- Quarterly Report (10-Q)

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

 

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2011

Commission File Number 001-08454

 

 

ACCO Brands Corporation

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware		36-2704017
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

300 Tower Parkway

Lincolnshire, Illinois 60069

(Address of Registrant’s Principal Executive Office, Including Zip Code)

[phone]

(Registrant’s Telephone Number, Including Area Code)

 

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ¨     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer		¨		Accelerated filer		x
Non-accelerated filer		¨   (Do not check if a smaller reporting company)		Smaller reporting company		¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

As of July 19, 2011, the registrant had outstanding 55,181,369 shares of Common Stock.

 

 

 

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Cautionary Statement Regarding Forward-Looking Statements. Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from those predicted by such forward-looking statements, you should not place undue reliance on such forward-looking statements when deciding whether to buy, sell or hold the Company’s securities. We undertake no obligation to update these forward-looking statements in the future. For a discussion of important factors that could affect our results, please refer to PART I, ITEM 1A. Risk Factors, contained in the Company’s annual report on Form 10-K for the year ended December 31, 2010, as updated under Part II, Item 1A. Risk Factors in this Form 10-Q and the discussions set forth in PART I, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, including under the caption “Forward-Looking Statements,” in this Form 10-Q.

Website Access To Securities and Exchange Commission Reports

The Company’s Internet website can be found at www.accobrands.com . The Company makes available free of charge on or through its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the Securities and Exchange Commission.

It is suggested that the condensed consolidated financial statements included herein in PART I, ITEM 1. Financial Information, be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2010.

 

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TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION					4
ITEM 1.		FINANCIAL STATEMENTS			4
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			34
ITEM 4.		CONTROLS AND PROCEDURES			34
PART II — OTHER INFORMATION					35
ITEM 1.		LEGAL PROCEEDINGS			35
ITEM 1A.		RISK FACTORS			35
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			35
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES			35
ITEM 5.		OTHER INFORMATION			35
ITEM 6.		EXHIBITS			36
SIGNATURES					37
Certification
Certification
Certification
Certification

 

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

 

		June 30, 2011				December 31, 2010
(in millions of dollars)		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	92.7			$	83.2
Accounts receivable, net			269.4				274.8
Inventories			221.6				205.9
Deferred income taxes			8.8				9.1
Other current assets			31.6				24.0
Assets of discontinued operations			—				23.7
Total current assets			624.1				620.7
Total property, plant and equipment			487.9				474.1
Less accumulated depreciation			(328.7	)			(310.9	)
Property, plant and equipment, net			159.2				163.2
Deferred income taxes			11.0				10.6
Goodwill			139.8				136.9
Identifiable intangibles, net			135.1				137.0
Other assets			66.6				71.8
Assets of discontinued operations			—				9.4
Total assets		$	1,135.8			$	1,149.6
Liabilities and Stockholders’ Deficit
Current liabilities:
Notes payable to banks		$	0.3			$	—
Current portion of long-term debt			0.2				0.2
Accounts payable			106.0				110.3
Accrued compensation			19.7				23.9
Accrued customer program liabilities			61.0				72.8
Accrued interest			21.7				22.0
Other current liabilities			72.5				84.1
Liabilities of discontinued operations			3.4				14.6
Total current liabilities			284.8				327.9
Long-term debt			716.8				727.4
Deferred income taxes			84.0				81.2
Pension and post retirement benefit obligations			64.9				74.9
Other non-current liabilities			13.6				12.7
Liabilities of discontinued operations			—				5.3
Total liabilities			1,164.1				1,229.4
Stockholders’ deficit:
Common stock			0.6				0.6
Treasury stock			(1.7	)			(1.5	)
Paid-in capital			1,404.0				1,401.1
Accumulated other comprehensive loss			(72.9	)			(86.1	)
Accumulated deficit			(1,358.3	)			(1,393.9	)
Total stockholders’ deficit			(28.3	)			(79.8	)
Total liabilities and stockholders’ deficit		$	1,135.8			$	1,149.6

See notes to condensed consolidated financial statements.

