Directory 2016- United States Securities and Exchange Commission, Washington, DC, 20549 Form 10- Annual reports submitted under sections 13 or 15 (d) Securities Transactions Act for the fiscal year as at December 31, 2016 19-34 7685 Avery Denison ( The exact name of the registrant specified in the articles of association)Delaware 95-1492269 ( Registration status)(I. R. S. Employer identity number) 207 Goodall Avenue Glendale, California ( Main executive office address)91203 (Zip Code) The registrant\'s telephone number, including the area code :(626)304- 2000 securities registered under article (b) Title of the act: each class name of each exchange registered with common stock, the New York Stock Exchange registered under section 12th, with a face value of $1 (g) The act: not applicable. Indicate whether the registrant is a well with a check mark Well-known experienced issuers as defined in Rule 405 of the Securities Act. Yes, no o indicate by check mark whether the registrant does not need to submit a report under Section 13 or 15 (d)of the Act. Yes o no check mark indicates whether the registrant (1) All reports requested in Section 13 or 15 have been submitted (d) Securities Trading Act of 1934 within the first 12 months ( Or a short period of time required for the registrant to submit such reports), and (2) This filing requirement has been bound for the last 90 days. Yes, no o indicates by check mark whether the registrant is electronically submitted and posted on its company website (if any), according to Rule 405 of the regulations, each interactive data file that needs to be submitted and published-T (§232. This Chapter 405) Within the first 12 months ( Or in such a short time that the registrant is required to submit and publish these documents). If a default declarant is disclosed under section 405th of the regulations, no o indicates by check mark-K (§229. This Chapter 405) As the registrant is aware, it is not included here and will not be included in the final proxy or information statement referenced in Part 2 of this Form 10 -- K or any amendments to this form 10K. Indicate whether the registrant is a large accelerated filer, non-accelerated filer by checking the mark A smaller reporting company. See the definition of \"large accelerated file manager\", \"accelerated file manager\" and \"small Reporting Company\" in Rule12b- 2 of the Trading Act. (Check one) : Non-accelerated large acceleration file Acceleratedfiler o ( Do not check if there are smaller reporting companies) The smaller reporting company o indicates whether the registrant is a shell company through a check mark ( Defined in Rule 12b-2 of the Act). Yes o no total market value of voting and non-voting Voting Ordinary Shares held by non-shareholders As of July 2, 2016, the last working day of the second fiscal quarter recently completed by the registrant, the subsidiary company was $6,414,034,778. As of January 28, 2017, at the end of the last fiscal month of the registrant, the number of shares of common stock, with a face value of $1, was outstanding: 88,123,603. The following documents are incorporated into the section of this form by reference- K. as follows: refer to the documents included in the annual report of shareholders for the fiscal year ended December 31, 2016, part II final proxy statement of the annual meeting of shareholders held on April 27, 2017 Part IV content table avery dennison corporation Annual Report of fiscal 2016 form 10 Section 1 item K directory page. Business 1 Item 1a. 5 items 1b of risk factors. 18 Comments by unresolved staff. Attribute 18 items 3 18 legal proceedings 4. 19 The second part of the fifth mine safety disclosure. The registrant\'s common stock, related shareholder matters and the market for the purchase of equity securities by the issuer. 20 Selected Financial Data 7. Management Discussion and Analysis of Financial Position and operational results Quantitative and qualitative disclosure of market risks 20 items 8 financial statements and 21 items 9 of supplementary data. Changes and differences with accountants in accounting and financial disclosure Control and procedure 21 items 9b. Other information 21 Part 3 10. 22 11 directors, executive officers and corporate governance. 24 administrative compensation. 24 items 13 of the secured ownership of certain beneficial owners and management and related shareholders. Certain relationships and related party transactions, as well as 24 items 14 of director independence. Major accounting fees and services Annex, schedule 25 of the financial statements signed 26 power of attorney 27 Item 1 of the first part of the catalogue. Business Company background Avery Denison ( \"Avery Dennison\", commonly referred to as \"us\" or \"Company\", \"registrant\" or \"Issuer\" of \"us \") Incorporated in Delaware in 1977, as Avery International Corporation, is a successor to a company of the same name in California, which was incorporated in 1946. At 1990, we merged one of our subsidiaries to manufacture for Denison (\"Dennison\") So Denison became all of us -- Our name was changed to Avery Dennison Corporation. You can learn more about us by visiting our website at www. averydennison. com. The website address we provide in this Form10- K is not intended to run as a hyperlink, and the information on our website is not part of this report and should not be considered as part of this report, nor should it be referenced to this report. Our business includes production pressure- Sensitive materials and a variety of tickets, labels and other conversion products. Some pressure- Sensitive materials are sold to label printers and converters that convert materials into labels and other products by stamping, printing, stamping and moldscutting. We sell some materials in the form of tape and reflective film. We also produce and sell a variety of other conversion products and items that do not involve stress Sensitive parts such as fasteners, tickets, labels, radio Frequency recognition (\"RFID\") We sell mosaic and labeling, imprint equipment and related services to retailers, garment manufacturers and brand owners. In 2016, we changed our operational structure to align with our overall business strategy. Asked to change the information he regularly reviews to allocate resources and evaluate performance. As a result of these events, our 2016 fiscal year results are reported in accordance with the \"segmentation information\" in the new reportable market segments and note 15 described below. \"In order to reflect our new operational structure, we re-classify certain amounts in the previous period. The parts that we can report for the fiscal year 2016 are: labels and graphic materials (\"LGM\"); Retail brands and information solutions (\"RBIS\"); Materials for industrial and health care (\"IHM\"). These segmentation changes lead to the movement of performance tapes ( Part of the previous pressure- Sensitive material section) Fastener solution ( Used to be part of RBIS) Enter the IHM section. In 2016, LGM, RBIS and IHM accounted for about 69%, 24% and 7% of our total sales, respectively. In 2016, international business accounted for a large part of our business, accounting for about 75% of our sales. As of December 31, 2016, we operate approximately 180 manufacturing and distribution facilities worldwide and operate in more than 50 countries. Production and sales of Fasson in our LGM Department®-, JAC®- And Avery Denison. ®-brand pressure- Sensitive labels and packaging materials for Avery Dennison®-and Mactac®- Brand graphic, Avery 1 catalog Dennison®- Brand reflective products. In addition to certain outdoor graphics and reflective products, the business in this area is often not seasonal. Pressure- Sensitive materials are mainly composed of