Ladies and gentlemen, thank you for standing by and welcome to Avery Dennison’s Earnings Conference Call for the Third Quarter ended September 27, 2014. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). This call is being recorded and will be available for replay from 8:30 am Pacific Time through midnight Pacific Time, October 28. To access the replay, please dial 1 (800) 633-8284 or for international callers please dial (402) 977-9140. The conference ID number is 21676583. I would now like to turn the conference over to Eric Leeds, Avery Dennison’s Head of Investor Relations. Please begin, Mr. Leeds.

Thank you. Welcome, everyone. Today, we’ll discuss our preliminary unaudited third quarter 2014 results. Please note that unless otherwise indicated, today’s discussion will be focused on our continuing operations. The non-GAAP financial measures that we use are defined, qualified and reconciled with GAAP on schedules A-2 to A-5 of the financial statements accompanying today’s earnings release. We remind you that we’ll make certain predictive statements that reflect our current views and estimates about our future performance and financial results. These forward-looking statements are made subject to the Safe Harbor statement included in today’s earnings release. On the call today are Dean Scarborough, Chairman, President and CEO; and Mitch Butier, Senior Vice President and CFO. I will now turn the call over to Dean.

Thanks, Eric, and good day, everyone. I am really please to announce Mitch Butier’s election to position of President and Chief Operating Officer effective November 1. Mitch has played an integral role in defining and executing our value creation strategy. He knows our businesses extremely well having held senior roles in both pressure sensitive materials and retain branding and information solution, not to mention focusing the majority of his time as CFO on their strategies and plans for execution. This move is consistent with the board’s longstanding practice of leadership development and succession planning. You may recall that I also held the role of Chief Operating Officer before taking the helm as CEO, as did my predecessor. All businesses will now report directly to Mitch. In addition, Don Nolan, President of the Materials Group is leading the company. As a result, Mitch will be assuming direct oversight for the materials businesses and Don will stay on for a brief period of time to assist him in the transition. I am grateful for Don’s leadership of the group over the past six and half years. Mitch will also continue on as CFO until we find his replacement. That process is underway. I’m very much looking forward to working with Mitch in this new capacity. We worked together now for more than a decade. I know that he has the experience, vision and leadership to effectively partner with me as well as the rest of the leadership team to achieve our strategic and financial goals. Shifting gears I’ll now turn to the results for the quarter. While we reported EPS in line with our expectation I have to say it was a challenging quarter. We experienced pressure on both sales and gross margin but those impacts were offset through tight management of…

Hello everyone. Let me starting by thanking Dean and our board for giving me the opportunity to play a greater role in the company. I’m honored, excited and confident in the company’s position and prospects. As COO my focus remains the same, ensuring the long term success of the company by delivering exceptional value for our customers, our employees and our shareholders. Now let’s review the results. In the third quarter, we delivered a 12% increase in adjusted earnings per share on 3% organic sales growth with the top line in growth in PSM offsetting a decline in RBIS. The company’s gross margin declined 100 basis points in the quarter due to declines in all three segments. PSM continues to grapple with negative impacts from net pricing and mix shifts. We also had challenges associated with manufacturing cost in the quarter primarily due to the higher than expected transition cost from the European restructuring that Dean described earlier. The lower gross margin RBIS was driven by lower volume. These factors more than offset the continued strong contribution from our productivity initiatives across the company. Adjusted operating margin in the quarter expanded 30 basis points to 8% as the lower gross margin was more than offset by productivity, tight spending controls and reductions in incentive compensation expense. The adjustments in incentive comp provided a 60 basis point benefit while the European transition cost reduced operating margin by about 30 basis points. So the impact of these two items with the net benefit of about 30 basis point or $0.03 in the quarter. Our adjusted tax rate for both the third quarter and year-to-date was 33% in line with our expectations as we continue to anticipate the full year tax rate to be comparable to last year. Free cash flow was $153…

Thank you. (Operator Instructions) Our first question is from the line of Ghansham Panjabi with Robert W. Baird. You may begin sir.

Hey guys, good morning. And Mitch congrats on all these changes. Sounds like you will be a busy guy and hope for your business card can hold all these new titles.

Thank you, Ghansham.

On the title, I mean they all make sense but one that stands out is on the PSM side. So just on that first up, what changes, if any, should we expect for the segment going forward I guess with the leadership adjustment there?

