Jennifer Rice – VP, IR Bob Keller – Chairman and CEO Neal Fenwick – EVP and CFO

Arnie Ursaner – CJS Securities Michael Schwartz – SunTrust Reza Vahabzadeh – Barclays Karru Martinson – Deutsche Bank Derek Leckow – Barrington Research Kevin Casey – Casey Capital Arun Seshadri – Credit Suisse

Good morning and welcome to our third quarter 2010 conference call. On the call today are Bob Keller, Chairman and Chief Executive Officer of ACCO Brands Corporation and Neal Fenwick, Executive Vice President and Chief Financial Officer.

Slides that accompany this call have been posted to the investor relations section of accobrands.com. These slides provide detailed information to supplement this call.

Our discussion this morning will refer to results for continuing operations and on an adjusted basis, which for 2009 excludes all restructuring and other charges and for 2010 applies a normalized effective tax rate of 30%. A reconciliation of all adjusted results to GAAP can be found in this morning's press release.

During the call, we may make forward-looking statements and based on certain risk factors, our actual results could differ materially. Please refer to our press release and SEC filings for an explanation of those factors.

Following our prepared remarks, we will hold a Q&A session. Now, it's my pleasure to turn the call over to Mr.

Keller.

Thank you, Jennifer, and good morning everyone. We released our third-quarter results earlier this morning and I'm pleased to report that we demonstrated continued progress in growing both our top and bottom lines.

Our reported net sales increased 3% on a volume increase of 4%, driven by strong growth across all business segments. EBIT was up 1%, growing from $42.5 million to $42.9 million and per share earnings grew $0.02 to $0.17 versus $0.15 in the prior year third quarter.

Our gross profit margin was 30.9%, a decline of 30 basis points compared to last year's third quarter, but SG&A expenses were down an offsetting 30 basis points and operating margin was flat. Importantly, our sales and earnings outlook for the full year remains unchanged.

We've consistently said that sales growth has and will continue to be one of the critical drivers of our improved financial performance. And since our second quarter release we've been awarded $40 million of incremental business in the office products channel.

More specifically, we were awarded the in-line punch business at a leading print-for-pay provider, an expansion of the placement of our boards category at a mass marketer that effectively doubles our volume there, multiple wins across our major customers in the business machines category and we just won a competitive bid at an office products retailer for private label ring binders. In our computer accessories business we just announced and began shipping the next generation of our Kensington laptop lock, the Kensington ClickSafe.

We are far and away the industry leader in laptop physical security and we exceeded our sales expectations on announcement day, a great start for a terrific new product. And for the iPad enthusiasts out there who'd rather carry an iPad than a laptop on a business trip, we brought to market a stylish iPad case with a built in Bluetooth keyboard, another great product innovation from our Kensington team.

We expect these wins in the office product area and the new products from Kensington to have some impact in the fourth quarter, but the majority of the benefit will be seen in next year's numbers. The other significant driver of our financial performance is expense control.

As we've discussed in prior calls, we continue to manage SG&A prudently and aggressively to ensure that we deliver on our commitment to our shareowners. We also continue to make progress on our supply chain initiatives which have help to offset the dramatic increases we've seen this year in raw materials and the COGS increases driven by FX volatility.

We remain focused on supplier consolidation, an area that offers us both scale and meaningful savings potential. Beyond that, though we continue to have significant opportunity to simplify the business, improve processes and take cost out.

In the third quarter in the U.S. alone, we had 40 of our people certified in Lean Six Sigma techniques, identified 70 process improvement projects that represent millions of dollars in potential savings and got started.

We're building meaningful performance improvement and cost take out into our budget expectations for next year, as a result of these activities and the commitment to continuous improvement is becoming part of our culture. Looking forward, we still have an awful lot to do.

In Europe I'm pleased with the improvements we've made with customer relationships, the innovation we have shown there in product development and marketing and the improvements in the effectiveness of our operations, but we need to significantly improve the profitability of our business there. The new president of our International business, Christopher Franey understands that and I'm confident he'll deliver the performance we expect.

