Ladies and gentlemen, thank you for standing by. Welcome to Avery Dennison's Earnings Conference Call for the Third Quarter ended October 1, 2016. This call is being recorded and it will be available for replay from 10 AM, Pacific Time, today through midnight, Pacific Time, October 29. To access the replay, please dial 800-633-8284 or 402-977-9140 for international callers. The conference ID number is 21782908. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. I'd now like to turn the call over to Cindy Guenther, Avery Dennison's Vice President of Finance and Investor Relations. Please go ahead, ma'am.

Thank you, Dimitra. Today, we'll discuss our preliminary unaudited third quarter results. The non-GAAP financial measures that we use, are defined, qualified and reconciled with GAAP on schedules A-4 to A-8 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 Mitch Butier, President and Chief Executive Officer, and Anne Bramman, Senior Vice President and Chief Financial Officer. I'll now turn the call over to Mitch.

Thanks, Cindy. And good day, everyone. We had another quarter of strong earnings growth, with EPS above our expectations. We are improving our competitiveness with continued strong profitability across the PSM portfolio and making progress with our business model transformation in RBIS. As expected, organic sales growth in Pressure-sensitive Materials moderated in the third quarter to 3%, reflecting the program loss in the personal care segment of Performance Tapes that we've discussed previously. Excluding this program loss, sales grew 4.5% organically. Once again, emerging markets were the key growth driver for PSM, more than offsetting softness in the North American market. From a product perspective, the base label materials business remained healthy, with solid top line growth overall and margins expanding across most categories. Graphics and specialty label materials were up high-single digits for the quarter on a global basis. I am pleased with our progress in shifting PSM's portfolio mix towards these higher value categories. We expect continued benefit over the long term from our focus and investment in these areas. Speaking of which, the integration of our acquisition of the Mactac graphics and tapes business, which we completed in August, is going smoothly. We also completed a very small acquisition of Ink Mill during the quarter, which expands our capabilities in the high-value reflectives business. And earlier this month we made an equity investment in a U.K.-based startup called PragmatIC, leveraging our strengths in RFID to enable long-term growth of intelligent labels in new segments. All three of these recent deals exemplify the range of opportunities we have identified and continue to pursue within our M&A pipeline with a focus on high-value product lines and supporting technologies. Our commitment to investing here in terms of both M&A and higher capital spending is reinforced by the excellent progress we've…

Thanks, Mitch. Providing a little more color on the quarter. In Q3, we delivered a 16% increase in adjusted earnings per share on 3% organic sales growth. Currency translation reduced reported sales by 1.7% in the third quarter, which was offset by the lift from the Mactac acquisition. Adjusted operating margin in the third quarter improved 40 basis points to 9.8% as the benefit of productivity initiatives and higher volume more than offset higher employee related expenses and the net impact of price and raw material input costs. We realized about $21 million of incremental savings from restructuring charges, net of transition cost. The adjusted tax rate for the quarter was 31%, reflecting a reduction to our estimate for the full year effective tax rate from 34% at the end of Q2 to 33% due to stronger income growth in lower-tax jurisdictions. Year-to-date, free cash flow was $248 million, an increase of $57 million compared to last year. During the first nine months of the year, we repurchased approximately 2.7 million shares and paid $106 million in dividends. Net of dilution, we reduced our share count by approximately 1 million shares for a net cost of $118 million, bringing the total amount of cash returned to shareholders so far this year to roughly $224 million. Our balance sheet remains strong, and we have ample capacity to continue funding acquisitions, as well as returning cash to shareholders in a disciplined manner. We funded the acquisition of Mactac Europe through euro-denominated commercial paper. We will explore a euro-denominated debt offering in the first half of next year to refinance notes that will be maturing later in 2017 as well as the Mactac acquisition. Our objective will be to take advantage of the low interest rates in Europe and the opportunity to hedge…

Thank you. Our first question comes from the line of Ghansham Panjabi with Robert W. Baird & Company. Please go ahead. Ghansham Panjabi - Robert W. Baird & Co., Inc. (Broker): Hey, guys. Good morning.

