stock-based compensation awards – including stock options, RSUs, PUs, MSUs and DSUs – or a combination of these and other awards. Under this plan, 5.4 million shares were made available for issuance, with each full value award counted as 1.5 shares for purposes of the number of shares authorized for issuance. Full value awards include RSUs, PUs and MSUs.

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Stock-based compensation expense and the related recognized tax benefit were as follows:

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Stock-based compensation expense	$	2827.79	$	2228.37	$	4722.43
Tax benefit	23.62		2.46		62.74

This expense was included in “Marketing, general and administrative expense” in the Consolidated Statements of Income.

As of December 2831, ~~2024~~2025, we had approximately $3840 million of unrecognized compensation expense related to unvested stock-based awards, which is expected to be recognized over the remaining weighted average requisite service period of approximately two years.

Stock Options

Stock options may be granted to employees and non-employee directors at no less than 100% of the fair market value of our common stock on the ~~date of the~~ grant date and generally vest over a four-year period. Options expire ten years from the ~~date of~~ grant date.

The fair value of stock options is estimated as of the ~~date of~~ grant date using the Black-Scholes option-pricing model. This model requires input assumptions for our expected dividend yield, expected stock price volatility, risk-free interest rate and the expected option term.

No stock options were granted in fiscal years 2025 or 2024. The weighted average grant date fair value per share for stock options granted in 2023 was $47.65. ~~No stock options were granted in fiscal years 2024 or 2022.~~

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The following assumptions are used in estimating the fair value of granted stock options:

Risk-free interest rate is based on the 52-week average of the Treasury-Bond rate that has a term corresponding to the expected option term. For 2023, it was 3.84%.

Expected stock price volatility represents an average of the implied and historical volatility. For 2023, it was 23.90%.

Expected dividend yield is based on the current annual dividend divided by the 12-month average of our monthly stock price prior to grant. For 2023, it was 1.84%.

Expected option term is determined based on historical experience under our long-term incentive plans. For 2023, it was 6.31 years.

The following table summarizes information related to stock options:

	Number ofoptions(in thousands)	Weighted averageexercise price		Weighted averageremainingcontractual life(in years)	Aggregateintrinsic value(in millions)
Outstanding at December 30, 2023	204.1	$	109.92	4.36	$	18.7
Exercised	(141.1)	73.96
Outstanding at December 28, 2024	63.0	$	190.54	8.68	$	—
Options vested and expected to vest at December 28, 2024	54.8	190.54		8.68	—
Exercised	—	—
Options exercisable at December 28, 2024	—	$	—		$	—
Outstanding at December 31, 2025	63.0	$	190.54	7.67	$	—
Options vested and expected to vest at December 31, 2025	58.5	190.54		7.67	—
Options exercisable at December 31, 2025	—	$	—		$	—

There were no stock option exercises in 2025 or 2023. The total intrinsic value of stock options exercised in 2024 was $19.5 million ~~in 2024~~. We received approximately $10 million in 2024 from the exercise of stock options, and the tax benefit associated with these exercised options was $4.8 million. ~~There were no stock option exercises in 2023 and the stock option exercises in 2022 were immaterial.~~ The intrinsic value of a stock option is based on the amount by which the market value of our stock exceeds the exercise price of the option.

Performance Units (“PUs”)

PUs are performance-based awards granted to eligible employees under our equity plan. PUs are payable in shares of our common stock at the end of a three- or four-year cliff vesting period provided that the designated performance objectives are achieved at the end of the period. Over the performance period, the estimated number of shares of our common stock issuable upon vesting is adjusted upward or downward based on the probability of achieving the performance objectives established for the award. The number of shares issued generally ranges from 0% to 200% of the target shares at the time of grant; however the shares issued for certain special PU awards can range up to 300% of the target shares at time of grant. The weighted average grant date fair value for PUs was $175.53, $224.82 and $180.12 in 2025, 2024 and 2023, respectively.

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time of grant. The weighted average grant date fair value for PUs was $224.82, $180.12 and $163.97 in 2024, 2023 and 2022, respectively.