In summary, we continue to make progress. And, despite the macro headwinds we've faced this year, we're positioned to deliver on our commitment to shareowners.

I'll turn the call over to Neal now to take you through our numbers in more detail. Neal?

Thank you, Bob. Our third quarter performance is recapped on slide 5.

Reported sales increased 3%. Volume increased 4% with growth in all business segments.

Adjusted gross margin contracted 30 basis points to 30.9% due to the impact of high commodity costs and unfavorable FX rates earlier in the year, which are now affecting our cost of goods. These cost increases have offset the improvements we have made on supply chain and lowering our freight and distribution costs.

We were able to maintain operating margin by offsetting the impact of the high commodity costs through SG&A management, with SG&A costs improving 30 basis points. Our operating income increased 3%, which included $1.4 million year-over-year benefit from foreign exchange translation.

EBITDA increased 1% to $42.9 million and included $1.5 million benefit of foreign exchange translation. EPS from continuing operations was $0.17 versus a comparable $0.15 in the prior-year quarter.

We had high interest expense in the current year, but a one-time cost on the early extinguishment of debt in the prior year quarter. The two net out on a year-over-year basis.

For the nine months, sales increased 4% with volume up 3%, driven by growth in all business segments. As shown on slide 7, adjusted gross margin increased 120 basis points for the nine month period to 30.9%.

Favorable product mix accounted for 50 basis points of the improvement and supply chain initiatives accounted for 100 basis points of the improvement, while adverse commodity costs had a 60 basis point impact. SG&A is up 8% for the nine months or 70 basis points to 22.2% of sales.

FX translation accounted for $4.7 million or 20 basis points of the increase and higher salary, benefits and incentive costs added $20 million or 180 basis points of the increase, mainly due to temporary reductions in the prior year. This was offset by 100 basis points of cost savings.

On 4% sales growth and gross margin expansion, operating income increased 13% in the nine months with margin expanding 70 basis points to 8.3%. Foreign exchange translation added $6.5 million to operating income.

EBITDA for the nine month period increased 10% to $114 million, including a $7.4 million benefit from foreign exchange translation. EPS from continuing operations was $0.29 using a normalized tax rate of 30% versus a comparable $0.25 in the prior-year nine-month period.

Turning to an overview of our segments on slide 8, during the quarter reported sales for the Americas increased 1% and volume increased 2%. The volume growth was driven by market share gains, improved category management and increased demand, which helped offset continued declines in consumable product categories.

Year-to-date, volume is up 2% for the Americas. Operating income for the Americas increased 1% and operating margin held flat at 9.3%.

Improved sales volumes were offset by higher commodity and compensation and benefit costs. Future price increases will offset the commodity cost increases beginning in Q1 2011.

International segment sales increased 4% and volume increased 7%, driven by share gains and improved category management. Prices decreased in certain markets, reflecting fluctuations in local currency rates.

Year-to-date, international volume is up 3%. International segment profit declined 17%, however and operating margin contracted 150 basis points to 6%.

The decline was the result of high commodity costs and adverse product mix in Europe. Our international segment will also raise prices in Q1 of 2011.

Computer products sales increased 4% with currency reducing the rate of growth by 2%. Volume increased 7%, driven by another quarter of strong sales growth of computer security locks and growth in most regions.

Year-to-date, Computer Products volume is up 7%. As a result of substantial improvements in gross margin, largely due to growth in security locks and increased royalty income, Computer Products operating profit increased 19%, resulting in a record high 28.4% profit margin.

Turning to cash flow, which is detailed on slide 9, Q3 was a cash outflow quarter as a result of higher working capital and our planned semiannual interest payment of $35 million. As expected, we finished the quarter with no borrowings on our ABL facility.

In terms of our annual free cash flow, we now expect to generate between $20 and $40 million this year, which has been adjusted from our original expectation of $50 to $60 million. The change is due to our assumptions for working capital, which will cause some of our operating cash flow to come in Q1 instead of Q4.