Yes, Ghansham, I expect the fundamental strategy to be the same and I think we’re in the process of tweaking the strategy a bit. The execution of the really complex project in Europe we would probably bit off a little more than we chew and lean forward pretty aggressively getting that back under control. And I think a more of a focus on growing in higher margin segments. And by the way, this graphics transition once it's done will help us be able to do that. So it's really fundamentally the same strategy. Just there’s a little bit of shift in priorities and execution.

And Ghansham, as far as from an organizational standpoint, right now given what Dean just said for a period of time I want to spend some time really, I know this business well but I want to do a deep immersion with the team and just spend more time in that organization.

Okay. That makes sense. And then on free cash flow, can you just quantify some of these? You mentioned higher clarity on the vendor payment so on and so forth and the impact it will have on 1Q at the expense of 4Q, but can you just quantify that in fact for us?

There is a tremendous amount of variation around year end as we have talked about, Ghansham. So we are not going to quantify and that's what we just said it's now going to be less than and it's the timing of vendor payments and customer receipts as we have talked about, but also if we look at where we are in the productivity front on working capital, we are a little behind from where we want to be. And so the key focus her is can we achieve our objective by the end of the year where we are going to be on working capital. We do expect it to be lower than $300 million at this point, could be a pretty wide range, a good portion of that. Any shortfall will come through next year. Our overall focus here is continuing to maintain long term capital discipline while we generate significant cash flow over the long time. So if you recall last year we made a significant Q4 free cash flow of $225 million and a big outflow in Q1. So we actually see a rebalancing of this is actually could be a good thing.

Okay. And just one final one. The caution on Europe, is that just being pragmatic based on the news headlines you are reading about or is there something specifically that you are seeing right now? Thanks/

Yes, Ghansham, I was just over with the team last week and we are still seeing a decent growth but it's just not as strong as it was. For the last few quarters we have seen good growth in Western Europe -- good growth in Eastern Europe but not at the higher rate that we have seen before. I actually think our results for Q4 will show okay but they will be different. In other words, our graphics sales weren’t very good in the third quarter because we had some execution problems. I believe those will rebound as we drive down our backlogs but on the labeling and packaging materials we have definitely seen a little bit of softening I would say the last couple of months in Western Europe. And yes, we are being pragmatic about the news coming out of Europe especially.

Okay. Thanks so much guys.

Our next question is from the line of George Staphos with Bank of America-Merrill Lynch. Please go ahead sir.

Thanks, good morning everybody. Again Mitch, congratulations well earned on the new responsibility. I just take back a little bit off of Ghansham's questions to start, do you see yourself in the role of heading up PSM indefinitely or do you think that it's something that transitions to some other individual in the next year or two? And then similarly can you update us and really it's just perhaps started where you stand on finding the right CFO to run Avery from here and whether it's more likely internal or externally focused?

So as far as your question of do I see myself running it indefinitely, one thing I have learned is nothing is indefinite. So not making any decisions on that whole front right now. For me the key thing is we’ve got the right strategy, we got a great team within the materials organization. We know we got to do, we know we've got to make some course corrections and that's what the team and I will be focused on. And like I said before, I want to spend a period of time doing a deep immersion with the organization and on the strategies. And we'll evaluate as time goes by about how we adjust of course from the organizational front.

George, as far as the CFO search goes, we have actually started the process. We are going to do an external search. We do have some internal candidates as well, so we are going to be doing some very active benchmarking there. And I expect it will take a few months, because -- especially at this time of year.

Yeah. Understood. Well, good luck in that process. It's obviously an important seat to fill. If we switch to operation, can you talk a little bit about what you're planning to do to adjust pricing in some of your lower priced geographies if I'm paraphrasing correctly?

Yes. So George, I think we talked about in a few regions we have been going after some lower margin business that was still EVA positive. I think we may have overcorrected there in a couple places. And so, fundamentally, we have adjusted prices in a few countries to capture that through a combination of factors either direct price increases or reducing rebates.

Okay. I mean, just a quick question on that. If it's EVA positive then, why do you need to increase pricing? And then, I had a follow-on on RBIS and I'll turn it over.

I think in Jan -- on the average it was the -- the moves have been EVA positive, especially even last quarter if you take the extra transition cost we had in Europe into account. But in some countries, in some product areas it wasn't EVA positive and that's where we are taking the corrective action.