The following table summarizes information related to awarded PUs:

	Number of PUs(in thousands)	Weighted averagegrant-date fair value
Unvested at December 30, 2023	300.7	$	174.54
Granted at target	68.3	224.82
Adjustment for above-target performance(1)	37.7	197.75
Vested	(104.2)	197.75
Forfeited/cancelled	(10.4)	184.82
Unvested at December 28, 2024	292.1	$	181.94
Granted at target	154.2	175.53
Adjustment for performance achievement(1)	(32.5)	162.57
Vested	(38.7)	164.91
Forfeited/cancelled	(16.9)	184.27
Unvested at December 31, 2025	358.2	$	182.66

(1) Reflects adjustments for ~~above-target~~ performance for the ~~2021~~2022-~~2023~~2024 PUs.

The fair value of vested PUs was $~~20.~~6.4 million in ~~2024~~2025, $2220.76 million in ~~2023~~2024 and $2022.27 million in ~~2022~~2023.

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Market-Leveraged Stock Units (“MSUs”)

MSUs are performance-based awards granted to eligible employees under our equity plan. MSUs are payable in shares of our common stock over a four-year period provided that the designated performance objective is achieved as of the end of each vesting period. MSUs accrue dividend equivalents during the vesting period, which are earned and paid only at vesting provided that, at a minimum, threshold-level performance is achieved. The number of shares earned is based upon our absolute total shareholder return at each vesting date and can range from 0% to 200% of the target amount of MSUs subject to vesting. Each of the four vesting periods represents one tranche of MSUs and the fair value of each of these four tranches was determined using the Monte-Carlo simulation model, which utilizes multiple input variables, including expected stock price volatility and other assumptions, to estimate the probability of achieving the performance objective established for the award. The weighted average grant date fair value for MSUs was $~~259~~190.7536, $~~192~~259.5375 and $~~141~~192.8053 in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively.

The following table summarizes information related to awarded MSUs:

	Number ofMSUs(in thousands)	Weightedaveragegrant-date fairvalue
Unvested at December 30, 2023	195.5	$	167.16
Granted at target	55.2	259.75
Adjustments for above-target performance(1)	20.6	129.76
Vested	(99.2)	147.25
Forfeited/cancelled	(8.4)	198.29
Unvested at December 28, 2024	163.7	$	202.83
Granted at target	83.7	190.36
Adjustment for performance achievement(1)	.3	204.59
Vested	(67.5)	195.87
Forfeited/cancelled	(9.8)	196.20
Unvested at December 31, 2025	170.4	$	200.85

(1) Reflects adjustments for ~~above-target~~ performance for ~~each of~~ the tranches of MSUs vesting in ~~2024~~2025.

The fair value of vested MSUs was $1413.62 million in ~~2024~~2025, $1614.16 million in ~~2023~~2024 and $1916.91 million in ~~2022~~2023.

Restricted Stock Units (“RSUs”)

RSUs are service-based awards granted to eligible employees and non-employee directors under our equity plan. RSUs granted to employees generally vest over a period between one and four years. RSUs granted to non-employee directors generally vest in one year. The vesting of RSUs is subject to continued service through the applicable vesting date. If that condition is not met, unvested RSUs are generally forfeited. The weighted average grant date fair value for RSUs was $~~210~~171.7482, $~~175~~210.8874 and $~~168~~175.3488 in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively.

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The following table summarizes information related to awarded RSUs:

	Number ofRSUs(in thousands)	Weightedaveragegrant-datefair value
Unvested at December 30, 2023	66.5	$	171.68
Granted	53.7	210.74
Vested	(18.4)	175.42
Forfeited/cancelled	(6.9)	196.80
Unvested at December 28, 2024	94.9	$	191.22
Granted	73.4	171.82
Vested	(64.7)	191.49
Forfeited/cancelled	(1.8)	184.65
Unvested at December 31, 2025	101.8	$	177.19

The fair value of vested RSUs was $312.24 million, $23.72 million and $2.87 million in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively.

