AVY 10-K & 10-Q changes, risk factors and insider trading

The demand for our products is impacted by the effects of, and changes in, worldwide economic, social,geopolitical, geopoliticalsocial and marketlabor 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, economicsocial 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 70%69% of our net sales wereoriginated producedoutside inthe international operations.U.S.

Macroeconomic developments such as impacts from slower growth in the geographic regions in which we operate; inflation,inflation resulting from, among other things, increased raw material, energy,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.

TensionsTrade-related remainuncertainty inremains trade relationselevated between the U.S. and certain other regions and countries, including Canada, Mexico, China, India and the European Union. TheIn 2025, the U.S. recently announced intentions to imposeimplemented a significant10% global baseline tariff rate on nearly all imports, with higher rates on certain goodsgoods. fromAdditionally, Canadait andapplied Mexicosignificant and a smaller tarifftariffs on certain goods from China.Canada, EachMexico, China and the European Union, each of these countrieswhich announced that they would impose reciprocal tariffs, with Canada and Mexico each agreeing upon certain concessions with the U.S. to temporarily delay the mutual imposition of tariffs. The tariff on certain goods from China has gone into effect, with China imposing reciprocal tariffs, and the amount of these tariffs or the classes of goods on which they are imposedapplied continues to evolve and could significantly increase.change. The U.S. hasgovernment alsocontinues indicatedto negotiate with countries regarding the tariffs. In July 2025, the U.S. and the European Union agreed to a framework for a trade deal that itincluded maya imposebaseline reciprocaltariff tariffsrate of 15% on most goods imported from otherthe countriesEuropean orUnion regions.into the U.S. While the direct impacts on our operations toafter dateour 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. TheseThe actionsindirect orimpact otheron 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 relationsrelations, 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 forto 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,2023, with sales representing less than 1% of our total net sales in 2024. 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.2025. 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 marketlabor conditions in the U.S. or other countries.

Fluctuations in foreign currency exchange rates, such as the unfavorable impacts associated with the ArgentineIndian peso, Chinese renminbirupee and Brazilian real and favorable impacts associated with the euro in 2024,2025, 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 decreasedincreased our 20242025 net sales by approximately $33$29 million compared to the prior year.

A substantial portion of our employees and assets are located outside of the U.S. and, in 2024,2025, approximately 70%69% of our net sales waswere 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.

Raw materials represent a significant portion of our costs and a critical elementfactor 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 2021past and 2022,years, we implemented targeted price increases in our Materials Group reportable segment to address raw material inflation,inflation; whichmore beganrecently, moderatingwe inimplemented 2023deflation-related andprice largelyreductions stabilizedas ina 2024.result of 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,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 havenegatively a material adverse effect onimpact our sales and profitability, and any sustained inability to obtain adequate supplies could have a material adverse effect on 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 industrialmedical tapestapes, 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,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,purchases and new intelligent label program rollouts, which are affected by announced pricepricing increases,actions, changes in our customer incentive programs, orour changes in the customer’scustomers' ability to achieve incentive targets.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 marketcustomer 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 materialmaterials 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 andpreferences, 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, presentspresent 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.

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. ConcernThe regardingextent of the impact of climate change hason ledour business is uncertain, as it will depend on the limits imposed by, and timing of, new or stricter laws and regulations, more stringent environmental standards and expectations, and evolving customer and consumer preferences, but it is likely to continueincrease leadingour costs and could have a material adverse effect on our business. After partnering with a third-party expert to increasingassess demandsour bydisclosures legislatorsagainst the recommendations regarding the information that companies should disclose to allow their stakeholders to assess and regulators, customers, consumers, investors, employees and non-governmental organizations for companies to reduceprice their GHGclimate-related emissions. One of our 2025 sustainability goals is to achieve at least a 3% absolute reduction in our GHG emissions year-over-year and at least a 26% absolute reduction compared to our 2015 baseline by 2025;risks, we have alreadypreliminarily exceeded the cumulative 2025 GHG emissions reduction goal. As part ofaligned our more ambitious 2030 sustainability goals, we are aiming by 2030 to reduce our Scope 1 and 2 GHG emissions by 70% compared to our 2015 baseline and workreporting with ourFinancial supplyStability chainBoard’s toTask reduceForce Scopeon 3Climate-related GHGFinancial emissions.Disclosures We could face risks to our reputation, investor confidence and market share if we are unable to continue reducing our GHG emissions at levels satisfactory to our stakeholders.requirements.

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. AlthoughIn we made no acquisitions in 2024, in 2023,2025, we acquired SilverTaylor Crystal, Lion Brothers and ThermopatchAdhesives 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.

A significant consolidation of our customer base could negatively impact our business. WhileIn 2025, no single customer represented 10% or more of our net sales, with our customer base tends to be highly fragmented,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 be accompanied byincrease 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.