Okay. Understood on that. My last one, then I'll turn it over. With RBIS given all that you bring to bear and all that you've told us about in terms of your value proposition, how is it that you are losing market share in the U.S.? And then, Mitch, just a quick one, just on share buyback, some numbers that the team and I were running, looks like the average share buyback price we would calculate for the third quarter was around $49 a share, is that correct, and if not could you tell us what the average repurchase price was? Thank you.

Yes, George, on RBIS, we've had very effective share gain in Europe and the strategies have worked extremely well there. In the U.S. actually there is some market segments where we are doing very well, especially in the performance and athletic segment and some of the fast-fashion segments. The area where we I would guess -- I won't say struggle, but we're trying to change the value proposition, is in the value and kind of contemporary fashion or probably easier to describe as department store sector. We have a couple of issues. One is that the portfolio of customers that we have traditionally had unfortunately, it's doing worse in the market. And so, one of the strategies here is to get and attract new customers. And we are having some early term success but it does take some time for that to play out. Also -- and I want to give the team some credit here. We have been doing a good job of pricing for value in all of our segments. And I think we just frankly got a little bit out of balance in a couple of these market segments. And so, we are again in the process of adjusting that and capturing some new business. And here is a case where we had lowered our fix cost and the variable margin is still very attractive. So again, I think it will take us a quarter or two to get back on track. But I think the team has good plans. We have made some changes in our commercial leadership in North America and actually moved one of our senior European leaders to North America who had been successfully executing that strategy. So I am confident we will be fine.

And Gorge, your math is right. It's about a $0.25 less than $49 a share average for the quarter. If you look at our absolute share buyback within Q3, it was 1.9 million of shares, which is basically the same we had in Q2. So when this stock started declining at the end of July, we ramped up our share repurchase activity. But as is said, it's -- we have limits based on daily trading volume. And as you know, volumes drop quite a bit off in the summer month. So we accelerated, but it's relative to trading volume. And as I said further, we have accelerated even further in the month of October.

George, one more piece of color on RBIS, especially for the North American business. There -- in especially the value segment, customers tend to buy a couple different ways. They use either nominated programs. In other words, they say you get a 100% of either my business or programs or they qualify multiple vendors. We then focus more on nominating programs. We have had a lot of success there because that really leverages our scale. But we have been less successful in the open platforms. So again, we have the ability to go get some more of this open business and that's really where the teams are focused.

Our next question from the line of Scott Gaffner with Barclays Capital. Please begin sir.

Thanks. Good morning. Congratulations, Mitch.

Thanks, Scott.

Just wanted to focus on PSM for a minute and some of the negative price cost issues, seems like they've been gone on for a couple of quarters. Does it make you sit back and may be reassess whether or not you put that business on more of a contractual faster going forward or do you think this is just a -- maybe your input cost for rising faster than you expect that input should take more time to get back go that price cost neutral situation?

Yes. First of all, we're not seeing a lot of raw material inflation right now as you might expect. I think the strategy here overall is the right one. Grow the top-line faster through innovation, grow in higher margin category, accelerate growth in emerging markets where we tend to have higher than average margin. And so, I like -- we like the fundamental strategy. What we've been faced with on the margin is that our variable margins in the short-term aren’t as rich as we would like them to be. So, how do we address that? We address that by more targeted segmentation around pricing, making sure that some of the business we go after is definitely EVA positive. We didn't help ourselves with the operational hiccups that we had in the quarter. We would have had at least 20 or 30 more basis points of flow through in the quarter without those hiccups. So we've got to hone in a little bit on the execution, I’m confident that we'll get there. So it's a number of factors. And I think the team is -- understands what we need to do. We have got really good clarity about what's going on in the market. So we'll start to make some progress.

And the thing I'd add on the mix front, from a product mix standpoint, this is something that we have been looking to address in focusing more growth on specialty and so forth. And so, we are seeing things. Despite the very slow graphics quarter in Europe, which is higher variable margin, we are starting to see a stabilization because of the successful implementation of those efforts. So that's one thing and the other is country mix I highlighted as well. So the very low growth in China. China has higher variable margins as well, also is impact for us, so, okay.

And you mentioned, may be a focus on growing the graphics business going forward. My understanding is that's a little bit of a leading indicator that segment just given its sensitivity to the economic situation. Is it – are you talking about growing it, because you’d actually see things getting better? I know you mentioned Eastern and Western Europe may be getting worse but maybe there is some underlying trends within your customers that makes you feel better about that business or is that just a long term opportunity?