 

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ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

		Three months ended June 30,								Six Months Ended June 30,
(in millions of dollars, except per share data)		2011				2010				2011				2010
Net sales		$	330.2			$	305.2			$	628.6			$	605.7
Cost of products sold			224.7				210.7				433.9				420.2
Gross profit			105.5				94.5				194.7				185.5
Operating costs and expenses:
Advertising, selling, general and administrative expenses			73.6				68.6				147.9				137.4
Amortization of intangibles			1.6				1.6				3.3				3.4
Restructuring income			(0.3	)			(0.7	)			(0.4	)			(0.8	)
Total operating costs and expenses			74.9				69.5				150.8				140.0
Operating income			30.6				25.0				43.9				45.5
Non-operating (income) expense:
Interest expense, net			19.5				19.7				38.7				39.2
Equity in earnings of joint ventures			(1.2	)			(1.1	)			(2.4	)			(2.3	)
Other expense (income), net			—				0.2				(0.2	)			1.1
Income from continuing operations before income taxes			12.3				6.2				7.8				7.5
Income tax expense			6.0				1.9				10.5				8.4
Income (loss) from continuing operations			6.3				4.3				(2.7	)			(0.9	)
Income from discontinued operations, net of income taxes			37.4				0.6				38.3				1.1
Net income		$	43.7			$	4.9			$	35.6			$	0.2
Per share:
Basic earnings (loss) per share:
Income (loss) from continuing operations		$	0.11			$	0.08			$	(0.05	)		$	(0.02	)
Income from discontinued operations		$	0.68			$	0.01			$	0.69			$	0.02
Basic earnings per share		$	0.79			$	0.09			$	0.65			$	—
Diluted earnings (loss) per share:
Income (loss) from continuing operations		$	0.11			$	0.08			$	(0.05	)		$	(0.02	)
Income from discontinued operations		$	0.64			$	0.01			$	0.69			$	0.02
Diluted earnings per share		$	0.75			$	0.09			$	0.65			$	—
Weighted average number of shares outstanding:
Basic			55.2				54.8				55.1				54.7
Diluted			58.0				57.2				55.1				54.7

See notes to condensed consolidated financial statements.

 

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ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		Six Months Ended June 30,
(in millions of dollars)		2011				2010
Operating activities
Net income		$	35.6			$	0.2
Asset impairment and other non-cash charges			—				0.4
(Gain) loss on sale of assets			(40.8	)			0.1
Depreciation			13.9				15.0
Amortization of debt issuance costs and bond discount			3.3				3.2
Amortization of intangibles			3.3				3.5
Stock-based compensation			2.8				2.4
Changes in balance sheet items:
Accounts receivable			15.7				10.4
Inventories			(10.2	)			(16.1	)
Other assets			(5.6	)			(9.6	)
Accounts payable			(7.7	)			13.8
Accrued expenses and other liabilities			(42.2	)			(24.9	)
Accrued income taxes			0.6				3.3
Equity in earnings of joint ventures, net of dividends received			2.4				2.0
Net cash provided (used) by operating activities			(28.9	)			3.7
Investing activities
Additions to property, plant and equipment			(7.1	)			(4.9	)
Assets acquired			(1.4	)			(0.8	)
Proceeds (payments) from the sale of discontinued operations			54.6				(3.7	)
Proceeds from the disposition of assets			0.2				0.3
Other			0.6				—
Net cash provided (used) by investing activities			46.9				(9.1	)
Financing activities
Repayments of long-term debt			(11.0	)			(0.1	)
Borrowings (repayments) of short-term debt, net			0.3				(0.1	)
Cost of debt issuance			—				(0.7	)
Other			(0.2	)			(0.1	)
Net cash used by financing activities			(10.9	)			(1.0	)
Effect of foreign exchange rate changes on cash			2.4				(2.7	)
Net increase (decrease) in cash and cash equivalents			9.5				(9.1	)
Cash and cash equivalents
Beginning of period			83.2				43.6
End of period		$	92.7			$	34.5

See notes to condensed consolidated financial statements.

 

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ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

1.

Basis of Presentation

The management of ACCO Brands Corporation (“ACCO Brands” or the “Company”) is responsible for the accuracy and internal consistency of the preparation of the condensed consolidated financial statements and footnotes contained in this quarterly report on Form 10-Q.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Company believes the disclosures are adequate to make the information presented not misleading, certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2010.