paper, plastic film, metal foil and fabric coated with company coating Develop and purchase the adhesive and then laminate with special coated base paper and film. They are sold in the form of a roll or sheet with a solid or patterned adhesive coating and have a variety of surface materials, sizes, thickness and adhesive properties. A pressure- Sensitive or self The adhesive, the material is by pressing-on contact. It is usually composed of four layers: surface material, which can be paper, metal foil, plastic film or fabric; An adhesive that can be permanent or removable; Release the coating; And protect the adhesive from backing materials that come into contact with other surfaces prematurely, which can also be used as a carrier to support and distribute individual labels. When using the product, remove the release coating and protect the backing to expose the adhesive so that the label or other surface material is pressed or rolled in place. Because they are easy to apply, there is no need for adhesive activation Compared to other materials that need to be heated, adhesive materials can save costsor moisture- Active adhesive. Labels and packaging materials are sold to label converters worldwide for labeling, decoration and special applications in home and personal care, beer and beverages, durable goods, pharmaceutical, wine and spirits, and food market segments. When used in packaging decoration applications, the visual appeal of the self Adhesive materials can help increase the sales of products that apply materials. Self- Adhesive materials are also used to deliver a variety of variable information, such as the barcode mailed or the weight and price information of packaged meat and other foods. Self- Adhesive materials provide consistent and versatile bonding and are available in a large selection of materials that can be made into labels of different sizes and shapes. Our graphic and reflective products include a wide range of film and other products sold to construction, commercial signs, digital printing and other related market segments. We also sell durable casting and reflective films to the construction, automotive and fleet transport markets and sell reflective films for traffic and safety applications. We offer a wide range of pressure for signature shops, commercial printers and designers- Sensitive materials enable them to create influential and informative graphics for brands and decorations. We have a series of pressures. Sensitive vinyl and specialty materials designed for digital imaging, screen printing and signage cutting applications. In the LGM area, our larger competitors in labeling and packaging materials include UPM- Kymmene, Lintec company; Ritrama,Inc. , Flexcon And various regional companies. For graphics and reflective products, our biggest competitor is 3 m Company (\"3M\") There is also the Orafol group. We believe our competitors are in the stress zone- Sensitive Adhesives and materials are subject to technical knowledge and funding requirements. We believe that our technical expertise, scale and scale of operations, quality products and service projects, distribution capabilities, brand strength, new product innovation are the primary advantages in maintaining and further developing our competitive position. Retail brands and information solutions division our RBIS division designs, manufactures and sells a wide range of brand and information solutions for retailers, brand owners, apparel manufacturers, distributors and industrial customers worldwide This part goes through some seasonality and usually has a higher volume before spring, fall (back-to-school) And the holiday season. In recent years, with seasonal updates in the apparel industry becoming more frequent, there is less seasonality in this area than in previous years. Brand Solutions for RBIS include creative services, brand decoration, flat tickets, labels and labels, and sustainable packaging. RBIS information solutions include: Level RFID solution, 2 directory visibility and damage prevention solutions; The price of ticketing and marking; Services, content and origin of compliance solutions; Brand protection and security solutions. In RBIS, our main competitors include Checkpoint Systems. Subsidiaries of CCL Industrial Corporation, R- Pac International and SML Group Ltd. We believe that our global distribution network, reliable service, product quality and consistency, regardless of where the customer is manufactured, can consistently provide them with a comprehensive solution, this is a key advantage in maintaining and further developing our competitive position. Production and sales of Fasson in our IHM Department®- Brand & Avery Denison®- Vancive TM-branded adhesive tape and fasteners Brand medical pressure- Sensitive Adhesive (PSA) Basic materials and products, as well as performance polymers. Our tape products include tape and adhesive transfer with non-sales Mechanical Fastening, bonding and sealing systems. Mechanical fasteners are mainly precision extrusion and injection Molded plastic equipment for various applications in automotive, industrial and retail applications. These tapes and fasteners are sold worldwide to OEMs and converters for a variety of adhesive and fastening applications in the automotive, electronics, construction and construction, other industrial sectors, and personal care sections. These tapes are provided in the form of rolls and in the form of various surface materials, dimensions, thickness and adhesive properties. Our Vancive- Brand products include a range of PSA materials and products that meet the needs of medical device manufacturers, clinicians and patients for surgery, wound care, mouth-making and electrical medical device applications. Our main competitors include 3 m, Tesa- SE, Nitto Denko Corporation and various regional companies. We believe that technical knowledge and capital requirements limit competitors from entering the field. We believe that our technical expertise, business size and scale, quality products and new product innovation are the most significant advantages to maintain and further develop our competitive position in this business. For Vancive products, we compete with various professional suppliers of medical tape and conversion products Ups for multinational companies. We believe that access to the medical solutions business is limited by capital and regulatory requirements. Fastener products, with a wide range of competitors offering extrusion and injection molded fasteners and fastener connection equipment. They range from smaller regional competitors to multinationals. We believe that access to this business is limited by financial needs and technical knowledge. For our business of Vancive and fastener solutions, we believe that we are ablequality, cost- Effective solutions and our ability to innovate are the most important factors in developing our competitive position. Segment financial information certain financial information about our reporting segment for fiscal 2016, 2015 and 2014 appears in Note 15, \"Segment information, \"in the notes to the consolidated financial statements contained in our 2016 annual report to shareholders ( Our Annual Report 2016 \") And incorporated here by reference. As noted above, certain upfront amounts have been reclassified to reflect our new, reportable market segments. In fiscal 2015 and 2014 of 2016, certain financial information on our sales by geographical region appeared in Note 15, \"Segment information, \"In the notes to the consolidated financial statements contained in our Annual Report for 2016, and included in this report as a reference. 