Good morning. Ghansham Panjabi - Robert W. Baird & Co., Inc. (Broker): Good morning, Mitch and Anne and Cindy. First off, did you see any measurable change in core sales growth for PSM in any particular month during 3Q? There have been some companies and different industries have commented on the slowdown in Europe during the quarter, wondering if you saw any deviation in the quarter?

Well, so we do normally see some variation month-to-month. We did see a little bit of a slide during Q3 over in Europe. Having said that, we're seeing a little bit of an uptick in early October as well within Europe as well as North America. So I don't read too much into individual month trends too closely, because it's not unusual for us to see four weeks of strong performance followed by a softening or vice versa. Ghansham Panjabi - Robert W. Baird & Co., Inc. (Broker): Okay. That's helpful. And then, what exactly, Mitch, is, do you think, driving the weakness in North American PSM? Is it just sort of inventory reductions? What do you think is going on by channel there?

It's hard to say. We think there's been a softening in the end consumption of the market in Q3 but we don't have that data right now. But we also did cede some share earlier in the year within that business as we were driving more discipline on the lower value, less differentiated segments. But, yeah, in the quarter we think it basically softened a bit. We don't have clear reasons why. At LabelExpo the sentiment from North American converters was overall, I'd say, most of them were very confident in their individual businesses, cautious about the market overall, but also talked about how they themselves have less visibility to their own order volumes than they traditionally have had as well. So it's hard to give you a read on exactly what's going on in the North American business, clearly some of the decline was from graphics, if you will, within that region specifically. But it's hard to give you a clear read here. As I said, first few weeks of October we're starting to see an uptick. Ghansham Panjabi - Robert W. Baird & Co., Inc. (Broker): Okay. And just one final one for me. You also called out higher raw material cost for 3Q. Can you first off expand on that? And then also how are you kind of positioning the company for what could be an increase in inflation as we head into 2017 coming off a period of a few quarters anyway of deflation? Thanks so much.

Yeah. Ghansham so what we really said was that we saw an impact to our margin price net of raw material input costs. And so relatively speaking, we don't give specific color on pricing inflation, but as we've been pretty consistent in saying that we broadly have given some price reductions since then, that's where we have relatively higher variable margins and where we may have seen some deflation. And we basically have been passing it along to customers in some targeted areas and in my script I specifically called out that we have seen that impact in North America. Ghansham Panjabi - Robert W. Baird & Co., Inc. (Broker): Okay. Thanks guys.

Our next question comes from the line of Scott Louis Gaffner with Barclays Capital. Please go ahead.

Thanks. Good morning.

Hi, Scott.

Mitch, just wanted to go back to RBIS for a second. You mentioned the North American apparel retailers and some of the import data. Are there any categories in particular within that channel that you are seeing, any weakness in and than what about European retailers, if you could give some color there as well?

Yeah. So the categories within the U.S. department stores in particular are seeing softness and we're seeing that as well with our key customers in that space. But generally I think it's relatively broad-based in the data that Anne shared is across the entire retail apparel sector, if you will. So inventory levels returned back this year to their pre-recession high. If you recall, for a few years after the recession they were quite a bit lower, those have bulked up. A good portion of that relates to the fact it was a very warm winter last year and just there was not as much sell-throughs, they have been holding on to the inventory. So I know the goal is for retailers to flush some of that inventory out of the system through this holiday season. And then for Europe, it depends I'd say overall softness in the U.K. Clearly the U.K. retailers with Brexit going on, I think, are struggling a bit and so that's one place we see softness. But in Germany pretty solid, other markets we are seeing relatively solid performance at the end retail level.

Okay. And any – you said RFID up 30% in the quarter, with some of the weakness in apparel are there any change in the conversation with your customers around adoption rates on RFID?

Yes, it was up 35% in the quarter and we expect to be 30% for the full year and we're expecting the growth to moderate a bit going into – quite a bit in going into Q4. The conversation is very similar. Working through in each retailer or brand, need to go through an assessment of the business case and then piloting and then you get a partial adoption and then full adoption. So, no real change in the conversations. There has been in the last quarter since we talked about where the pipeline is, we have had one tier 1 move from pilot into early adoption and then a couple of very small specialty retailers move either from business case to pilot or pilot to adoption. So, conversation is pretty much the same. Seeing a little bit of a migration through the pipeline as well.