The condensed consolidated balance sheet as of June 30, 2011, the related condensed consolidated statements of operations for the three and six months ended June 30, 2011 and 2010 and the related condensed consolidated statements of cash flows for the six months ended June 30, 2011 and 2010 are unaudited. The December 31, 2010 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required annually by accounting principles generally accepted in the United States. In the opinion of management, all adjustments consisting of only normal recurring adjustments necessary for a fair presentation of the financial statements have been included. Interim results may not be indicative of results for a full year.

The Company has sold its GBC Fordigraph Pty Ltd business to The Neopost Group as of May 31, 2011. This business was part of the ACCO Brands International segment. The GBC Fordigraph Pty Ltd business has been reclassified as a discontinued operation on the condensed consolidated statements of operations and condensed consolidated balance sheet for all periods presented in this Quarterly Report on Form 10-Q. Prior year amounts included herein have been restated to conform to the current year presentation. The cash flows from discontinued operations have not been separately classified on the accompanying consolidated statement of cash flows.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

2.

Recent Accounting Pronouncements

In June 2011 the FASB issued an update, ASU No. 2011-5, to existing standards on comprehensive income (ASC Topic 220). ASU No. 2011-5 was issued to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU No. 2011-5 is effective for interim periods ending after December 15, 2011. The Company currently believes that the adoption of this accounting standard will not have a significant impact on its consolidated financial statements or results of operations.

 

3.

Long-term Debt and Short-term Borrowings

Notes payable and long-term debt consisted of the following at June 30, 2011 and December 31, 2010:

 

(in millions of dollars)		June 30, 2011				December 31, 2010
Senior Secured Notes, due March 2015, net of discount (1) (fixed interest rate of 10.625%)		$	454.9			$	454.3
U.S. Dollar Senior Subordinated Notes, due August 2015 (fixed interest rate of 7.625%)			260.3				271.3
Other borrowings			2.1				2.0
Total debt			717.3				727.6
Less: current portion			(0.5	)			(0.2	)
Total long-term debt		$	716.8			$	727.4

 

(1)	Represents unamortized original issue discount of $5.1 million and $5.7 million as of June 30, 2011 and December 31, 2010, respectively, which is amortizable through March 15, 2015.

 

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During the second quarter of 2011 the Company redeemed $11.0 million of its Senior Subordinated Notes.

As of June 30, 2011, the amount available for borrowing under the Company’s senior secured asset-based revolving credit facility (the “ABL Facility”) was $167.2 million (allowing for $6.8 million of letters of credit outstanding and borrowing base limitations).

Compliance with Loan Covenants

As of and for the period ended June 30, 2011, the Company was in compliance with all applicable loan covenants.

The ABL Facility would not be affected by a change in the Company’s credit rating.

 

4.

Pension and Other Retiree Benefits

The components of net periodic benefit cost for pension and postretirement plans for the three and six months ended June 30, 2011 and 2010 are as follows:

 

		Three Months Ended June 30,
		Pension Benefits																Postretirement
		U.S.								International
(in millions of dollars)		2011				2010				2011				2010				2011				2010
Service cost		$	—			$	—			$	0.5			$	0.5			$	—			$	0.1
Interest cost			2.1				2.3				3.7				3.5				0.2				0.1
Expected return on plan assets			(2.7	)			(2.6	)			(4.0	)			(3.7	)			—				—
Amortization of prior service cost			—				—				—				0.1				—				—
Amortization of net loss (gain)			1.1				0.7				1.0				1.2				(0.2	)			(0.2	)
Total net periodic benefit cost		$	0.5			$	0.4			$	1.2			$	1.6			$	—			$	—
		Six Months Ended June 30,
		Pension Benefits																Postretirement
		U.S.								International
(in millions of dollars)		2011				2010				2011				2010				2011				2010
Service cost		$	—			$	—			$	1.1			$	1.1			$	0.1			$	0.1
Interest cost			4.3				4.5				7.4				7.2				0.3				0.3
Expected return on plan assets			(5.4	)			(5.2	)			(8.0	)			(7.5	)			—				—
Amortization of prior service cost			—				—				0.1				0.1				—				—
Amortization of net loss (gain)			2.2				1.5				1.9				2.4				(0.3	)			(0.4	)
Total net periodic benefit cost		$	1.1			$	0.8			$	2.5			$	3.3			$	0.1			$	—

The Company expects to contribute approximately $16.1 million to its defined benefit plans in 2011. For the six months ended June 30, 2011, the Company has contributed $11.5 million to those plans.

 

5.