3 Working capital catalogue some financial information on working capital of China in the fiscal year of 2016, 2015,201 4 appears in the \"financial position\" section of \"Management\'s Discussion and Analysis of Financial Position and operational results (PartII, Item7) And incorporated here by reference. The R & D of many of our current products is the result of our R & D efforts. Our research work is mainly to develop new products and operating technologies, improve productivity and product performance, which are usually closely related to customers. These efforts include patent and product development work related to printing and coating technology as well as adhesives, release and ink chemistry. In addition, we focus on research projects related to RFID in the field of RBIS, as well as medical technology in the field of IHM, and we own and license multiple patents. Our R & D cost is $89. It was $7 million in 2016. In 2015, it was $9 million and $102. 2014 5 million. The loss of patents, trademarks and licenses personal patents or licenses is not important to us as a whole, nor to our operations. Our main trademarks are Avery Dennison, our logo and Fasson. We believe that these trademarks are strong in the competitive market segments of our products. Manufacturing and environmental issues we use a variety of raw materials, mainly paper, plastic film and resin, as well as special chemicals purchased from various commercial and industrial sources affected by price fluctuations. While there is a shortage sometimes, these raw materials are usually available. We have produced most of our own. Adhesive materials for water Based on emulsion and heat Hot Melt Adhesive Technology. Emissions from these operations contain a small amount of volatile organic compounds, regulated by federal, state, local and foreign governments. We continue to evaluate the use of alternative materials and technologies to minimize these emissions. Part of our manufacturing process Adhesive materials use certain organic solvents that may be discharged into the atmosphere or pollute the soil or groundwater unless controlled. Emissions and pollution of these substances are regulated by federal, state, local and foreign governments. In the maintenance and procurement of certain manufacturing equipment, we have invested in solvent capture and control devices to help regulate these emissions. We have developed adhesive and adhesive treatment systems that minimize the use of solvents. Hot emulsion adhesive Many of our facilities are equipped with melt adhesives, solvent-free and emulsion silicone systems. Based on current information, we do not consider the cost of complying with applicable laws or other laws relating to environmental protection that regulate the discharge of materials into the environment, will have a significant impact on our capital expenditures, consolidated financial position or operational results. For information on our potential liability for cleaning up costs at certain hazardous waste sites, see \"legal procedures \"(PartI, Item3) And \"Management\'s Discussion and Analysis of financial status and Operational Results \"(PartII, Item7). 4 Directory available information our annual report on Form10- Quarterly Report on Form10 Q: Latest report on Form8 K and amendments to the report submitted or provided to the Securities and Exchange Commission (\"SEC\") According to section 13 (a)or 15(d) Securities Trading Act of 1934 as amended ( Trade Act) , Available free of charge on our investor websiteinvestors. averydennison. After submitting electronic documents to the SEC or providing electronic documents to the SEC, it is reasonable and feasible as soon as possible. We also provide our on our website (i) Certificate of Registration as amended and restated ,(ii) Amend and restate the Articles of Association ,(iii) Guidelines for corporate governance ,(iv) Code of conduct applicable to our directors, senior staff and employees ,(v) Code of Ethics for chief executive and senior financial personnel ,(vi) The articles of association of the audit and finance, remuneration and executive personnel and the Board of Directors Committee on governance and social responsibility, and (vii) The Audit Committee\'s complaint procedures for accounting and audit matters. These documents can also be provided free of charge by written request to the company secretary of Avery Denison, 207 glendalgood Avenue, California, Zip code: 91203. Reports submitted to SEC can be viewed on www. sec. Government or public data room in Washington, D. C. C. Information about the operation of public data rooms can be reached by calling SEC 1-800-SEC-0330. Item1A. Risk factors the factors and risks discussed below, and matters outlined in this Annual Report on form 10 K and the documents cited here may have a significant adverse impact on our business, including our operating results, cash flow and financial position, and lead to a decline in the value of our securities. The risks described below are not exhaustive. Our ability to achieve our goals and objectives depends on many factors and risks, including but not limited to the factors and risks described below: the demand for our products is affected by the following factors and risks: changes in the global economic, political and market environment can have a significant adverse impact on our business. In 2016, about 75% of our sales came from international business. We operate in more than 50 countries and our domestic and international operations are strongly influenced by matters beyond our control, including changes in political, social, economic and labor conditions, tax laws (including U. S. Foreign income tax) Regulations on International Trade ( Including tariffs) And the impact of these changes on the potential needs of our products. Economic growth has continued to slow in parts of China and South America, with European sovereign debt and other debt restructuring underway, the weakness of the local economy we operate and the uncertainty of global credit or financial markets lead to the loss of consumer confidence, which may have a significant adverse impact on our business, among other things, the decrease in consumer spending, lower asset valuations, lower liquidity and credit availability, volatility in securities prices, lower credit ratings, fluctuations in foreign exchange rates, such as the decline in the value of sterling and the value of the euro and RMB in 2016 (renminbi) Seen in recent years. These declines may have a variety of negative effects, including a decrease in income, an increase in costs, a decrease in the percentage of gross profit margin, an increase in the allowance for suspicious accounts and/or writing letters The closing of accounts receivable and requires confirmation of impairment of capitalized assets including goodwill and other intangible assets. Due to recent changes in the United StatesS. The government, we are faced with the uncertainty of trade relations between the United States and the United States. S. And many of its trading partners. There is a big risk that tariffs or other restrictions may be imposed on products imported from China, Mexico or other countries, or relations with these 5 catalog countries and the United StatesS. Trade parties may deteriorate more broadly. These countries may retaliate by imposing similar tariffs or restrictions on products exported by the United States. S. Any such action or further development of the United StatesS. Trade relations may have a significant adverse effect on our business. In addition, due to political, social or economic instability and instability, such as major civil, political and economic riots that continue to occur in Russia, Ukraine, Syria, etc. , business and operations are interrupted or delayed, iraq, Iran, Turkey and its impact on global stability, the possibility of terrorist attacks and other hostile