Well we have had great growth in Graphics in North America, in Asia and I'm going to carve up the piece of business that's been sourced from Europe or Asia, and in South America. And up until we had some of the operational hiccups we also had higher than average growth at Europe at the same time. So, in the third quarter it wasn’t good because frankly we couldn’t get orders up in to work and we will have that backlog driven down in this quarter and be back. So, customers like our value proposition, we’re going to be more competitive after we complete the restructuring program. So, it’s an opportunity for us. We have relatively low market share and we have some fantastic new products. I think the one new product that is very popular right now is our Supreme Wrapping Film for automobiles. And it’s a great product, it’s got very nice margins, installers like it, customers like it. So, I encourage all of you guys to go out and stiff up your cars and try some of this new Supreme Wrapping Film.

Interesting, then just lastly on all of, on both segments and then even on the corporate line it looks like maybe you mention the lower incentive compensation, I assume there were maybe some reversal of prior accrual. Can you just quantify how much was for the each of the segments?

Well so we’re just going to provide the information, Scott, at the overall company level but if you’re trying to get a feel for what was for the quarter versus reversal of some prior quarter item. So I mentioned that it was a 60 basis point benefit to the quarter. So year-to-date it’s about a 30 base point benefit year-to-date. So you can compare the impact of the various quarters and understand what the implication would be to ‘15. And then within the segment, won’t provide specific numbers but what I’ll say is its less for PSM and more for RBIS meaning more of a benefit for RBIS and still benefit in PSM but less though.

Great, thanks guys.

Our next question is from the line of Anthony Pettinari with Citigroup. Please go ahead, sir.

Good morning and congratulations to Mitch.

Thank you.

Just a follow-up on PSM, you’ve talked about this more targeted segmented pricing. And I'm just wondering how long it takes to implement this kind of change, is this something that we could see benefits from in 4Q or is it sort of a longer term project? And when you look within the organization in terms of people or systems or processes what do you really need to do to implement this kind of change in pricing, and again sort of what’s the timeframe for this implementation?

Yes, Anthony, it takes time and I think we have the data and we got the capabilities to do this. I don’t think there is a lack of knowledge here. So I don’t want to put a specific time frame on it because it’s difficult to predict and let’s face it. There are a lot of factors in here mix, what product lines are growing, country mix and as well as regional mix in terms of overall demand. But I think we will start to see some progression over the next few quarters.

Okay, okay. That's helpful. And then just on RFID I was wondering if you could talk a little bit about growth of RFID in the quarter and what kind of rate of growth you all can really see this year? And then just early look into 2015, you’ve anniversaried the customer loss earlier. What kind of growth do you expect in RFID in ‘15?

I think the -- we’re not going to give guidance on RFID for 2015. We’re happy to do that when we get to our Q4 earnings call and provide guidance next year. It’s growing about 20% this year and – it’s very much in line with our expectation. So we feel good about our position there and the market growth.

Okay. That's helpful. I’ll turn it over.

Our next from the line of Rosemarie Morbelli with Gabelli & Company. Please go ahead. Rosemarie Morbelli - Gabelli & Company: Thank you, and congratulations to Mitch as well. If we get Europe and Russia, Ukraine you have a new distribution center in Ukraine, can you give us a feel for how that is doing? It was doing quite well last quarter, I understand it is small. And when you look at October, do you see continuation of the decline or continuation at this particular lower level?

I think from, Rosemarie from European perspective we've definitely seen a slowdown in Russia which is probably not a surprise to most folks. And really all of Eastern Europe I don’t have any specifics on Ukraine, so it is awfully small. I will say though that the rate of growth that we had forecast or it’s part of our guidance range for the quarter, we’re at or a little bit above for the whole company after three weeks into the quarter. So I still got my fingers crossed, we got a long way to go. And when things slow down they tend to slow down near the end of the quarter rather than especially at the end of the year rather than in the beginning. So I'm cautiously optimistic. I think Europe, again, we’re concerned about the economics like everyone else, in Germany and in France, but I think that some of that will be offset by the improvement in our graphics business as we drive down the backlog. So we may not be indicative -- our numbers for Q4 may not be indicative of what’s exactly is happening in the market because we do have this large backlog of orders that we’re processing now.