However, on a rolling basis our cash generation will largely be unaffected. For example, in Q4 we're adding inventory to support some of our new share gains, which will offset the seasonal reduction of inventory we typically see in the fourth quarter.

We are also seeing the pattern of orders in Q4 will mirror the trend we saw in the first three quarters, whereby the largest sales month is the last month in the quarter and therefore results in a higher accounts receivable balance at the end of the quarter, deferring some of the cash receipts into Q1. We have also seen that our inventory balance will have a higher carrying value, due to the commodity cost increases during the year.

So importantly, the cash flow generation of the business has not changed, but timing this quarter has been affected. In terms of our sales and earnings guidance, we have reiterated that our expectations are unchanged.

We expect sales growth before any impact of FX of 0% to 2% and EBITDA margin expansion of approximately three quarters of a point. That concludes our prepared remarks.

At this point, Bob and I will be happy to take your questions. Operator?

Hi, good morning. Bob, I know you've done a very good job controlling costs and one of them that I wouldn't mind you expanding on a little bit, you've had a pretty good sized discretionary executive bonus pool that you've been accruing.

Was there any change in the accrual in Q3 and what's your outlook for that item for the balance of the year?

Well, we took it down a little bit. We're being a little less specific because I'm getting tired of every time I go get a cup of coffee I get asked about it.

Our expectation is that we're going to pay bonuses this year. And I think our external message is the same that I'm going to deliver to our troops tomorrow morning at our town hall meeting, which is the size of the bonus is going to be dependent on how we perform in the fourth quarter.

Okay. A couple of other quick questions, if I can.

One is you mentioned in your prepared remarks regarding cash flow that you expect the month of – literally the last month of the quarter has tended to be fairly important for your order trends.

Sure.

What was the pattern you saw in Q3 and how did September shape up, the back-to-school season versus the balance of the quarter?

September was the strongest month in the quarter. Our back-to-school was okay, kind of about what we expected it to be.

The mix of our back-to-school products tends to be slightly lower margin than our normal run rate mix, but it was at or slightly above our expectations.

My final question, your view of your revenue growth for the year is flat to up 2% and you indicate you expect the biggest part of that to be driven by share gains. What is your view of the industry growth expectations that you're looking at?

How much of it will be share gains versus industry activity?

We think the industry is the traditional office products industry, is going to be flat to slightly down. And we think – we've said consistently all year long that we would expect to outperform it by three or four points.

And I think we're – that's kind of where we think we're at.

I'll jump back in queue. Thank you very much.

Okay. Thanks, Arnie.

Hey, good morning everyone.

Good morning.

Looking at commodities and where we stand right now, when we look back to the second quarter kind of commentary regarding commodities, has that changed at all? Is there anything materially better or worse looking forward?

And then, do you continue to expect to be able to kind of recapture any kind of cost increase or adverse FX through pricing that's set to go through on January 1st?

Yes. We don't know that anything has changed.

We've been consistent in saying all year long that we'd feel the impact of commodity increases in the second half and that we wouldn't get a chance to impose any pricing increases until January 1st. We're planning on both in the U.S.

and in Europe in raising prices on January 1st. We have had or are in the process of having those discussions with customers.

And I think their expectation, which is consistent with ours is that they'll look at those in light of an expectation that we will also bring to them productivity improvements to help offset that, but given the magnitude of the increases, we're going to eat a part of that, our customers are going to eat a part of it and they're going to pass part of that on to the consumers. And so that's kind of what are expectation is going forward.

And that hasn't changed?

No, not at all.

Okay. Great.

And then, second question, looking at the SG&A line, I think that came in below where we were pretty significantly. And it looks like you stepped up marketing spend in the quarter.

Can you help us kind of understand what was going on, on the SG&A line this quarter?

Yes. One of the big things we did is in the Computer Products section we launched our new security product and obviously, that was actually technically launched at the beginning of Q4 but a lot of the spend was done in Q3 in preparedness for that.