actions, public health crises or natural disasters around the world may lead to economic and political uncertainty, in turn, it may have a significant adverse impact on our business. We cannot predict the duration and severity of unfavorable economic, political or market conditions in the United States. S. Or other countries. We are influenced by competitive conditions and customer preferences. If we do not compete effectively, we may lose market share or reduce the sales price in order to maintain market share, which may have a significant adverse impact on our business. The risk we face is that our competitors, including some of our customers and distributors, will expand and implement new technologies in our key market segments to improve their competitive position with respect to us. Competitors can also offer additional products, services, lower prices, or other incentives that we cannot or will not offer, or make our products less profitable. There is no guarantee that we can successfully compete with current or future competitors. We also face the risk of changes in the customer order model, such as changes in the inventory level maintained by the customer and the time of the customer\'s purchase, which may be affected by the announced price changes, changes in our incentive plan, or a change in the customer\'s ability to achieve incentive goals. Changes in customer preferences for our products will also affect the demand for our products. The decline in demand for our products may have a significant adverse impact on our business. For example, in 2016, we announced the loss of a particular customer personal care program that had a negative impact on our business over the course of the year. As manufacturers, our sales and profitability depends on the cost and availability of raw materials and energy that are affected by price fluctuations and our ability to control or deliver raw materials and labor costs. The increase in raw material costs may have a significant adverse impact on our business. The raw material environment used in our business can become challenging and volatile, affecting availability and pricing. In addition, energy costs may fluctuate and cannot be predicted. Shortages and inflation or other increases in raw materials, labor and energy costs have occurred in the past and may happen again. Also, to verify if our product is \"conflicting- As required by the SEC rules, disclosure of the use of certain minerals mined from the Democratic Republic of the Congo and neighbouring countries is required ( Rules for conflict minerals] We can make alternative purchasing and supply decisions on materials used in certain products, which may have a significant adverse impact on our pricing terms. Our performance depends to a certain extent on our ability to pass on the increase in raw material costs to our customers by increasing the sales price of the product and the ability to increase productivity. According to market dynamics and customer contract terms, our ability to obtain raw materials from third-party suppliers for any increased costs may be limited due to conflict of mineral rules or other reasons. In addition, we must obtain timely delivery of materials, equipment and other resources from our suppliers and deliver them to our customers in a timely manner. Due to natural disasters and other disasters or other events, we may experience supply chain disruptions or our existing relationship with suppliers may terminate in the future. Any such disruption to our supply chain can have a significant adverse effect on our sales and profitability, and any ongoing disruption we receive sufficient supply can have a significant adverse effect on our business Because our products are sold by third parties, our business depends to some extent on the financial situation of these parties. Our products are not only sold by us, but also by third parties. The same is true of party distributors. Some of our dealers also sell products that compete with our products. Changes in financial or business conditions, including economic weakness, market trends or industry consolidation, or procurement decisions of these third parties or their customers, may have a significant adverse impact on our business. We outsource some manufacturing. If there is a significant change in the quality control or financial or business conditions of these outsourced manufacturers, our business may be negatively affected. We make most of the products, but occasionally we use the third one. Party manufacturer with professional work or capacity overflow. Outsourced manufacturing reduces our ability to prevent product quality problems, delayed delivery, customer grievances and non-compliance with customer requirements for labor standards. Due to Possible quality problems and customer grievances, the performance shortfall of outsourcing manufacturers may have a significant adverse impact on our business. Our business and activities outside the USS. It may expose us to risks that are different from our domestic business and may be more risky than these. A large part of our staff and assets are located outside the United States. S. And, in the year to December 31, 2016, about 75% of our sales came from customers outside the US. S. The risks involved in international operations and activities are different from those we face in our domestic operations and may also be greater, including our lack of extensive knowledge and relationships with contractors and suppliers, distributors and customers in certain markets; Changes in foreign political, regulatory and economic conditions, including national, regional and local changes; Significant adverse effects of exchange rate movements; Challenges in repatriation of foreign income; Challenges to comply with various foreign laws and regulations, including laws and regulations related to sales, corporate governance, operations, taxation, employment and legal proceedings; Establish effective controls and procedures to regulate our international operations and to oversee compliance with US lawsS. Laws and regulations such as the anti-overseas Corruption Act and similar foreign laws and regulations, including the Bribery Act of the United Kingdom of 2010; Differences in lending behavior; Challenges of complying with applicable import and export control laws and regulations; Differences in language, culture, and time zones. The realization of any of these risks or non-compliance with these laws or regulations can make us liable and have a significant adverse impact on our business. Britain, June 2016 (\"UK\") The referendum was held and voters withdrew from the EU through Britain ( Commonly known as \"off Europe \"). The direct impact of Britain\'s exit from the EU is that the value of the pound has dropped significantly compared with the United States. S. dollar. The value of the pound and the economic stability of the UK may fluctuate further, which may affect our ability to sell products in the UK. There is also uncertainty about how Brexit will affect the legal and regulatory environment in the UK and the EU, and whether it will lead to other EU countries approving similar measures and creating further uncertainty in the region. While our business in the UK is relatively small, legal and regulatory changes in the region may have a significant adverse impact on our business. If the quality of our products and services does not meet the expectations of our customers, our reputation, sales and revenue may be significantly adversely affected. In addition, product liability claims or regulatory actions may have a significant adverse effect on our financial results or reputation. Sometimes we encounter product quality problems due to material, manufacturing, packaging or design