Okay. Last one for me just around the share repurchases. I mean, obviously you don't make a decision based on one day's move, but the stock is down fairly dramatically today and I would think your internal model would be screening well for share buyback here. How do you think about share buyback into the end of the year?

So as you talk about, we don't really comment on timing and pace of share buyback and we have been really consistent in how we look at this, but we look – we do have an intrinsic value model and as we see the gap, if we see a gap widening, we will be much more aggressive in buying back stock. And again as we see the gap – less of a gap, then we don't buy back as much stock at that point. So we are a bit opportunistic in how we look at our share buyback programs as well.

Yeah. So Scott, we don't comment, but you can probably infer from our past behavior how we would behave in such an environment.

Understood. I appreciate all the color.

Absolutely.

Our next question comes from the line of George Leon Staphos with Bank of America Merrill Lynch. Please go ahead.

Thanks operator. Hi everyone, good morning. Thanks for all the details. Cindy, congratulations to you as well and good luck with the retirement. We'll miss working with you. I guess the first question I had, recognizing the answer is probably both, when we look at the slight reduction in the core growth rate you are expecting, Mitch, is it more centered in RBIS given the weakness in retail or is it in the somewhat difficult to pin down but nonetheless apparent reduction in consumption in Pressure-sensitive Materials in the – I think the U.S. is what you said. Which one of those is a bigger driver of this modest trim there?

So, George, are you asking about Q3 or Q4 because you can kind of triangulate on what that takes?

I was meaning it really more for the full year outlook but answered however you feel is most illustrative.

Yeah, so overall, I mean RBIS you can see where the growth rate is, little over 2% and so we expect roughly a continuation of that. Obviously it can be a little lower, a little higher depending on how things pan out. And a couple key contributing factors, we have harder RFID comps, if you will. We have a couple of things that ease up on the comps front in that business. So that's what we're thinking within RBIS, as the continuation. And within Pressure-sensitive, the Q3, the revenue was lower than we were thinking that business would come in at and it was specifically around North America. And so it's really a question about, is the early trends we see in October continue, positive trends that we're seeing, or does it revert back to a lower level.

Okay. Is October more or less in line with what you would have expected otherwise? And obviously it's up, but is it up where you would have liked it to have been?

It is consistent with our guidance range that we've provided. One thing, it's very hard to read Asia, North Asia in particular, because of the calendar shift of the Golden Week. So basically their harvest festival, if you will. So that distorted things. So anything for RBIS because so much is sourced out of North Asia as well as North Asia for Materials Group is not a good read. North America rebounded like we said and Europe has rebounded a little bit from a softening late Q3 as well.

Okay. Thank you for that. Now one other question I had, if I look at the guidance increase, I know it's roughly $0.10. The tax effect in the third quarter was probably a couple of pennies. The FX negative is about a couple pennies more favorable. Is there a way to split the remaining difference between restructuring, what you said is in excess of $75 million but you didn't necessarily say how much, and any other factors that are benefiting you?

Yes, really the biggest piece of the gap that you're talking about is from the beat we have with PSM this quarter. So even though the restructuring we gave guidance, it's just slightly more than $75 million. It could be a couple of million more. We just wanted to give a little bit of flavor on that. But it's really the operational beat we had this quarter.

Okay. Thanks for that, Anne. My last one and then I'll turn it over and try to come back. Back to RBIS, we've asked similar questions I guess in the past around the business and your need to restructure. Recognizing it's a challenging business, and it's competitive, at the same time you're continuing to restructure and you're trying to stay ahead of kind of the pace of competition and the other challenges in that market. At this juncture, given what you know, what two or three things make you confident that you can continue to retool that business, stay ahead of competition and ultimately hit your margin targets for RBIS by 2018?