Okay. And if we look at the issues on PMS the manufacturing consolidation, could you give us a little more details? And as you were enabled to deliver products to your customers when did you have any loss of customers because of that? And second more related to the European slow down, any increase in bad debt, potential customer bankruptcy filing?

I think on the order side we defiantly lost the business during the quarter. When you can’t fulfill customer orders they generally look for other places to go. I will say though that the sales rate as we’re driving down the backlog has continued, the order rate I should say it continued to improve. So that I think is good. I think customers are always disappointed when you do that but once we get back into a normal service position they like our products, we've got a number of new products that we’ll be launching in graphics in the beginning of the year and we’ve got to execute obviously. And so we did, we did lose some business in the quarter for sure.

As for the collectability of receivables and so forth, Rosemarie, we haven’t seen anything abnormal in the change. And actually if you look at our measures we have for quality of receivable they’ve actually improved from where they were last year but we do have small adjustments and so forth and hits periodically but nothing else out of the norm right now.

Okay. Thank you.

Our next question is from the line of John McNulty with Credit Suisse. Please go ahead.

Yes, good morning, and thanks for taking my questions, and Mitch again congratulations. So can you give us an update or remind us as to what percent of your raw materials are petroleum or petro chemical based?

Well, so it’s about half of our raw material base is driven by paper stocks and then the balance I say 35% are film and then the 15% are monomers, resins, other chemicals that we use in the manufacturing (inaudible). One thing I will note though and that is there is probably more of a decoupling between oil prices and some of the feed stocks that we buy mainly because of the -- especially in the U.S. when you have a lot more shale gas and oil being produced they don’t have the same derivatives as oil, let’s say, from the Middle East. And therefore, it doesn’t have same linkage. In other words, there are some products that we would buy that are less sought in the market place because of that change.

Okay, fair enough. So basically what it sounds like is the big drop in oil volume may see some benefits that may, it may not be necessarily the link that we've seen in say the last 10 years or so. Is that kind of a fair way to think?

That's correct. We haven’t seen a big change now. Obviously, we’re interested in making that happen if we can. So that's an area of focus for procurement there.

Okay, fair enough. And then with regard to corporate and other, it definitely took a noticeable leg down; it’s actually the lowest level we've seen in five or six quarters at least. Is this all the competition accrual adjustment or is there something else, and I guess how should we be thinking about what that level is going forward?

That's a portion of the comp reduction there but only the portion that relates to corporate employee. So there is always some variation in this line. There is a number of things that can impact that. The right number to be thinking about is roughly $80 million per year.

Okay, fair enough. And then just the last question on the RBIS side, in terms of the business that you lost some maybe not necessarily where you were betting on the wrong horse but just some of the pricing issues you had mentioned. When you think about the type of competitor that took the business, is it typically a smaller regional competitor there where once you kind of adjust your pricing it’s pretty easy to take that business back or are they may be slightly larger where you’re going to really have to kind of scrap for? So if you can give us some color as to maybe where you think you lost the business that would be helpful?

Yes, I don’t have that much detail, John, but typically it does tend to be smaller regional competitors. I mean that's still the bulk of the market place especially for those types of customers.

Okay great. Thanks very much for the color guys.

Our next question is from the line of Chris Kapsch with Topeka Capital Markets. You may begin.

Good morning. I had a few follow-ups on this strategy to selectively adjust your pricing in pressure sensitive. First, just wondering which geography is this issue sort of most acute? And then second you mentioned adjusting pricing maybe reducing rebates, just wondering also if there is the willingness to walk away from business that you’ve gained that you previously viewed as EVA positive but you may no longer view it that way. So are you willing to cede share as you adjust your strategy here? And then also just wondering if there is any sense for competitive response or maybe it’s too early gauge?

Yes, I think in places like Asia, that’s where we’re doing some of the rebate adjustments. And we have. We’re constantly managing mix of our product portfolio. So there is business that we have “walked away from” and we’re – and the focus there is growing faster in higher margin profit category so. That's the balance that you’re always trying to achieve.

Which geography generally have, do you feel like this issue is kind of most acute? I mean, you mentioned the reducing rebates in Asia but is this, is it across the Board or is it more in western markets?