And so we continue to invest behind our new product development and campaigns but we continue to tweak our expenditure on a discretionary basis so that we are literally supporting the key initiatives that we feel we need to do and we are holding back all the things we would like to do.

Okay. Great.

Thank you.

And to expand on that a little bit, I think one of the things that – we spent a good portion of 2009 kind of focused on our survival. And we spent the first half of this year kind of stabilizing the business.

We spent an awful lot of time in the last four or five months and we will for the next several months, in terms of trying to understand where our priorities should be going forward and what parts of our product line we're going to emphasize. And I think what Neal was saying is we've made some of those calls and we're investing in portions of our product line where we think that we have growth, where we think we have adjacencies and where we think we have an ability to strengthen brand.

And you'll hear more about that going forward. But we're picking and choosing where we're spending money now as opposed to just trying to be incrementally better in every single thing that we do.

Good morning.

Good morning, Reza.

I missed one or two items. On ACCO, the international business, you talked about the volume, but what was the impact of pricing and FX in the quarter?

The impact on pricing was negative in the quarter. So what you saw was for international minimal currency, was at – sorry on the international it was 0.1%, so almost no currency net.

But for us, price was negative by about 3.4% in the quarter. And the big issues that we had on the international segment, as we explained before was that the – in some of our foreign markets, particularly in Australia, we in October of last year had significant price reductions that we had to put through because of the significant currency appreciation that they had seen.

And that is one of the negative issues. We do expect to receive a stronger benefit from the European business in the fourth quarter from the price increase that they notionally put into the market in July.

The biggest effect of that is going to be in Q4.

I see. Okay.

And in the Computer Products was there a negative pricing in there as well?

You know, it's very hard to track pricing in Computer Products. It appears slightly negative in the way we do the mathematics, but you have to remember, so many products get launched new each year that actually tracking price on a consistent basis is almost meaningless in that channel.

Got it. Can you touch on your inventory levels at the end of third quarter, as well as your lower free cash flow guide for the year because of the working capital use?

Is that, just to be clear, is that just timing or is it the higher cost of the products? Any explanation would be helpful.

Sure. It's both of those issues, but the bigger issue is timing, which is why we said fundamentally that on a rolling basis, there really isn't that much impact on the business.

There is a step up in the carrying value of inventory because of the cost increases that we've seen. And that obviously has an impact on our inventory carrying value.

But that's the smallest issue. The biggest issue is simply timing.

We're seeing very much a shift in the timing of how we see order patterns within the quarter with a very, very strong last month of the quarter. And that leaves with you a lot more accounts receivable.

And in addition to that, just the volatility that we have seen in demand has meant it's become very difficult to manage our inventory in the way we used to. And so we've ended with more inventory than I would like at the end of the third quarter.

Got it. And then, as far as costs that you are seeing going higher, can you just elaborate on which costs they are and how much visibility you have on them?

Well, so the biggest things we're exposed to are, I'll generically call it plastics, steel and packaging. And we've seen all three of those increases significantly.

Within plastics you've seen huge variety, things like polypropylene up about 30% and PET is showing extreme volatility, particularly the type of grade we use for laminating pouches. Steel has actually started to come down, but it's still up significantly year over year.

And we're seeing a lot of volatility around packaging, particularly in the corrugate area which is up again strong double digits. And so all our raw materials are showing extreme volatility and also increases.

And you're going to offset all this with a bit of pricing and some maybe cost savings?

We expect to, yes.

Okay. Thank you.

Yes. Just a follow-up on Reza's question here.

You talked about the millions in potential costs saved and continuous improvement culture. And is the magnitude here five to 10 or are we looking at larger cost save that you could drive through in the upcoming year?

You know, we think that the original projects that we have identified, which you have to appreciate will take several years to rollout, the opportunity is in excess of $20 million.

Okay. Now, in terms of the pricing strategy as you guys raise prices, what are you seeing your competitors doing?

And are you seeing customers order ahead here as we come into the fourth quarter ahead of those price increases?