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 customerscustomers, could materially adversely affect our business.

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 andor 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.

As our business environment changes, we have adjusted and may need to further adjust our business strategies orstrategies, restructure our operations or particular businesses.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 $42$47 million in 20242025 compared to $79approximately $42 million forrelated to restructuring actions in 2023.2024. Our restructuring actions in 20242025 related to various locations across our company, primarilycompany in both our Solutions Group reportable segment. Our restructuring actions in 2023 included a restructuring plan to further optimize the European footprint of ourand Materials Group reportable segment.segments. We had incremental savings from restructuring actions, net of transition costs, of approximatelymore $63than $60 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 returnssavings onfrom investmentsthese actions could be lower.lower than expected.

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, IndiaIndia, 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.platform. Infrastructure investments, which are long-term in nature, may not generate the expected return due to changes in the marketplace, failuresunanticipated 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.

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.

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 thethat 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 ourthese 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 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 strengthening authentication; continuing to maturematuring 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; upgradingmaturing legacyour systemsoperational totechnology simplifysecurity and standardize business processes and applicationsprogram; implementing more robust cloud security across multiple platforms; adoptingestablishing AI policies, governance and risk management; continuously improving information technology project and portfolio management discipline; enhancing accountability with more aggressive key performance indicator targets; continuing to maturematuring 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.

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.

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.

The amount of variousincome taxes we pay is subject to ongoing compliance requirements and audits by federal, state and foreign tax authorities.

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 income 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,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.

Competition to recruit and retain critical talent haswas increasedchallenging 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 managemanaged 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 Board’sthe Talent and Compensation Committee,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.

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 labor costs by closingclose or downsizingdownsize 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 ourretain talent pools in the impacted regions/countries.

If our indebtedness increases significantly or our credit ratings are downgraded, we may have difficulty obtaining acceptable short- and long-term financing.financing on acceptable terms and conditions.

At December 28,31, 2024,2025, we had approximately $3.15$3.73 billion of debt. Our level of indebtedness and credit ratings are significant factors in our ability to obtain short- and long-term financing. 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 resultexpose in the same exposureus to variable interest rates.

InAfter recentseveral years,years of raising interest rates in an effort to curb rising inflation across the globe, the U.S. Federal Reserve and similar monetary policymaking entities around the world significantlymodestly raised interestreduced rates in an effort to curb rising inflation across the globe, beginning to modestly reduce rates in 2024.2025. As of December 28,31, 2024,2025, the U.S. Federal Reserve’s benchmark interest rate was between 4.25%3.50% and 4.50%,3.75%, down from between 5.25%4.25% and 5.50%4.50% theat sameyear-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 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, 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.

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 significantlydeclined during the second half of 20232024 and theremained firstrelatively half of 2024 but declinedstable 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 ourthe industries,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.

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 1.23.2 million shares of our common stock at an aggregate cost of $247.5$575.6 million. As of December 28,31, 2024,2025, shares of our common stock in the aggregate amount of $346.9$526.3 million remained authorized for repurchase under thisthe 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 9%7% 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 the discretion of our discretion.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.

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 divertsdivert the attention of management.

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 arecontinue continuallyto evolvingevolve and imposingimpose additional requirements on our current and former manufacturing facilities, imposecan 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.

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,software and take other precautionary measures, we cannot guarantee that a violation will not occur. A prohibited shipment hascan 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.

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 delaydelayed or losslost of sales opportunities.sales.

The actuarial assumptions used forin valuationthe purposesmeasurement 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 legislationlaws 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.

Goodwill is initially recorded at fair value and not amortized and is reviewed for impairment annually (or more frequently if impairment indicators are present). As of December 28,31, 2024,2025, the carrying value of our goodwill was $1.98$2.27 billion. In 2024,2025, we determined that the goodwill of our reporting units was not impaired. WeIn reviewperforming impairment tests, we have the option to first assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for goodwill forimpairment. impairmentIf bythe 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, operatingprofit margins, growth rates,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.

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 comparisoncomparisons 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.

•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 weekdays in our fiscal year and the calendar shift resulting from an extra weekdays 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.

Subsequent to fiscal year-end 2024, inIn January 2025, the Audit Committee of our Board of Directors approved a change to our previous 52- or 53-week fiscal year generally ending on the Saturday closest to December 31 to a fiscal year coincident with the calendar year. Our 2025 fiscal year that began on December 29, 2024 willand endended on December 31, 20252025, andwhich resulted in four extra days compared to prior years; fiscal years 2026 and beyond will beginbe coincident with the calendar year beginning on January 1 and endending on December 31.