Yes, it’s actually, Chris, this is fairly typical of the way the business works everywhere. I don’t think there is one place where it’s worse or better etcetera, etcetera. I mean this is a constant, I won’t call it a balancing act but – we've done a, I think the team has done a really good job of improving margins very successfully over the past few years, part of its through innovation. So that's where we get a lot of that the margin increase newer products either with lower cost and, therefore, we can substitute products with higher margins or brand new products that just have higher margins. And then again growing in product categories like durables our specialty products or graphics where we have higher variable margins and flow through so. So this has always been part of our formula on a go forward basis.

Okay, and if I could just follow up with a sort of bigger picture one. If you think about the pressure sensitive industry notwithstanding the recent slowdown and sounds like in China obviously emerging markets are pretty good growth. Europe has been growing certainly better than doing better than the broader European economy most recently. And then at least North America it appears as though, and I think the industry data even suggest us that the pressure sensitive industry broadly is no longer a GDP plus industry. In fact, maybe this year it may have even grown less than GDP. So I'm just wondering is there -- can you just comment about the North American pressure sensitive industry and its growth vis-à-vis the broader economy in North America? Has something changed or it’s just not as growthie or how do you see that?

Yes, it’s a little perplexing. You’re right that Europe has the market in Europe has grown nicely actually above GDP for the last 18 months whereas the U.S. has been I think for the last three or four quarters has been pretty flat. I try not to draw too many conclusions from that. We had growth in North America in the third quarter and that was nice to see. We don’t have the market data. So it’s difficult for us to calibrate on that. So I am actually perplexed by it. I still think there is growth in both geographies. And certainly for us whether it’s in graphics or durables or some of those other more specialized niche markets. So I wouldn’t declare that the business is sub GDP especially with Europe growing above. So I think this is too early to make a call like that.

Thanks for the color.

Our next question is from the line of Selka Cook from JPMorgan Securities. Please go ahead.

I have a question on your cost saving targets. So I think like year-to-date your cost savings were something like $27 million and it looks like maybe for the year by the end of the fourth quarter maybe look at it like $34 million, $35 million. And the restructuring spending last year was something like $35 million or $36 million. So my intuition is that whatever cost savings – you’ll be pull out in the $55 million you’re spending this year would be higher than the $35 million you’re indicating. So essentially what I am asking is this, is the $35 million in cost savings the next year conservative given the level of restructuring spending this year?

You’re right to call us out, Selka. So usually we get savings roughly equal to the amount of cost that we incur. The exception of the large European restructuring just restructuring in Europe are more costly relative to the saving. So that is why you see a little bit of a differential here, higher cost this year relative to the amount of savings we are expecting. And given the timing of the implementation of the European restructuring, there is actually also further about $5 million that will come in ‘16 from the action this year, but you’ve right to call it out but it is a little bit different from the norm and I wouldn’t call it conservative. Now we do expect to have further restructuring next year which is without further savings as well. Some of that would impact next year and some of that impact a year after as well.

Okay, helpful. And in terms of the rollback of the corporate cost accruals maybe that must $9 million or $10 million this quarter. Is there a similar order of magnitude in the fourth quarter or is everything adjusted now?

No, so a couple of things. It’s not hitting just the corporate line, those numbers that I quoted 60 basis point was across the company. So it’s in fact --

Yes, I apologize, I just meant like overall comp accruals, yes.

Yes. So it was about 60 basis points in the quarter; year-to-date it’s about 30 basis points. So you’d expect it to be, assuming everything plays out like we’re planning, it’d be roughly the 30 basis points.

So that means no further adjustments in the fourth quarter. Is that what you said?

You would not be further adjusting down but you would be accruing less than you had in the prior year Q4. That's how that works.

Okay. And can you quantify the magnitude what that may be on a year-on-year basis?

About 30 basis points.

Okay that's the 30 basis point, okay, I understand, sorry.

No, I understand.

And the last question I had is even though it seems that propylene prices haven’t really moved yet because we had all these refinery outages, like it looks like that the raw material basket may be less sensitive to oil but once activities starts up again -- I mean I would expect that probably all the propylene based derivatives that you purchase will probably begin to come down. And in that environment it seems that it may be difficult to raise price? Or how do you argue for a better price with your customers if it turns out that raw material basket may not – may be it won’t step down may be just be flat. So how do you think they’ll get to higher price in an environment like that?