defects. Many of these problems were discovered before shipment, resulting in delays in the delivery of 7 catalogues, delays in the manufacturing process, and occasional cancellation of orders. When problems are found after shipment, additional shipping, discounts, refunds or future sales losses may result. Both pre- Shipping and mailing Transportation quality issues can have a significant adverse impact on our business and have a negative impact on our reputation. Claims for losses or injuries allegedly caused by some of our products occurred in our normal business process. In addition to the risk of significant monetary judgment and punishment that may have a significant adverse impact on our business, product liability claims or regulatory actions may result in negative publicity, damage our reputation and brand value in the market. We may also be asked to recall potential defects or unsafe products and may stop selling, which may result in adverse publicity and significant expenses. Although we retain product liability insurance, potential product liability claims may be deducted or excluded under the terms of the policy. Changes in our business strategy may increase our costs and may affect the profitability of our business. As our business environment changes, we may need to adjust our business strategy or restructure our business or specific business. At 2015, we announced more than one. Our annual transformation plan for our former RBIS division focuses on streamlining our go-to- Optimize management efficiency and consolidate our manufacturing footprint. In addition, we have launched business restructuring and investment actions aimed at improving profitability. As we continue to grow and adjust our growth strategy, we may invest in new businesses in the short term A negative or low long-term return, whose final business outlook is uncertain or unprofitable. For example, in 2015, we decided to withdraw from an expected growth platform in our former Vancive division in order to re-focus our efforts on more profitable strategic options. We cannot guarantee that we will achieve the expected results of any business strategy that involves operational complexity, consumption of management attention, and the need for a significant amount of resources and effort. If we cannot achieve the expected results of these actions, our costs may increase, our assets may be damaged, and our return on investment may be lower. Our growth strategy includes increasing concentration in emerging markets, which may create greater risks under unstable political conditions, civil unrest, economic fluctuations and other risks applicable to international operations. Our sales are increasingly coming from emerging markets, including countries in Asia, Latin America and Eastern Europe. Our profitable growth in emerging markets is an important focus of our long-term attention. According to the economic conditions of these regions, the long-term growth strategy and our regional results may fluctuate greatly, which is consistent with our results in China in 2016. If we fail to successfully expand our business in emerging markets, or receive our expected return on capital due to our investments in these countries, our financial performance may be significantly adversely affected In addition to the risks that apply to our international business, factors that may have a significant adverse impact on our business in these developing and emerging markets include the lack of good Due to unstable political conditions, civil unrest or economic fluctuations, established or reliable legal systems and possible disruptions have been established. These factors may lead to a decline in consumer purchasing power, a decrease in demand for our products, or impaired ability to achieve our long-term goals The long-term growth strategy has a significant adverse impact on our business. If we are unable to develop and successfully sell new products and applications, we may compromise our competitive position. The timely launch of new products and the improvement of current products help to determine our success. Many of our current products are the result of our R & D efforts. The efforts of our research 8 catalog are mainly to develop new products and operating technologies to improve product performance, often closely related to our customers or end users. These efforts include patent and product development work related to printing and coating technology as well as adhesives, release and ink chemistry. In addition, we focus on research projects related to RFID in the field of RBIS, as well as medical technology in the field of IHM, and we own and license multiple patents. However, research and development is complex and uncertain and requires innovation and prediction of market trends. We can focus on products that are ultimately not accepted by our customers or end users, or we may suffer delays in the production or release of new products, which may not lead to recovery spending and, therefore, it may harm our competitive position. Wrong estimates of our infrastructure needs can have a significant adverse impact on our business. If the actual demand is not as we expected, we may not be able to recover the cost of infrastructure investment. For example, in September 2015, we completed the expansion of the manufacturing plant located in Kunshan, China, and added a new coating machine to meet our projected demand for pressure Sensitive Tapes from China In 2016, we announced additional investment in capacity to support US economic growth. S. Engaged in graphic business in Asia and Luxembourg as well as in RFID and heat transfer technology. These infrastructure investments are Long-term. Essentially, these investments may not generate expected returns due to market changes, failure to complete implementation, and other factors. Significant changes in our expected needs and/or returns for infrastructure investments may have a significant adverse impact on our business. If our productivity gains are not as good as expected, our profitability in the future may be significantly adversely affected. We take restructuring actions aimed at reducing our costs and improving the efficiency of our business units. In 2015, for example, we announced more than one Our annual transformation plan for our former RBIS division focuses on streamlining our go-to- Optimize management efficiency and consolidate our manufacturing footprint. In addition, we intend to continue our efforts to reduce our operating costs, which in the past include, and may continue to include, reduced facilities and square feet, layoffs, organizational restructuring, standardized processes, and manufacturing relocation. The success of these efforts is not guaranteed, and a lower level of productivity may reduce profitability. In addition, actions to reduce costs may put us at risk of production, loss of sales and loss of staff. Foreign exchange rates and fluctuations in these rates may have a significant adverse effect on our business. For the fiscal year ended December 31, 2016, about 75% of our sales came from foreign sales, so we were affected by fluctuations in foreign currencies such as the euro, RMB (renminbi) GBP, which can lead to transactions, translations and other losses and may have a negative impact on our sales and profitability. The sales profit margin of our products in foreign countries may be significantly adversely affected by fluctuations in foreign exchange rates. We monitor our foreign currency exposure and may use hedging tools from time to mitigate trading exposure to foreign currency changes. The effectiveness of our hedging depends to a certain extent on our ability to accurately predict future cash flows, which is particularly difficult during periods of uncertain demand for our products and services and high exchange rate fluctuations. In addition, hedging activities can only offset part, or not offset part at all, in the significant adverse financial impact of adverse changes in foreign exchange rates in a limited period of time, hedging is in place, due to factors such as demand fluctuations and currencies, we may suffer major losses due to hedging activities. 