Yes, so I think overall what makes us confident around that is the adjustments that we made – started making last year that we talked through, and it was the beginning of what we said would be a multiyear transformation. We made quite a few adjustments, and a lot of that was around moving more decision-making into the regions and closer to the customer, having a more segmented approach, different customers, if it's a performance athletic – high-end performance athletic brand relative to a discounted retailer, they have different needs, so we've adopted a more segmented approach. And, as part of that, in some segments that meant adjusting our cost structure to, one, expand margin but, two, also to get more price competitive. Remember that the variable margin in this business, even in what we call the less differentiated, are relatively high. And so being able to drive consistent growth is a key requirement within this business as well. So what are the signs of success? It's basically we're getting volume gains, we've stopped the share slide that we had for a couple of years going into mid last year, and we're seeing volume gains even though the market is down. And we've basically proven the model ourselves internally, so now it's a matter of pushing forward to accelerate. And as far as just to get to the margin targets that we've laid out for 2018, if you recall when we laid those out, we identified there is a lot of amortization expense going away late in the cycle. So we've got to have basically a full point of expansion just from that. That's not new. We talked about that when we first laid out the targets. So that gives you a full point and then from there, from where we expect to be this year, you need less than a point of margin expansion over the two years to get to the low-end, and less than 2 points to get to the high end.

Okay, thanks, Mitch. I'll turn it over.

Thank you, George.

Our next question comes from the line of Adam Josephson with KeyBanc Capital Markets. Please go ahead.

Good morning, everyone. Mitch and Anne, I hope you are well. Forgive me I joined a bit late, so forgive me if I am repeating anything. But it sounds like you reduced – you slightly reduced your organic sales growth guidance on account of some weakness in North America in PSM. Am I on the mark so far?

Yes. When we looked at our guidance, yes, we came in a little bit softer on the North America for PSM. And I think if you look at the full year guidance, the reality is we're going to be around the midpoint. If you look at the two ranges, you'd have to assume a pretty significant change in the run rate in Q4 for the businesses, and on the downside piece to it you would have to assume a reversal in trend for all the businesses as well. So the likelihood is we are going to be around the midpoint.

And then – thanks, Anne. And you raised your guidance partly on tax and I think you said partly on better PSM. Is that right?

Correct. And I will clarify on the tax, that's really a contributor from PSM as well. We saw a very favorable geo mix of where the income was coming from lower tax jurisdictions. So I really consider that kind of operational beat as well.

So you have lower sales expectations for PSM broadly, but you have higher profit expectations for PSM for the year presumably on margins, right?

Correct.

And that's why the margin upside given the sales – given that sales were a bit light?

So again a similar story than what we've had – that we've had the last couple of quarters is productivity continues to be a very strong performer for this division and in this quarter, we continue to deliver on the productivity front. So really the beat we had that we're showing for the full year guidance came from this quarter.

Okay. Thanks. And just in terms your implied 4Q guidance that's the midpoint around $0.95 compared to last year's $0.85, last year you had a little tax rate. So can you just help us understand what the primary drivers of that year-over-year growth are?

So for our guidance for the margin we would assume the normal seasonal margin, sequential margin pieces from Q3 to Q4 for PSM and we are in traditionally the RBIS business does have a higher margin sequentially from Q3 to Q4 that we also have baked in. So you look at our guidance range, really the biggest component of it is where will the margins deliver for RBIS.

Okay. Thank you, Anne. Appreciate it.

Our next question comes from the line of Anthony Pettinari with Citigroup Global Markets. Please go ahead.

Good morning. With the investment in Luxembourg, is it possible to say when the capacity becomes available or when it ramps and then how much of that $65 million investment shows up in 2016 CapEx versus 2017 and kind of any early view on 2017 CapEx?

Yeah. So just specifically with that investment, it's coming online essentially for the year 2018 is when it will be up and running. So that's our expectation. And if you look at the investment that we're making, we've consistently talked about pretty robust growth within Europe, both Western Europe but also the combination of Western Europe and Eastern Europe. So this is a business that actually we haven't added a new coder in for labels for quite a number of years. And so this is to fund the growth that we're seeing within that business right now and we expect we'll continue to be investing in that region because we see quite a bit of opportunity for continued growth there. As far as the CapEx timing, Anne do you want to comment?