Yes. I think we're right in the middle of the mix.

Depending on product composition, you get some that are higher and some that are lower, but we track and all of our customers track pretty common indexes and our competitors do as well. And so the consistency of perspective about what's going on in the marketplace is pretty clear.

We have built a little bit into the fourth quarter forecast for buy forwards. And specifically, our wholesaler customers tend to buy forward a little bit when there's a known increase.

Okay. And then, what impact, if any do you see from the management changes that are happening at some of your larger retail customers?

Our expectation and part of it is based on what they've communicated, which is with their strategic suppliers they want these changes to be as little impact and with no disruption as possible but kind of the other piece of it is we have very deep relationships throughout our customer organizations and unless someone were to come in and fundamentally change the strategy of the business which we haven't seen, our expectation is it's kind of business as usual.

All right. Thank you very much, guys.

Thank you. Good morning.

Good morning.

So just second quarter in a row here of some nice volume improvements and just wondered if you could elaborate on that a little bit. I mean, are we going to see additional new product launches, because it sounds like some of these new product wins you announced are actually new products.

You know, in the Kensington channel they are. In the office products channel it's our traditional products.

And we're winning, frankly across all of our channels. We had wins in the quarter in the mass channel, significant wins across our traditional office product superstore base, wins in the computer accessories distribution channels.

So we feel good about it. I think the organization as a whole is competing more aggressively than maybe we have historically.

And the relationships with our customers is clearly better than it has been and so they're more receptive. So we feel good about how we're competing these days.

And so, back to Neal's comment about how it's kind of difficult to analyze price increases because some of these new products are new and obviously you build in your product costs into the price of these products. Just kind of curious, how can we sort of measure the impact of new products in that regard as we move forward?

Is there a percentage of sales that we should kind of expect to come from new products and that therefore is somewhat insulated from the cost pressures that you mentioned?

That's great question, Derek. We're actually asking that internally.

We don't – we haven't figured yet kind of what the percentage of new product revenue should be as a percentage of our overall revenue. In the traditional technology channels that's a very high number when you have a business like ours where we have products like paper clips that are over 100 years old that continue to generate revenue.

It's obviously going to be much smaller. I think we're going to end up, as we do our segment analysis for our strategic planning reviews, end up doing it by segment.

Is there any differentiation between sort of the durable products versus the more consumable items?

In terms of new product revenue?

Yes. In terms of new product revenue.

I would tell you, having come into this job a couple of years ago we hadn't done an awful lot on the durable side of the office products business in terms of new product introduction. We've been an awful lot more aggressive.

We've refreshed our laminating line. We've refreshed our shredder line and we're in the process of refreshing our binder line.

We've introduced in-line technology in high-end copier space for our binding products. And so our expectation is over the next couple of years that we're going to have a pretty sizeable new product volume as part of our revenue in that set.

But we also look at part of our Kensington product line as a durable. So the security products tend to be durable.

We announced the next generation of that product, but we will continue to sell – the product that we have out there today in terms of physical security is far and away the industry leader and we're going to continue to sell that product as well and so that one's kind of a watch-and-see. Our expectation is that we will grow our security revenue in aggregate.

So I don't have a good answer for you right now. We just expect to continue to grow.

That sounds good. Just to follow up on someone else's question on the changes in management at some of your customers, are you also seeing any potential for consolidation of certain outlets?

Or is there anything along those lines that has changed since last quarter?

No. I mean, we haven't seen anything in the marketplace that would suggest that anything is changing.

And I think, given how that Max has just made their announcement and Depot is engaged in a search process kind of as we speak, it would be premature to figure out what they intend to do, what their new leadership is intending to do.

Okay. All right.

Thanks a lot; appreciate it.

Sure.

Yes. I was wondering if you can talk about the pricing this year?

Is this kind of an ongoing thing? And then also the change in working capital – it's more of a timing thing, but are customers asking for concessions on the working capital?