Yes, I think the decision on prices is driven not just by raw material cost, Selka. It’s driven but what we’re trying to do with the business and as well as raw material costs and prices. And propylene is one factor for us in a whole range of factors whether it would be pulp – remember pulp and paper is half of what we do. So I mean I hope you’re right about propylene. And if that happens our goal would be obviously to take advantage of that and, yes, customers will probably aware of those factors as well. But I think this is, I think in this environment we’re constantly taking pricing actions whether it’s being driven by currency or new products that we launch or number of factors and there are changes in raw materials all over the place. So I'm not too concerned about that.

And a very last question on capital allocation. Do you envision that you can sort of continue the magnitude of the share buyback next year or do you have other plans for the free cash flow that you generate?

Well we have a very disciplined strategy for the use of our cash and a good model. We said back in May at the investor meetings that we were looking as potentially some small bolt-on acquisitions and we have a pipeline of deals. And as you can tell so far we haven’t found anything that makes sense. But if we find the right opportunity we’ll do that. We’re pretty -- we’re well below our targeted range for our – on our balance sheet for debt to EBITDA. And so we've got plenty of capacity to do both frankly. So that's -- we’re in a pretty good position actually.

Okay. That's clear. Thank very much, I’ll get back into queue.

Our next question is a follow-up question from the line of George Staphos. Please go ahead sir.

Hi guys. I’ll try to ask you in sequence, I know we’re getting late in the call here. I guess first of all, can you help us map out the savings of $35 million, how you expect it to fall over the next few quarters, they’re pretty even or do you think it will be back end loaded? And given what you know right now recognizing that things can change obviously, do you anticipate much additional restructuring next year? I think to answering Selka’s question said there may be a little bit but, could there be other endeavors that you need to do for getting the cost structure right in either RBIS or PSM? And then lastly at least in the sequence, Vancive, what’s the long term strategy here? It’s obviously a drag on the P&L. I know you’ve got some products that hopefully will come out, but it’s still a burden on the P&L. So what’s the long term strategy there?

George, as far as your first question about the timing of savings for next year using roughly evenly distributing that throughout the year is the right to rule of thumb to start with. What you’ll see on the carry over front, not talking about the new initiatives, on the carry over front more the savings will be front loaded to – to RBIS in the first part of the year, and as you go out through the later part of the year more of those savings would be in PSM as this European restructuring project comes to completion.

Yes, George, this is Dean, on the additional restructuring we’re going through our operating plan reviews in a few weeks. And our goal is to continue on our path of delivering against our long term financial target. So I think we’ll have a lot better visibility on what we want to do on productivity and cost out and restructuring etcetera, etcetera in a few weeks. And we’ll certainly let investors know when we do the fourth quarter call and provide guidance for next year. I think we have hopefully a good track record for identifying good productivity gains and executing them well. I think this in the third quarter we got probably the first hiccup that we’ve had and we’re committed to crisping that up and having better execution. But I think our teams are really good at finding additional sources of productivity and that’s going to be one of the areas just like we always did focus on the AOP. I think at Vancive, our goal is to have that business at breakeven next year. The new products that we’ve launched are what are causing the losses, and we’re investing in the future. And the products are fine. We’ve have a couple of commercial partners that haven’t frankly delivered what they said they would do and so it was taking a little longer for us to ramp up some of those new product launches. So this is an -- I’m confident and we’ve got a good team and good products, but we’re going to be very disciplined about how we move that forward.

Okay, thanks for that. And maybe lastly in 30 seconds, why should we be comfortable that the transitional manufacturing cost issues in PSM are now behind in Europe? Thanks and good luck in the quarter.

Yes, mainly George, I was just there again last week and we’re now hitting the metrics that we need to drive down the backlog, to improve our inventory and service levels to customers. So through the first three weeks of October anyway we’re making the progress that we, that the team is committed to so. And I’m pretty confident that we’ll get everything squared away by year end.

And with that, Mr. Scarborough, I’ll return the call back to you for your closing remarks.

Yes, thank you France. Just a quickly recap, our playbook hasn’t changed. We’re continuing to pursue the broad strategic priorities that we’ve communicated in the past fine tuning were appropriate and tightening up the execution of our commercial and operational initiatives. I know Mitch will continue to be an outstanding partner in driving our value creation agenda and I look forward to working with him and the rest of the organization to achieve our strategic vision and financial goals. Thank you, and we’ll talk to you all in the New Year.