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PENSION AND OTHER POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
PENSION AND OTHER POSTRETIREMENT BENEFITS 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 26% in equity securities, 58% in fixed income securities and cash, and 16% 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.
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)TotalQuoted
Prices
in Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Other
Unobservable
Inputs
(Level 3)
2025
Cash$1.6 $1.6 $— $— 
Insurance contracts52.6 — — 52.6 
Pooled funds – real estate investment trusts4.2 — — 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 contracts39.0 — — 39.0 
Pooled funds – real estate investment trusts5.3 — — 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 
(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 2025 and 2024:
Level 3 Assets
(In millions)Insurance ContractsPooled Funds –
Real Estate
Investment Trusts		Total
Balance at December 30, 2023
$42.6 $6.4 $49.0 
Net realized and unrealized gain (loss)1.1 (1.0).1 
Purchases3.7 — 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 5.3 44.3 
Net realized and unrealized gain (loss)1.2 (1.5)(.3)
Purchases5.5 — 5.5 
Settlements(2.6)— (2.6)
Transfer
4.4 — 4.4 
Impact of changes in foreign currency exchange rates5.1 .4 5.5 
Balance at December 31, 2025
$52.6 $4.2 $56.8 
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. 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
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, we evaluate current market conditions, including interest rates, and review market data for reasonableness and appropriateness.
Measurement Date
When 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
(In millions)20252024
Change in projected benefit obligations
Projected benefit obligations at beginning of year$664.4 $679.9 
Service cost14.7 13.8 
Interest cost26.2 24.1 
Participant contributions
5.1 4.7 
Amendments1.4 5.1 
Actuarial (gain) loss(82.2)2.8 
Transfer
4.1 — 
Benefits paid(27.2)(24.5)
Settlements— (6.0)
Foreign currency translation73.7 (35.5)
Projected benefit obligations at end of year$680.2 $664.4 
Accumulated benefit obligations at end of year$629.4 $608.0 
The 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.
Plan Assets
Pension Benefits
(In millions)20252024
Change in plan assets
Plan assets at beginning of year$659.5 $663.2 
Actual return on plan assets(4.8)41.6 
Transfer
4.4 — 
Employer contributions19.2 15.5 
Participant contributions5.1 4.7 
Benefits paid(27.2)(24.5)
Settlements— (6.0)
Foreign currency translation76.3 (35.0)
Plan assets at end of year$732.5 $659.5 
Funded Status
Pension Benefits
(In millions)20252024
Funded status of the plans
Other assets$138.7 $84.7 
Other accrued liabilities(4.4)(3.2)
Long-term retirement benefits and other liabilities(82.0)(86.4)
Plan assets more (less) than benefit obligations$52.3 $(4.9)

Pension Benefits
20252024
Weighted average assumptions used to determine year-end benefit obligations
Discount rate4.57 %3.95 %
Compensation rate increase2.68 2.80 
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 non-U.S. plans, the accumulated benefit obligations and fair values of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were approximately $227 million and $152 million, respectively, at year-end 2025 and approximately $230 million and $151 million, respectively, at year-end 2024.
Accumulated Other Comprehensive Loss
The pre-tax amounts related to our non-U.S. defined benefit plans recognized in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets are detailed below:
Pension Benefits
(In millions)20252024
Net actuarial loss$31.2 $69.4 
Prior service cost3.7 2.3 
Net amount recognized in accumulated other comprehensive loss$34.9 $71.7 
The following table shows the pre-tax amounts recognized in “Other comprehensive loss (income)”:
Pension Benefits
(In millions)202520242023
Net actuarial (gain) loss$(36.8)$(3.4)$32.6 
Prior service credit1.4 5.1 (.1)
Amortization of unrecognized:
Net actuarial (gain) loss
(1.5)(.4)2.1 
Prior service cost
.1 .5 .4 
Settlements— .1 .1 
Net amount recognized in other comprehensive loss (income)$(36.8)$1.9 $35.1 
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
(In millions)202520242023
Service cost$14.7 $13.8 $10.5 
Interest cost26.2 24.1 24.7 
Expected return on plan assets(36.6)(37.4)(33.2)
Amortization of actuarial (gain) loss
1.5 .4 (2.1)
Amortization of prior service cost
(.1)(.5)(.4)
Recognized gain on settlements
— (.1)(.1)
Net periodic benefit cost (credit)$5.7 $.3 $(.6)
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
202520242023
Discount rate3.95 %3.78 %4.36 %
Expected return on assets4.72 5.04 4.71 
Compensation rate increase2.80 2.73 2.75 
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. Our expected contributions in 2026 for our non-U.S. defined benefit plans is $21.3 million.
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.
(In millions)Pension
Benefits
2026$34.1 
202729.0 
202831.6 
202929.6 
203031.8 
2031-2035176.2 
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 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 2024, our postretirement health benefits obligation and related loss recorded in “Accumulated other comprehensive loss” were approximately $2 million and $9 million, respectively. Net periodic benefit cost was not material in 2025, 2024 or 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 $34.0 million, $31.9 million and $30.3 million in 2025, 2024 and 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 2025 and 2024, we had accrued $99.8 million and $99.0 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. DSUs in the amount of 0.03 million and 0.04 million were outstanding as of year-end 2025 and 2024, respectively, with an aggregate value of approximately $5 million and $8 million, respectively.
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 $259.7 million and $247.4 million at year-end 2025 and 2024, respectively.