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

Net income increaseddecreased from approximately $503 million in 2023 to approximately $705 million in 2024.2024 to approximately $688 million in 2025. The primary factors affecting this increasedecrease were:

•Higher volumeemployee-related costs

InDuring the fourth quarter 2024,2025, we recorded $13.1$48.8 million in restructuring chargescharges, 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, reflectingas a result of actions intaken to optimize our Solutionsoperational Group reportable segment.footprint.

DuringIn the fourth quarter of 2024, we recorded $28.8$13.1 million in restructuring charges, net of reversals,charges related to our 20232025 actions. These charges consisted of severance and related costs for the reduction of approximately 1,28090 positions, as well as asset impairment charges, atreflecting 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,actions at numerous locations acrossin our company.Solutions Group reportable segment.

We realized approximatelymore $63than million and $69$60 million in incremental savings from restructuring actions, net of transition costs, in 2024each of 2025 and 2023, respectively, primarily related to our 2023 actions.2024.

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."

In 2024,2025, net cash provided by operating activities increaseddecreased compared to 20232024 primarily due to higher net income, lower incentive compensation paymentspayments, and lowerhigher tax payments, net of refunds, lower net income and higher trade rebate payments, partially offset by changesthe in operational working capital and theprior-year settlement payment for the Adasa legal matter.matter and changes in operational working capital. In 2024,2025, adjusted free cash flow increased compared to 20232024 primarily due to higherlower netpurchases cashof providedproperty, by operating activitiesplant and lowerequipment purchasesand higher proceeds from sales of property, plant and equipment, partially offset by lower proceedsnet fromcash company-ownedprovided lifeby insuranceoperating policies.activities.

•We expectanticipate ana unfavorablefavorable impact to our full-year net sales and operating income from foreign currency translation, based on recent rates.

Gross Profit Margin

Gross profit margin in 20242025 increased compared to 20232024 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 margin in 20232024 increased compared to 20222023 primarily due to higher volume and benefits from productivity initiatives, including temporary cost-saving actions, 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 inputsdeflation-related costs,price partially offset by lower volume and higher employee-related costs.reductions.

Refer to Note 9, “Fair Value Measurements,” to the Consolidated Financial Statements for more information regarding (gain) loss on venture investments.and other investments, net.

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. 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.

DuringOur theCODM fourth quarter of 2024, we modified ouruses segment performanceadjusted measureoperating income to exclude other expense (income), net. These changes align with how our CODM evaluatesevaluate segment performance and allocatesallocate 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.

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.reductions, partially offset by favorable volume/mix. On an organic basis, net sales increased by a low single digit rate in North America, and decreased by low single digit rates in NorthEurope, Americathe Middle East and WesternNorth EuropeAfrica, Asia Pacific and aLatin high single digit rate in emerging markets.America.

In 2023,2024, net sales decreased on an organic basis increased compared to the prior year due to lowerhigher volume driven primarily by inventory destocking,volume, partially offset by the impact of pricingraw actions.material deflation-related price reductions. On an organic basis, net sales decreasedincreased by a low double-digitsingle ratedigit rates in North America,America aand highEurope, teensthe rateMiddle East and North Africa and mid-single digit rates in WesternAsia EuropePacific and aLatin high single digit rate in emerging markets.America.

Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the European Union. In 2025, the U.S. implemented a 10% global baseline tariff rate on nearly all imports, with higher rates on certain goods. Additionally, it applied significant tariffs on goods from Canada, Mexico, China and the European Union, each of which announced reciprocal tariffs. The amount of these tariffs or the classes of goods on which they are applied continues to evolve and could significantly change. The U.S. government continues to negotiate with countries regarding the tariffs. In July 2025, the U.S. and the European Union agreed to a framework for a trade deal that included a baseline tariff rate of 15% on most goods imported from the European Union into the U.S. While the direct impacts on our operations after our mitigating actions have not been significant, our business could be materially adversely impacted by changes in U.S. and non-U.S. trade policies, including potential modifications to existing trade agreements and additional tariffs or other restrictions on free trade, impacting our raw materials or finished products. The indirect impact 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. OnIn February 20,February, 2026, the U.S. Supreme Court issued a decision holdingruled that the applied tariffs were not authorized under the International Emergency Economic Powers ActAct. doesBeginning not authorizein the Presidentsecond quarter of 2026, the U.S. Customs Border and Protection began processing refunds related to imposecertain tariffs.unliquidated Whiletariffs affected by this mayruling. provideIn immediateJune relief2026, the U.S. Department of Justice filed an appeal in the U.S. Court of Appeals for the Federal Circuit asserting that the U.S. Court of International Trade overstepped by ordering refunds to non-litigants on liquidated entries. In July 2026, the U.S applied new tariffs of 10.0% and 12.5% on certain imports from these60 specific duties, there will likely be a period of trade policy instability.countries. Further developments in international trade relations, including ongoing developments on tariffs required by the U.S. or other countries, and increased deglobalization, could have a material adverse effect on our business.

•Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts receivable and inventories, net of accounts payable, divided by annualized current quarter net sales, 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.liabilities. 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.

The three and six months ended MarchJune 31,30, 2026 consisted of 91 and March181 29,days, respectively, and the three and six months ended June 28, 2025 consisted of 9091 and 91182 days, respectively.

In the three months ended MarchJune 31,30, 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volumevolume, partially offset by unfavorable mix. In the six months ended June 30, 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by unfavorable mix and the impact of raw material deflation-related price reductions and unfavorable mix.reductions.

Net income increased from approximately $166$355 million in the first threesix months of 2025 to approximately $168$372 million in the first threesix months of 2026. The primary factors affecting this increase were:

•Net benefit of pricing and raw material costs, including material re-engineering These items were partially offset by the following factors:

We recorded $15.9$34.7 million in restructuring charges during the threesix months ended MarchJune 31,30, 2026.2026 related to our 2026 actions. These charges consisted of severance and related costs for the reduction of approximately 370600 positions, as well as asset impairment charges, at various locations across our company asrelated a result ofto actions taken to optimize our operational footprint and workforce headcount.

During the first threesix months of 2026, net cash provided by (used in) operating activities increased compared to the same period last year primarily due to lower incentive compensation payments and changes in operational working capital,capital and lower incentive compensation payments, partially offset by higher tax payments, net of refunds. During the first threesix months of 2026, adjusted free cash flow increased compared to the same period last year primarily due to an increase in net cash provided by operating activities.

•Based on recent rates, a favorable impact from foreign currency translation to our full-year net sales and operating income

•Unfavorable impact from higherHigher interest expense to our operating income

•OurA full-year effective tax rate to be in the high-twenty percent range

•UnfavorableAn unfavorable impact to our operating income resulting from the normalization of the majority of our prior-year temporary costcost-saving savings,actions, which was largely relatedrelate to lower incentive compensation

ANALYSIS OF RESULTS OF OPERATIONS FOR THE FIRSTSECOND QUARTER

Gross profit for the firstsecond quarter of 2026 increased from the same period last year due to higher volume, favorable foreign currency translation and the net benefit of pricing and raw material costs, including material re-engineering andre-engineering, benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and favorable foreign currency translation, partially offset by unfavorable mix and higher employee-related costs.

Marketing, general and administrative expense increased in the firstsecond quarter of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable foreign currency translation, higher employee-related coststranslation and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs.

Interest expense increased in the firstsecond quarter of 2026 compared to the same period last year primarily due to the €500 million of senior notes we issued in September 2025.2025, partially offset by a decrease in commercial paper borrowings.

Our effective tax rate for the three months ended MarchJune 31,30, 2026 increased compared to the same period last year primarily due to a higher netlower discrete chargebenefits from increasesdecreases in tax reserves related to a court ruling impactingcertain tax group requirements in a foreign jurisdiction.reserves. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information.

RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE FIRSTSECOND QUARTER

(1) Segment adjusted operating income excluded other expense (income), net, of $7.7$3.9 million and $4.4$(7.0) million in the firstsecond quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments, outcomes of legal matters and settlements, transaction and related costsinvestments and (gain) loss on sales of assets.

In the firstsecond quarter of 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume,volume in part resulting from customer inventory stocking and our pricing actions, partially offset by the impact of raw material deflation-related price reductions and unfavorable mix. On an organic basis, net sales increased by a lowhigh single digit rate in North AmericaAmerica, a mid-teens rate in Europe, the Middle East and byNorth Africa, a high single digit rate in Asia Pacific,Pacific decreased byand a mid-singlelow single digit rate in Latin America and were comparable in Europe, the Middle East and North Africa.America.

Segment adjusted operating income increased in the firstsecond quarter of 2026 compared to the same period last year primarily due to higher volume, favorablethe foreignnet currencybenefit translationof pricing and raw material costs, including material re-engineering, and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by unfavorable mix and higher employee-related costs.

(1) Segment adjusted operating income excluded other expense (income), net, of $9.9$17.2 million and $10.1$7.2 million in the firstsecond quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions andactions, (gain) loss on venture and other investments.investments and outcomes of legal matters and settlements.

In the firstsecond quarter of 2026, net sales decreasedincreased on an organic basis compared to the same period in the prior year due to a mid-single digit rate decrease in the base business, partially offset by a low single digit rate increaseincreases in both the base business and high-value categories. Company-wide, on an organic basis, net sales of intelligent labels decreased by a low single digit rate compared to the same period in the prior year.

Segment adjusted operating income decreasedincreased in the firstsecond quarter of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable volume and growth investments, partially offset by the net benefit of pricing and raw material costs and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and the net benefit of pricing and raw material costs, partially offset by higher employee-related costs.