No. The pricing thing, in our industry we get a couple of chances a year to adjust pricing given that the industry as a whole still puts out catalogs and things like that that are time driven and it's hard to make changes while a catalog is still active.

And so we tend to trail what's going on in the marketplace by about six months. And normally, in kind of normal conditions, we get 90-day price protection from our suppliers and we've got 90 days of inventory.

And so it tends to be not particularly disruptive. But this past year, both in terms of currency fluctuation and just the magnitude of raw material increases, we're kind of outside that barrier and we've got some catch-up to do on January 1st.

And my expectation is kind of that that will happen. So, over time things kind of even out, but within quarters at this level of volatility it can be a little challenging and you've got to manage to it.

I think we did a pretty good job of managing to it this quarter. And in terms of our customers asking for extended terms that just hasn't happened.

Okay. And then, I was actually talking about the slight decrease that you saw in pricing.

Is that just because six months ago, nine months ago raw material prices were actually going down at that time and since there's a lag and is that the reason for it?

It's honestly, just given the magnitude of the adjustments in Australia from a year ago, from October a year ago.

And then in the Americas we took some specific SKU pricing initiatives in January, which were to make sure we were more competitive, particularly on some of those new product ranges that we launched. And so we actually see a lower rate of negative price impact in Q3 versus Q2 in the Americas because of the price increase we put through.

But in Q3 you see the big issue is in International, which is Australia, as Bob mentioned. That will drop out of the equation in Q4, because the effect occurred in October last year.

We lap it.

Okay. And then, going forward and I'm not sure if I heard this correctly, but it sounded like your customers are buying later in the quarter and they also might buy a little forward, given a price increase.

So are we going to get some extra benefit in December this year?

Our expectation is December's going to be a wonderful month. We have some new product wins that we expect to deliver in December.

The cycle this year has been that our normal customer ordering pattern, refresh pattern, is in December. We would expect some amount of buy-forward given the price increases in December.

So our expectation is December's going to be a big month. But to Neal's earlier point, the downside of that is we're going to have more inventory going into this December than we traditionally have.

We would traditionally blow through inventory in December and we're having to actually increase inventory levels as we speak in anticipation of customer volumes and then the receivables won't hit until the first quarter, so.

All right. Sounds great.

Thanks.

Okay.

Good morning.

Good morning.

Just wanted to ask a couple of questions. First, consumables – you've spoken in previous quarters that consumables trends, at least in second quarter, were pretty flat, maybe modestly negative, driven by Europe.

Now that you're starting to see some strength in Europe, how does that look right now?

It really hasn't changed. We're seeing the same thing.

The consumables tend to be flat to down and the durables are flat to up.

But you don't see any –

It's a little bit of a lift –

Positive signs?

I'm sorry. We saw a little bit of a lift in the quarter on some consumables tied to the back-to-school.

And we don't view that as a trend. We just think that's a seasonal reaction.

Okay. And then broadly for the industry, what do you think are the current expectations for industry growth in 2011?

And based on any line review result so far, how do you see your market share prospects in 2011?

Again, short of a recovery, which we're not planning for and no one I've spoken to is planning for, I think the industry as a whole is expecting to be kind of flat to slightly down. And based on the market share and the competitive wins that we have had thus far this year, our expectation again, is that we're going to grow and that we're going to grow faster than the industry.

Okay. And then, finally, I wanted to touch a little bit more on working capital.

So versus your previous guidance it looks like about 20 million to 30 million timing difference, I guess timing plus the inventory carrying values. Can you talk about when you expect that timing to basically reverse?

Is it like a first quarter or second quarter of 2011 timeframe?

Q1.

Q1. You'll see pretty much all of the recovery in Q1?

Apart from the fact that raw materials have become more expensive. That's going to be in there until such time as inflation reverses.

And can you talk at all about in terms of the total amount, $20 million, $25 million in free cash flow timing, what proportion of that is inventory versus simply timing?

Well, we see the inventory as timing as well. And so it's really, as Bob mentioned, we saw a lot of difference in our ordering pattern as we came through Q3.