Yeah. So generally the bulk of the CapEx timing will take place in 2017 and the spending that we have this year is within the guidance that we gave at the beginning of the year of roughly $200 million for CapEx. And again, when we laid out our 2018 target we said that on average we would spend about $200 million in CapEx over the years. We're a little behind in the first couple of years of that guidance range, so I would expect to see us still average around the $200 million. It's just going to be a little more back weighted overall for the company.

Okay. Okay. That's very helpful. And then in RBIS, I think the last quarter you indicated you were impacted by store closures and athletic goods. I'm wondering given what we've been reading in a very challenging retail environment, our store closures, are they still a headwind in 3Q? And does that may be a drag through the end of the year or any kind of color you can give there?

There's always some consolidation in store closures and what you see is what we see. Specifically what we commented on before was the fact that there was some bankruptcies of some athletic store, athletic chains. So, that affected performance athletics to recall at declined last quarter, which was exceptional because usually we see very consistent growth. So that category for us returned to growth in this past – in Q3.

Okay. That's helpful. And maybe just one last one. It's kind of a follow-up to George's question on RBIS. In your remarks you referenced accelerating the RBIS margin improvement program and I was wondering if can you give a little color on the levers you can pull there from here on out. Do you need to get more aggressive on the price adjustments or are there additional costs that you can take out or would you get more aggressive along M&A or just how should we think about the levers you can pull to accelerate the RBIS margin improvement?

Yeah. I think it's just a basically a continued execution of what we've been doing but really taking the next step and accelerating what we've been doing. This is about winning in the marketplace and I'll tell you from what we're seeing and what we are hearing from customers. The changes we made are resonating, that gives us confidence. We are seeing the numbers behind that of volume gains in a period of declining market conditions, so that gives us confidence. And we just see opportunities to run this business more efficiently as well. So there's quite a few levers within a business of that size and don't want to go through each of the individual details but we feel not pleased with where the performance is but confident with the prospects of this business and what we are going to deliver.

Okay. Thanks. I will turn it over.

Our next question comes from the line of Rosemarie Morbelli with Gabelli & Company. Please go ahead. Rosemarie Jeanne Morbelli - Gabelli & Company: Thank you. Good morning, everyone. I was wondering if you could give us a feel for the growth rate in the athletic chains following the softness in the previous quarter. What is a normal rate that you were expecting and are you there in the third quarter?

So this can have a little bit of volatility too, but it's consistently grown above the average for the overall segment and pretty – relatively consistently mid-single digits to higher, so and that's where was within Q3. Rosemarie Jeanne Morbelli - Gabelli & Company: Okay. Thank you. And could you give us some detail as to the inventory increase versus last year inventory is up 10% versus revenues up 2.7% or is this Mactac or is something else going on?

So Rosemarie, there a couple of components to it. Yes, this is the first quarter that we have got Mactac in our balance sheet, so that will distort some of your ratios a little bit. But in general, a couple of quarters ago we talked about the fact that we were making some investments in certain select areas and inventory primarily in RFID with RBIS. And so while we have continued to make progress, and we have seen the inventory reductions come down as we played out the year, we still have an investment in that in order to carry us through the end of this year into next year. Rosemarie Jeanne Morbelli - Gabelli & Company: So this is making sure you have the proper inventory in anticipation of the changes you are making?

It's the pipeline of RFID customers that we've got to make sure that we are meeting their demands. Rosemarie Jeanne Morbelli - Gabelli & Company: Okay. Thank you. And if may I ask one last one, your ratio price, selling price versus cost, was negative as raw material costs seem to be rising, are you expecting that ratio to worsen in the few quarters until you manage to get price up in line with raw material cost?