9 directory in addition, about the short attention-and long- The long-term stability of the euro and its ability to act as a single currency for euro-zone countries may result in individual countries recovering or threatening to restore their previous local currency, and the euro may depreciate. If this happens, the assets we hold in a country that redistributes the assets The introduction of its local currency may depreciate significantly, the cost of raw materials or our manufacturing business may increase significantly, and the demand and price of our products may be significantly adversely affected. In addition, if it is necessary for us to do business in additional currency, we may be affected by additional income fluctuations as the amount of these currencies is translated into US currencyS. dollars. We have acquired the company and may continue to acquire other companies. The acquisition brings significant risks and uncertainties, including those associated with integration, technology and personnel. In order to expand our product line and expand to new markets, we have made acquisitions in the past and may do so in the future. In 2016, we completed the acquisition of Mactac\'s European business, a leading high Quality pressure- Sensitive materials that serve several graphic, professional labels and industrial tape segments for US dollars. We also announced an agreement to acquire Hanita paint. Manufacturers of sensitive materials for special films and laminated products, for a price of $75 million, subject to customary adjustments. On February 2017, we announced an agreement to acquire Yongle tape Co. , Ltd. , A manufacturer of professional adhesive tape and related products used in various industrial markets, for a price of $0. 19 billion, need to make custom adjustment, additional income is According to the acquisition of enterprises to achieve certain performance targets in the next two years, the opportunity to pay up to $55 million. Various risks, uncertainties and costs associated with the acquisition. Effective integration and cost savings of systems, controls, objectives, personnel, product lines, market segments, customers, suppliers and production facilities may be difficult to achieve, especially considering our geographically dispersed organization, the result of the consolidation action is uncertain. In addition, we may not be able to retain the key personnel of the acquired company, successfully implement the integration strategy, and achieve the expected performance goals of the business units integrated by the acquired company. Before and after the acquisition, our business with the acquired company or company may be affected by uncertainty or management attention transfer. There is no guarantee that any acquisition will succeed and contribute to our profitability, and we may not be able to identify or execute new acquisition opportunities in the future. Stripping off any of our business or product lines can have a significant adverse impact on our business. We constantly evaluate the performance of our business and may decide to sell the business or product line. While we believe these divestitures are in our best interests for a long time Term strategies, they can lead to a lot of writing Loss or impairment of assets including goodwill and other intangible assets. For example, in May 2015 we completed sales of certain assets and liabilities related to the product line of our former RBIS division, losing money and generating impairment costs and exit costs, including those related to severance pay. Any divestiture we make in the future may also involve additional risks, including operations, separation of products and people, transfer of management attention, disruption to our other businesses, and loss of key employees. When divesting a business or product line, we may not be able to manage these or other risks successfully, which may have a significant adverse impact on our business. Due to economic conditions or other market factors, the difficulty in collecting Accounts receivable may have a significant adverse impact on our business. While we have the process of managing the issuance of credit to our customers and believe that our suspicious account allowance is sufficient, we have already experienced and may experience it in the future, losses caused by our inability to collect certain accounts receivable. The financial difficulties of the customer may lead to a reduction in business with that customer. We may also bear higher credit risks associated with accounts receivable from customers experiencing financial difficulties. In the event of these circumstances, we are unable to collect accounts receivable from major customers, which may significantly reduce our cash flow and income and have a significant adverse impact on our business. Changes in our tax rates may affect our future results. Our effective tax rates in the future may be affected by changes in national income portfolios at different statutory tax rates, changes in valuation of deferred tax assets and liabilities, changes in tax laws and regulations or their interpretation. There is no guarantee that these changes will not have a significant adverse impact on our business. The amount of the various taxes we pay depends on the ongoing compliance requirements and audits of federal, state and foreign tax authorities. We regularly accept inspections of income tax returns by various tax authorities. We regularly assess the likelihood that these checks will produce significant adverse results to determine whether our tax provisions are sufficient. In addition, tax enforcement has become increasingly active in recent years, including recent actions by the European Commission against unpermitted state aid, with a greater focus on transfer pricing and inter-company documentation. Our estimation of the potential results of uncertain tax issues depends on our assessment of the relevant risks, facts and circumstances that existed at that time. We use these assessments to determine whether our income tax and other tax provisions are sufficient. Related accounts Our future results may include a favourable or adverse adjustment to our estimated tax liability during the assessment or resolution period, which may have a significant adverse effect on our effective tax rate, and have a significant adverse impact on our business. In some cases, we may not be able to implement Deferred tax assets. If we are unable to generate sufficient future taxable income in certain jurisdictions, or if a potential temporary difference has changed significantly within a taxable or deductible time, we may be asked to raise our valuation allowance for deferred tax assets. This will lead to an increase in our effective tax rate and may have a significant adverse effect on our future results. In addition, changes in the statutory tax rate may alter our deferred tax assets or balance of liabilities, with a favourable or adverse effect on our effective tax rate. The calculation and evaluation of the feasibility of our deferred income tax assets may also be significantly affected by new legislation or regulations. Potential tax liabilities and proposed changes in the United StatesS. Tax legislation can have a significant impact on our business. In 2016, about 75% of our sales came from customers outside the US. S. A