It was very back-end loaded. So we ended the quarter with a lot more accounts receivable than we would have done this time last year.

We also ended with more inventory than we would have normally. And part of the reason for that is the timing of when things are happening.

And so, effectively, as we go into Q4 although we will run down some of the inventory I didn't want to have at the end of Q3, we'll replace it with inventory we need to add for a lot of the new products and market wins that we've got in place. And so inventory traditionally for us is actually at its seasonal low point in December of every year and I'm not anticipating that this year.

Got it. Thank you.

Could you expand a little bit on your improving status in the mass channel and perhaps highlight some of the new wins you've had or percent of the business that you're getting there? And also perhaps expand a little bit on your private label activities?

Sure. We're pleased with the progress that we've made in the mass channel this year.

We're frankly doing better with branded product than products that have weaker brands or private label in that space. That segment is the fastest growing segment of our business, but it is still not material.

And we tend to be doing better in the parts of the business that are retail consumer driven, as opposed to parts of that channel that tend to be people going in and buying bulk items. And so, our products are selling one at a time rather than in big bulk.

So we're performing better at Wal-Mart than we are at Costco. But in aggregate, we're very pleased with the progress that we've made there.

In terms of private label, I don't know that the percentage has changed much. It's still tiny in terms of our participation in that.

We just had a pretty significant win with an office products retailer to do their private label ring binders. And that's a terrific opportunity for us to potentially expand into the branded product at that customer.

And so we're excited about that. And the margins that we're doing that at are absolutely acceptable.

Bob, as a follow-up to that, you mentioned that I know we've been – we had to clean out the inventory of previous suppliers before you could get into the retailers. And many of the orders you had originally were almost like a test order to see how you could perform.

Yes.

What has been the follow-up to that, meaning have you delivered these products in Q3? Is the customer satisfied and saying to you, please make a proposal for other products.

What are you seeing as you go through this?

Our supply chain performance has been outstanding, no issues at all relative to that. I think our – the customers in that channel tend to be very, very price sensitive and they are testing in some of our categories private label product.

And so we'll kind of see. But, again, we are growing the channel and the opportunities where we think we have the best opportunities we are performing at or above our levels of expectation.

One more quick question if I may. You talked about perhaps an opportunity over several years of 20 million of cost savings, indicated your Lean initiatives are front burner.

What is embedded in your Q4 view for the actual cost savings you hope to achieve?

We have nothing from the Lean Six Sigma projects that are built into fourth quarter, I think, from a budgeting point of view. For 2011 we have a reasonably substantive amount baked into that for our teams.

And we feel good about that contribution. Where we do expect to take cost out of the business is, frankly, in our European operation.

I think across the globe we're making progress. We're not making enough progress in Europe in terms of their contribution to our profitability.

That's the number one thing that's tattooed on Christopher Franey's forehead and I think he's focused on it. And I think his opportunities in the short term are going to be around simplifying the business, moving small customers into the appropriate channels and taking a look at our order patterns and increasing the size of orders and pricing appropriately for small shipments and then, finally, kind of rationalizing the SKU base that we've got in Europe.

And so, I think we have cost savings initiatives outside of the Lean Six Sigma process that we expect to see returns on in the fourth quarter. And they tend to be in Europe.

It's also worth remembering that we're not considering taking any restructuring charges or anything of that nature. And therefore, although from a run rate basis we will be achieving a lot of savings, there'll be a lag before some of those show up in the P&L account, because we'll have to deal with things like severance charges on a regular expense basis – but not in Q4.

Nothing in Q4.

And to the extent you have these meaningful cost savings next year, would it have more of an impact on the gross margin line, in your view, or the SG&A line?

Both.

Okay. Thank you.

We appreciate all of you joining us today. I think the third quarter – it's still tough out there economically and competitively.

And I think we continue to manage the business appropriately and feel good about how we're positioned. We expect to deliver on shareowners' expectations this year.

And I look forward to reporting on our progress at year's end. Thanks.