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Cash-Based Awards

Long-Term Incentive Units (“LTI Units”)

LTI Units are cash-based awards granted to eligible employees under our long-term incentive unit plan. LTI Units are service-based awards that generally vest ratably over a four-year period. The settlement value equals the number of vested LTI Units multiplied by the average of the high and low market prices of our common stock on the vesting date. The compensation expense related to these awards is amortized on a straight-line basis and the fair value is remeasured using the estimated percentage of units expected to be earned multiplied by the average of the high and low market prices of our common stock at each quarter-end.

We also grant cash-based awards in the form of performance and market-leveraged LTI Units to eligible employees. Performance LTI Units are payable in cash at the end of a three-year cliff vesting period provided that certain performance objectives are achieved at the end of the performance period. Market-leveraged LTI Units are payable in cash and vest ratably over a period of four years. The number of performance and market-leveraged LTI Units earned at vesting is adjusted upward or downward based upon the probability of achieving the performance objectives established for the respective award and the actual number of units issued can range from 0% to 200% of the designated target units subject to vesting. Performance and market-leveraged LTI Units are remeasured using the estimated percentage of units expected to be earned multiplied by the average of the high and low market prices of our common stock at each quarter-end over their respective performance periods. The compensation expense related to performance LTI Units is amortized on a straight-line basis over their respective performance periods. The compensation expense related to market-leveraged LTI Units is amortized on a graded-vesting basis over their respective performance periods.

The compensation expense related to LTI Units was $1412.9 million in ~~2024~~2025, $1614.39 million in ~~2023~~2024 and $1116.53 million in ~~2022~~2023. This expense was included in “Marketing, general and administrative expense” in the Consolidated Statements of Income. The total recognized tax benefit related to LTI Units was $3.62 million in ~~2024~~2025, $3.96 million in ~~2023~~2024 and $23.79 million in ~~2022~~2023.

NOTE 13. COST REDUCTION ACTIONS

Restructuring Charges

We have plans that provide eligible employees with severance benefits in the event of an involuntary termination. We calculate severance using the benefit formulas under the applicable plans. We record restructuring charges from qualifying cost reduction actions for severance and other exit costs (including asset impairment charges and lease and other contract cancellation costs) when they are probable and estimable.

2025 Actions

InDuring ~~the fourth quarter 2024~~2025, we recorded $1348.18 million in restructuring charges, net of reversals, related to our 2025 actions. These charges consisted of severance and related costs for the reduction of approximately 901,200 positions, as well as asset impairment charges, at numerous locations across our company, ~~reflecting~~as a result of actions intaken ~~our~~to ~~Solutions~~optimize ~~Group~~our ~~reportable~~operational ~~segment~~footprint.

72In the fourth quarter of 2024, we recorded $13.1 million in restructuring charges related to our 2025 actions. 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.

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2023 Actions

Accruals for severance and related costs and lease cancellation costs were included in “Other current liabilities” and "Long-term retirement benefits and other liabilities" in the Consolidated Balance Sheets. Asset impairment charges were based on the estimated market value of the assets, less selling costs, if applicable. Restructuring charges were included in “Other expense (income), net” in the Consolidated Statements of Income.

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During 2025, restructuring charges and payments were as follows:


(In millions)	Accrual at December 28, 2024		Charges, Net of Reversals		Cash Payments		Non-cash Impairment		Foreign Currency Translation		Accrual at December 31, 2025
2025 Actions
Severance and related costs	$	10.0	$	45.7	$	(41.5)	$	—	$	.2	$	14.4
Asset impairment charges	—		3.1		—		(3.1)		—		—







Total	$	10.0	$	48.8	$	(41.5)	$	(3.1)	$	.2	$	14.4

During 2024, restructuring charges and payments were as follows:


(In millions)	Accrual at December 30, 2023		Charges, Net of Reversals		Cash Payments		Non-cash Impairment		Foreign Currency Translation		Accrual at December 28, 2024
2025 Actions
Severance and related costs	$	—	$	10.0	$	—	$	—	$	—	$	10.0
Asset impairment charges	—		3.1		—		(3.1)		—		—
2023 Actions
Severance and related costs	27.7		25.4		(43.3)		—		(.6)		9.2
Asset impairment charges	—		3.0		—		(3.0)		—		—
Lease cancellation costs	—		.4		(.6)		—		—		(.2)


Total	$	27.7	$	41.9	$	(43.9)	$	(6.1)	$	(.6)	$	19.0

During 2023, restructuring charges and payments were as follows:

(In millions)	Accrual atDecember 31,2022		Charges,Net ofReversals		CashPayments		Non-cashImpairment		ForeignCurrencyTranslation		Accrual atDecember 30,2023
2023 Actions
Severance and related costs	$	—	$	72.1	$	(45.1)	$	—	$	.7	$	27.7
Asset impairment charges	—		8.3		—		(8.3)		—		—
2019/2020 Actions
Severance and related costs	5.1		(1.0)		(4.1)		—		—		—
Total	$	5.1	$	79.4	$	(49.2)	$	(8.3)	$	.7	$	27.7

The table below shows the total amount of restructuring charges incurred by reportable segment and Corporate.

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Restructuring charges by reportable segment and Corporate
Materials Group	$	522.79	$	525.47	$	(152.0)4
Solutions Group	3523.84		2335.28		723.92
Corporate	.49		3.84		3.8
Total	$	4147.92	$	7941.49	$	779.74

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NOTE 14. TAXES BASED ON INCOME

Taxes based on income were as follows:

(In millions)	~~2024~~2025		~~2023~~2024		~~2022~~2023
Current:
U.S. federal tax	$	3645.09	$	4236.50	$	2942.45
State taxes	1011.60		910.06		89.80
Foreign taxes	~~214~~205.93		~~160~~214.89		~~177~~160.78
	261.5		212.3		215.9
	262.2		261.5		212.3
Deferred:
U.S. federal tax	(817.72)		(298.07)		5(29.80)
State taxes	(31.3)		(3.53)		(3.95)
Foreign taxes	(6.96)		11(.9)		1911.69
	(12.9)		(20.6)		26.3
	(25.1)		(12.9)		(20.6)
Provision for income taxes	$	~~248~~237.61	$	~~191~~248.76	$	~~242~~191.27

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

(In millions)	2024		2023		2022
Tax provision computed at U.S. federal statutory rate(1)	$	200.2	$	145.9	$	209.9
Increase (decrease) in taxes resulting from:
State taxes, net of federal tax benefit	2.7		2.6		11.8
Foreign earnings taxed at different rates(1)	49.5		50.4		51.7
GILTI high-tax exclusion election, net(2)	(6.2)		(10.0)		(11.9)
Valuation allowance	15.9		2.6		(5.0)
U.S. federal research and development tax credits	(7.7)		(8.3)		(6.5)
Tax contingencies and audit settlements	1.9		11.9		(4.3)
Other items, net	(7.7)		(3.4)		(3.5)
Provision for income taxes	$	248.6	$	191.7	$	242.2

(1) All years included certain U.S. international tax provisions and foreign earnings taxed in the U.S., net of credits.

(2) In 2024, we recognized $6.2 million from our current year GILTI exclusion election. In 2023, we recognized $4.4 million from our 2023 GILTI exclusion election and $5.6 million related to the election made on our 2022 U.S. federal tax return. In 2022, we recognized $11.9 million of benefit related to a GILTI exclusion election made on our 2021 U.S. federal tax return.

Income before taxes from our U.S. and foreign operations was as follows:

(In millions)	2024		2023		2022
U.S.	$	211.4	$	187.2	$	232.4
Foreign	742.1		507.5		766.9
Income before taxes	$	953.5	$	694.7	$	999.3

Our effective tax rate was 26.1%, 27.6% and 24.2% for fiscal years 2024, 2023 and 2022, respectively.