large part of our assets and staff are outside the United States. S. While local authorities tax these sales revenues, we do not accumulate the U. S. Most of our unrepatriated income tax or foreign withholding taxU. S. Subsidiaries, because we intend to reinvest the operations of these subsidiaries indefinitely. If there is a change in the tax rules regarding unrepatriated income, our operating results and cash flow from operating activities may be materially adversely affected, if the change in our domestic cash demand requires us to remit foreign income without tax provisions back home, or if the United StatesS. As part of a comprehensive tax reform or other tax legislation, international tax rules have changed. Due to recent changes in the United StatesS. The government, future changes in tax laws and regulations and the impact of their regulatory application are uncertain. A major disruption to the information technology infrastructure that stores our information can have a significant adverse impact on our business. We rely on the efficient and uninterrupted operation of large and complex information technology infrastructure to connect our global business. Like other information technology systems, our systems are vulnerable to some risks, including, but not limited to, damage or disruption caused by various reasons, such as obsolescence, natural disasters, power failures, human errors, viruses, social engineering, phishing, or other malicious attacks and data security loopholes. We upgrade and install the new system, if the installation or programming is incorrect or time delay, may result in delay or cancellation of customer orders for 11 catalog, which hinders the manufacture or shipment of products, or disrupt the handling of the transaction. For example, in 2016, we announced an investment in information technology to upgrade the systems of our North American label and graphic materials business and drive supply chain productivity. We have taken some measures to reduce the risk associated with system and network outages, but we may suffer significant losses and remediation costs if an outage occurs, this may have a significant adverse impact on our business. In addition, we rely on services provided by third parties A large part of our information technology support, development and implementation is provided by third-party suppliers, which makes our operations vulnerable to the failure of any of these suppliers to fully implement or maintain effective internal control Security breaches can compromise our information and hold us accountable, which can lead to damage to our business and reputation. We maintain the information needed to carry out the business in digital form, which is stored in the data center, network and third- Third-party cloud services including confidential and proprietary information and personal information about our customers and employees. The security of this information is critical to our operations. Data saved in digital form is at risk of intrusion, tampering and theft. We develop and maintain systems to prevent this from happening, but the development and maintenance costs of these systems are high, and as technology changes and efforts to overcome security measures become more complex, we need to constantly monitor and Moreover, despite our efforts, the possibility of invasion, tampering and theft cannot be completely eliminated. Our information technology and infrastructure may be vulnerable to hacking or vandalism due to employee errors, malpractices or other interruptions. In addition, when it is necessary to pursue business objectives, we provide confidential, proprietary and personal information to third parties. While we are assured that these third parties will protect this information and, where appropriate, assess the protection measures applied by these third parties, the secrecy of the data held by the third party may be compromised. Any such breach or attack may harm our network, that is, the network of third parties to whom we disclose confidential, proprietary or personal information, the data center or third- Information stored there may be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or loss of other information may result in legal claims or litigation, disrupt our business, damage our reputation, and damage our ability to carry out our business, or resulting in loss or value reduction of profit opportunities, and loss of income due to unauthorized use of our intellectual property rights. Contract terms with third parties, including cloud service providers, may limit our ability to recover these losses. If personal information of our customers or employees is stolen, our reputation with customers and employees may be damaged, resulting in loss of business or morale, litigation or regulatory action arising from any such event, we may incur fees to compensate our customers or employees or to pay damages or fines. From time to time, we encounter unauthorized intrusion into our network, and while these intrusion do not have a significant adverse impact on our business, this may not happen in the future. After these attacks, we took additional steps aimed at improving the security of the network and computer systems. Despite these defensive measures, there is no guarantee that we fully protect our information, nor that we disclose it to which third parties, or that we store it with which third parties ( On the data center and cloud) We are taking similar precautions, otherwise we will not continue to experience the invasion of the future. Recruiting and retaining our key management and heights in order to remain competitive- Skilled staff We also use various outsourcing arrangements for certain services where the associated delay, resource availability or errors of these service providers may result in increased costs or business disruption. Recruiting and retaining key management and heights- Skilled staff In particular, due to the expansion to more geographical locations, as well as the productivity efforts we are working on and recent staff restructuring actions, it may be difficult for us to recruit and retain a sufficient number of high Skilled staff We may also not be able to recruit and retain key management and heights- If we don\'t provide the market, skilled employees Provisions on competitive employment and remuneration. If we do not recruit or retain our key management or high enough Skilled staff, we may encounter difficulties in business disruption, managing operations and implementing business strategies. The implementation of succession plans is also important for our long-term development. term success. For example, we have experienced several key management changes recently, including the appointment of a new chief financial officer in 2015 and the appointment of a new chief executive in 2016. While we believe that we have established appropriate succession procedures, failure to ensure an effective transfer of knowledge and any key management or other heights involving US Skilled staff can hinder our strategic planning and execution. In addition, we have outsourced certain services to third parties. Other services may be outsourced in the future to achieve cost savings and operational efficiency. Delays, resource availability, business issues or errors from service providers may disrupt our business and/or increase costs. If we do not develop, implement and manage the outsourcing relationship effectively, if the third Third-party providers are not performing effectively or in a timely manner, or if we are having problems transferring work to third parties, we may not be able to achieve the expected cost savings and, in order to correct the errors of these service providers, there may be delays or additional