UPDATE 2-Avery Dennison Q4 results down; shares fall

* Q4 profit falls 46 pct; rev down 12 pct

* To exchange debt for shares

* Cutting 10 pct workforce

* Sees restructuring charges of $120 mln

* Shares fall 13 pct to 12-year low (Recasts; adds details about debt-stock exchange, background, analyst comment, share movement)

Jan 27 (Reuters) - Label and office supplies maker Avery Dennison Corp (AVY.N) plans to exchange units of certain debt worth $440 million for shares and other consideration, and is reducing its global workforce by about 10 percent as part of its restructuring program. The reduction in interest expense attributable to the HiMEDS units of debt would only partially offset the anticipated dilution in earnings per share related to the issuance of stock in the exchange, the company said.

Shares of Avery Dennison, which on Tuesday also reported lower fourth-quarter results and indicated a weak 2009, fell 13 percent to $24.20 -- their lowest level in more than 12 years.

Although the units of debt need not be settled until November, 2010, the company believes that taking the dilution now is appropriate, given "the benefits from having lower leverage in today's environment."

The company, which makes self-adhesive labels and other products used by retailers, auto suppliers and a host of other industries, did not give an estimate for the number of shares it will issue as part of the exchange.

Avery Dennison, which went through a tough 2008 due to weak macroeconomic conditions, began a restructuring program in the fourth quarter. The company expects to take related charges of about $120 million, of which a majority will be incurred in 2009.

Avery Dennison, which also makes specialty films and tags used by clothing retailers, expects annual savings of $150 million over the next two years.

If 2008 volume trends continued throughout 2009, adjusted earnings for the year would come in near $2.00 per share, the company said. Analysts on average were expecting 2009 earnings of $2.62 a share, before items, according to Reuters Estimates.

For the fourth quarter, the company reported net income of $42.6 million, compared with $79.4 million a year earlier.

Excluding items, earnings were 65 cents a share. Revenue fell 12 percent to $1.51 billion.

Analysts on average were expecting earnings of 43 cents a share, before special items, on revenue of $1.57 billion.

Sales at the company's pressure-sensitive materials (PSM) division, which makes labels, fell 9 percent to $808.1 million in the fourth quarter.