So, raw material cost, the environment we're seeing is relatively stable. You see some commodities like oil have been on an upswing, but as far as what we're experiencing they've been relatively stable. And as far as the net impact of price and raw material cost, Anne talked about what the headwind was in the quarter, and over the long run we've been pretty consistent in saying that some of the modest gains we've had in each quarter over the past couple of years basically, over the long run those eventually adjust for themselves, if you will, or correct. So, what we're seeing on the pricing, net pricing front is what we expected, the outperformance in PSM was largely around continued productivity, and our objective here is to consistently grow this business, leveraging our innovation capabilities, which includes finding ways to reduce the material content of our products so that we can be competitive in the marketplace and grow the market while driving returns and margins in this business. Rosemarie Jeanne Morbelli - Gabelli & Company: Thank you. And one very quick one, if I may. When are you – when are we anniversarying the program loss in Performance Tape?

So, we had a bit of – a small piece of that in the first half of the year, but I would expect to see headwinds in the second half as the program loss really – we really start filling that in Q3.

It's basically mid next year is the rough rule of thumb you should use, Rosemarie. Rosemarie Jeanne Morbelli - Gabelli & Company: Okay. Thank you.

Our next question comes from the line of Jeffrey John Zekauskas with JPMorgan Securities. Please go ahead.

Hi, thanks very much. I guess I'd like to go back to raw materials. I understand that your raw material costs were pretty benign, but propylene costs are up $0.10 pound since April. And so that's going to move up acrylic prices in the fourth and in the first quarter. So, is your attitude that you're going to wait and see, as the raw material costs move up, if they do move up before you take pricing action, or are you going to try to be more aggressive? What's your stance as some of the petrochemical values move up?

Yeah, so we saw a little bit of modest inflation that we talked about last quarter, but we've seen relative stability, and individual components, Jeff, move in different directions. But on balance is where we're seeing things fairly muted, if you will. So that's what we're referring to, not any individual components, you're absolutely right, what you're seeing is what we're seeing for that component. But what we do is when there is inflation, and so if we were to – if start to seeing inflation, we go through and we will announce price increases on which products or which region it's affecting. And a good example of that is last year we were still in a relatively deflationary environment. We raised prices within film and categories within Europe. So went out and announced it and pushed it through. So you've really got to think through about – with the commodities we're seeing, it's different in U.S. dollars or if you are in euros, and so we basically make adjustments and we will put price increases where we see inflation.

Okay. You made a couple of small acquisitions. What did you pay for them and what did you get? That is what was the revenues or the EBITDA and what were the cost of your two small acquisitions?

Yes, we don't – I mean, they're very small and so we don't want to disclose all the details about them, but I can tell you the incremental acquisition just has a few million dollars of revenue; so very small. It's a business that's really investing in our high-value reflectives business but it's also a capability we think we can leverage elsewhere within the portfolio as well. They make UV and UV LED curable inks and it's part of our TrafficJet solution within that business. And then on Pragmatic, so that was an investment you haven't – was earlier in October, so it's not in the results right now.

Sure.

That's a minority investment. There was £18 million funding round that Pragmatic went through. We were less than half of that, I will say.

Why is Europe PSM growing faster than the U.S.? Or are there particular markets in Europe that are healthier or more robust and are there particular PSM markets in the U.S. that are a little lackluster?

So, Europe broadly speaking gets the benefit of Eastern Europe emerging markets, and Eastern Europe this quarter is what really was a key driver for them. But actually pretty consistently for the past years even Western Europe we've talked about growth being higher than the U.S. And there's a number of factors behind that. We can't point to any one. One of them is regulatory requirements around larger label sizes and so forth. So there's not one thing I can point to, that's one example. But to be honest, it's the differential between the U.S. and Western Europe has pretty much consistently been a little bit bigger than we would have even expected. I'm talking about market level not just our performance.

And in the weakness in the U.S., was it confined to a particular market or it's too hard to tell?

Not a particular market, no. It's relatively broad-based.

Okay. Okay. I think that's it from me. Thank you so much.

You're welcome.

We have a follow-up question from the line of George Leon Staphos with Bank of America Merrill Lynch. Please go ahead.