Our 2024 provision for income taxes included (i) $15.9 million of net tax charge related to the tax on global intangible low-taxed income ("GILTI") of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from foreign-derived intangible income (“FDII”); (ii) $15.9 million of tax charge from valuation allowances due to the uncertainty of the realization of certain deferred tax assets; and (iii) excess tax benefits associated with stock-based payments, and return-to-provision benefits related to our 2023 U.S. federal tax return, partially offset by net tax charge primarily from the recognition of uncertain tax positions and tax audit settlements in certain foreign jurisdictions.

Our 2023 provision for income taxes included (i) $16.4 million of net tax charge related to the tax on GILTI of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from FDII; (ii) $14.7 million of return-to-provision benefit primarily related to our GILTI exclusion election and benefits from additional foreign tax credits recognized under temporary relief granted by the Internal Revenue Service ("IRS") in July 2023, related to our 2022 U.S. federal tax return, (iii) $10.5 million of tax charge related to non-deductible expenses resulting from the impact of the Argentine peso remeasurement loss; and (iv) $9.5 million of net tax charge primarily from the

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~~recognition~~A reconciliation of ~~uncertain~~our ~~tax~~provision ~~positions~~for inincome ~~certain~~taxes ~~foreign~~to ~~jurisdictions,~~the ~~partially~~amount ~~offset~~computed by ~~decreases~~multiplying inthe ~~certain~~U.S. federal statutory tax ~~reserves~~rate asto aincome ~~result~~before oftaxes ~~closing~~for ~~tax~~the ~~years.~~year ended December 31, 2025 is provided below:

Our 2022 provision for income taxes included (i) $18.8 million of net tax charge related to the tax on GILTI of our foreign subsidiaries and the recognition of foreign withholding taxes on current year earnings, partially offset by the benefit from FDII; (ii) $17.3 million of return-to-provision benefit, including $11.9 million related to a GILTI exclusion election and a lower net tax charge from other international inclusion items related to our 2021 U.S. federal tax return; and (iii) net tax benefit primarily from decreases in certain tax reserves, including interest and penalties, as a result of closing tax years and the settlement of certain foreign tax audits.


	2025
(In millions, except percentages)	Amount		Percent
U.S. federal statutory tax rate	$	194.3	21.0	%
State and local income taxes, net of federal income tax effect(1)	7.7		.8	%
Foreign tax effects
China	18.0		1.9	%
The Netherlands
Nontaxable or nondeductible items	(9.9)		(1.1)	%
Other	5.4		.6	%
Germany
Changes in valuation allowances	(10.6)		(1.1)	%
Other	2.5		.3	%
Other foreign jurisdictions	44.9		4.9	%
Effect of cross-border tax laws	(18.1)		(2.0)	%
Tax credits	(8.8)		(1.0)	%
Changes in valuation allowances	8.3		.9	%
Nontaxable or nondeductible items	2.9		.3	%
Changes in unrecognized tax benefits	.5		.1	%
Provision for income taxes and effective tax rate	$	237.1	25.6	%

(1) State taxes in California, Illinois, Pennsylvania, Wisconsin, New York and New Jersey made up the majority of the tax effect in this category.

A reconciliation of our provision for income taxes to the amount computed by multiplying the U.S. federal statutory tax rate to income before taxes previously disclosed for the years ended December 28, 2024 and December 30, 2023 is provided below:


(In millions)	2024		2023
Tax provision computed at U.S. federal statutory rate(1)	$	200.2	$	145.9
Increase (decrease) in taxes resulting from:
State taxes, net of federal tax benefit	2.7		2.6
Foreign earnings taxed at different rates(1)	49.5		50.4
Global intangible low-taxed income high-tax exclusion election, net(2)	(6.2)		(10.0)
Valuation allowances	15.9		2.6
U.S. federal research and development tax credits	(7.7)		(8.3)
Tax contingencies and audit settlements	1.9		11.9
Other items, net	(7.7)		(3.4)
Provision for income taxes	$	248.6

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