charges. We have one U. S. Collective bargaining units and various types of non-U. S. Collective labor arrangements expose us to potential stoppages, union and union battles, and other labor disputes, any of which may adversely affect our business. Work interruption or downtime may have a significant impact on the number of products we can sell. In addition, collective bargaining agreements, union contracts and labor laws may undermine our ability to reduce labor costs by closing or narrowing manufacturing facilities to restructure our business, because of restrictions on changes in personnel and wages and similar restrictions. The shutdown of one or more of our facilities may have a significant adverse impact on our business. In addition, if any of our customers encounter a shutdown, the customer may stop or restrict the purchase of our products, which may have a significant adverse impact on our business. Our share price may fluctuate. Changes in our stock prices may affect our access to financing from the capital market or the cost of financing and may affect our stock Based, among other things, on compensation arrangements. Our stock prices have experienced significant fluctuations at times, and may have experienced significant fluctuations in the future, which is affected by changes in the entire stock market and the overall demand for stock securities. Other factors, including our independent financial performance, and relationships with peers and competitors, as well as market expectations for our future performance, perceived growth levels in our industry, other companies- It will also have a significant adverse impact on our stock price. There is no guarantee that our stock prices will not fluctuate in the future. If our debt increases significantly or our credit rating is downgraded, it may be difficult for us to get an acceptable short termand long-term financing. Our overall debt level and credit rating are important factors in our ability to get short term loansand long-term financing. Higher debt levels may have a negative impact on our ability to meet the needs of other businesses and may lead to higher financing costs. The credit rating assigned to us will also affect the interest rate paid. Our short downgrade Regular credit ratings may affect our ability to enter the commercial paper market and increase our borrowing costs. If we have limited access to the commercial paper market and we are required to obtain short-term Under our revolving credit mechanism or other credit mechanism, we will face more variable interest rate risks. An increase in interest rates may have a significant adverse effect on our business. In 2016, our average variable The borrowing rate is about $281. Increase in the short term The regular rate will directly affect the interest we pay. Assuming that the 20 basis point move of the interest rate will affect our variables Loan interest rate ( We\'re 10% Weighted. Average interest rate of floating interest rate debt) It will increase interest spending by about $. The variable 5 million- Borrowing rates in 2016. Fluctuations in interest rates increase borrowing costs and have a significant adverse impact on our business. In response to the last global recession, the United States has taken extraordinary monetary policy actions. S. The Federal Reserve and other central banking institutions, including the use of quantitative easing, are used to create and maintain an environment of low interest rates. However, in December 2015, the United StatesS. The Fed has raised its benchmark interest rate by 25 percentage points for the first time since 2006. The U. S. The Fed raised the rate by 25 percentage points in December 2016 and said it might increase in 2017. While it is not clear whether these actions mean changing past monetary policy positions, including but not limited to the cancellation of QE over time, any such change or market expectation of such change may result in a long term Regular rate. This shift may be sudden and may, among other things, reduce the likelihood of acquiring new debt and refinancing existing debt and/or increasing costs, negatively affecting the market price of our common stock. Our current and future debt contracts may limit our flexibility. Our credit facility and the deed of management of our notes contain restrictive covenants that impose operating and financial restrictions on us, and any of our future debts may contain such covenants. These covenants, among other things, limit our ability to assume additional debt, create certain liens on our assets, make certain investments, sell our assets or merge with third parties and conduct certain transactions In some cases, we also need to maintain a specific financial ratio. These restrictive covenants and ratios in our existing debt agreements and any future financing agreements may limit or prohibit us from engaging in certain activities and transactions that we may have been engaged in for a long time. We may be at a competitive disadvantage compared to our competitors, which may have a significant adverse impact on our business. Additional financing may dilute the shareholding of our existing shareholders. To fund our business operations, we may make additional funding arrangements. These arrangements may involve the issuance of new shares of preferred or common stock, convertible debt securities and/or warrants. Any of these issues may result in a substantial increase in the number of outstanding shares of common stock, which will dilute the interest of ownership of our existing common stock shareholders. In addition, any new securities may contain provisions that may have a significant adverse effect on the value of our existing common stock, such as issuance of priority and voting rights. 14 catalogue the level of return on our pension and post-retirement planned assets and the actuarial assumptions used for valuation purposes may affect income and cash flow for our future period. Changes in accounting standards and government regulations may also affect our pension and post-retirement planning costs and funding needs. In consultation with the external actuaries, we evaluate the assumptions used to determine the expected benefit obligations and fair value of the planned assets of the pension plan and other post-retirement benefit plans. If we are to determine that a change in the assumptions used (such as the discount rate) is necessary, it is expected that the long term Our future pensions, projected post-retirement benefits spending, and funding needs may increase or decrease. Due to changes in market conditions or changes in the group of participants, the actuarial assumptions we use may differ from the actual results, which may have a significant impact on our pension and post-retirement liabilities and related costs The funding obligations of each plan are determined in accordance with the value of assets and liabilities on a specific date as required by applicable government regulations. Future pension funding requirements and timing of funding payments may also be affected by future legislation or regulations. Our pension assets are important and may reduce their value and are affected by market, interest and credit risks. Changes in the value of our pension assets may have a significant adverse effect on our income and cash flow. In particular, our investment value may decline due to rising interest rates or fluctuations in financial markets. In addition, we may take action to reduce financial fluctuations related to pension liabilities, which may result in charges in the short term. 2016, we generated about $41 million in non- Cash charges related to lump- Settlement of the amount of certain pension obligations of our American dismissed vested employeesS.