Thanks. Hi, guys. I want to come back to RFID and RBIS a little bit. So recognizing you're not giving guidance here for 2017, do you think, Mitch, over the next couple of years – let's frame it that way, that the outlook for adoption is as good as what we've seen, you know, say over the trailing 12 months? I recognize it's retailer by retailer, et cetera, and it can come in fairly large chunks, but if you had a frame is it as good, better, somewhat worse, how would you have us consider it over the next couple of years?

I would say it's as good and getting better.

Okay.

So, we basically a year or so ago we were talking about getting into an inflection point starting to see some customers adopt. We've seen that. But it's really hard to call when that will happen to the point you raise. I mean, next year we expect this business to be double-digit growth. It could be just over 10% or could be 30%. So timing specifically is hard to tell but over the long run we definitely, you know, we've talked about this business being at 20% growth business and that's what we continue to expect.

Mitch, are the returns getting better to the retailer from adoption that's why the growth has been so strong or are there other reasons why you'd see adoption? I would imagine have to be the former but, again, just want to get your thoughts on that.

I think it's just more – it's retailer by retailer and brand by brand, them going through the process. It's a pretty big shift and how they do things, how they think about running their supply chains. So the returns have been strong, very strong last few years for adoption. It's just each business, each customer needs to go through that assessment and evaluation. And the reason pilots can take so long and the early adoption phase can take a while is just purely because of the change and adjustments they need to make.

Okay. Back to the margin question from earlier and – again we have talked about this before and I was aware that you have the drop off in DNA, the roll-off from Paxar there. So if I look at the low end of your range, I guess I would drill down and say what makes you comfortable about getting that incremental 100 basis points or so? When I look at 2016, obviously a lot of restructuring benefit to your credit, but yet the margins are, at least in this quarter, kind of flat versus the year ago. So is it just further restructuring that drives the majority of that 100 basis points? Is it more in your view the RFID element which you're quite obviously positive on? What gives you confidence in at least capturing that last 100 basis points above and beyond the DNA component?

It's really a balance between driving the growth strategy as well as driving further productivity. And if you look at the business, we've consistently delivered over half-point a year of margin expansion regardless of what's going on in the top line. And if you look over the last few years, we've grown this business 2.5%. So our objective here is, ensure we can get those margin targets even in a lower growth scenario than the 4% to 5% we had targeted. We will get there even in this lower growth environment, and ensuring there is upside as we develop and push through our growth strategies so that when we start achieving that 4% to 5% growth, which is still our goal, you will then have further uplift from there.

Okay. Appreciate that. And then I guess my last question and I will turn it over, actually two part, two questions, I apologize. The Pressure-sensitive mix, what was negative in the quarter? I remember reading in the release, but I don't know what your comments were here on the call. And then the extra sales week in the fourth quarter from last year, I seem to remember that not really having much of an effect in earnings, but I just wanted to verify that. Thanks guys and good luck in the quarter.

Thanks. So the mix was primarily in two different areas. First was customer application that we had discussed in the personal care space for Tapes.

Right.

So that was the Pressure-sensitive mix. And then the second piece was North America. Primarily in the high-value segments we've been talking about in North America volumes as well. So those were the two pieces of the mix. It was geo mix as well as customer Tapes. As far as the 53rd week, that was really...

And just on that, I saw emerging markets tended to be a higher-margin for you, so why would North America being a little bit weak be negative for mix?

Yes, so as far as on the geo mix comment, George, our margins we've said are higher where we have higher relative market share and North America we have relatively high relative market share.

Okay. Thank you for that. Sorry about that Anne, go ahead.

On the 53rd week, that was really 2014, 2015 impact, so you really wouldn't see anything for 2016.

Okay, I was just reflecting on the comparison, but that's fine. Okay. Thank you, guys.

Thank you.

Mr. Butier, I will now turn the call back to you. Please continue with your presentation or closing remarks.

Okay. Thank you. Well, thanks everybody for joining the call. Again, I'm pleased with the progress we're making against both our strategic and financial objectives and we remain committed to achieving our long-term targets for value creation. I want to thank the entire team within Avery Dennison for their hard work and commitment to our success. So thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.