Stock-Based Compensation

The following table summarizes the Company’s stock-based compensation expense (including stock options, stock-settled stock appreciation rights (“SSARs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”)) for the three and six months ended June 30, 2011 and 2010.

 

		Three Months Ended June  30,								Six Months Ended June  30,
(in millions of dollars)		2011				2010				2011				2010
Stock option expense		$	0.1			$	0.1			$	0.2			$	0.2
SSAR expense			0.1				0.1				0.1				0.1
RSU expense			1.2				1.1				1.8				1.6
PSU expense			0.6				0.3				0.7				0.5
Total		$	2.0			$	1.6			$	2.8			$	2.4

During the first quarter of 2011 the Board of Directors approved a stock compensation grant of 500,000 RSUs for the Company’s Chairman and Chief Executive Officer. During the second quarter of 2011, the Company’s Board of Directors approved an additional stock compensation grant to eligible employees and non-employee directors, which consisted of 642,300 stock options, 356,516 RSUs and 762,100 PSUs.

 

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The Company generally recognizes compensation expense for its stock-based awards ratably over the vesting period. Stock-based compensation expense for the three and six months ended June 30, 2011 includes $0.6 million of expense related to restricted stock units granted to non-employee directors, which became fully vested on the grant date. Unrecognized compensation expense related to unvested stock options, SSARs, RSUs and PSUs was $2.3 million, $0.2 million, $6.3 million and $7.5 million, respectively, as of June 30, 2011. The unrecognized compensation expense related to stock options, SSARs, RSUs and PSUs will be recognized over a weighted-average period of 3.0 years, 1.0 years, 3.0 years and 2.2 years, respectively.

 

6.

Inventories

Inventories are stated at the lower of cost or market value. The components of inventories are as follows:

 

(in millions of dollars)		June 30, 2011				December 31, 2010
Raw materials		$	28.0			$	28.3
Work in process			5.9				4.5
Finished goods			187.7				173.1
Total inventories		$	221.6			$	205.9

 

7.

Goodwill and Identifiable Intangibles

Goodwill

As more fully described in the Company’s 2010 annual report on Form 10-K, the Company tests goodwill for impairment at least annually, normally in the second quarter, and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company performed this assessment in the second quarter of 2011 and concluded that no impairment exists.

Changes in the net carrying amount of goodwill by segment were as follows:

 

(in millions of dollars)		ACCO Brands Americas				ACCO Brands International				Computer Products Group				Total
Balance at December 31, 2010		$	90.2			$	39.9			$	6.8			$	136.9
Translation			1.0				1.9				—				2.9
Balance at June 30, 2011		$	91.2			$	41.8			$	6.8			$	139.8
Goodwill		$	222.1			$	126.0			$	6.8			$	354.9
Accumulated impairment losses			(130.9	)			(84.2	)			—				(215.1	)
Balance at June 30, 2011		$	91.2			$	41.8			$	6.8			$	139.8

Identifiable Intangible Assets

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of June 30, 2011 and December 31, 2010 are as follows:

 

		June 30, 2011												December 31, 2010
(in millions of dollars)		Gross Carrying Amounts				Accumulated Amortization				Net Book Value				Gross Carrying Amounts				Accumulated Amortization				Net Book Value
Indefinite-lived intangible assets:
Trade names		$	139.2			$	(44.5	)  (1)		$	94.7			$	138.5			$	(44.5	)  (1)		$	94.0
Amortizable intangible assets:
Trade names			59.4				(27.4	)			32.0				58.2				(25.3	)			32.9
Customer and contractual relationships			26.8				(21.1	)			5.7				26.3				(19.5	)			6.8
Patents/proprietary technology			10.8				(8.1	)			2.7				10.4				(7.1	)			3.3
Subtotal			97.0				(56.6	)			40.4				94.9				(51.9	)			43.0
Total identifiable intangibles		$	236.2			$	(101.1	)		$	135.1			$	233.4			$	(96.4	)		$	137.0

 

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(1)	Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets.

The Company’s intangible amortization expense was $1.6 million and $1.6 million for the three months ended June 30, 2011 and 2010, respectively, and $3.3 million and $3.4 million for the six months ended June 30, 2011 and 2010, respectively. Estimated 2011 amortization expense is $6.3 million, and is expected to decline by approximately $0.7 million for each of the five years following.

 

8.

Restructuring and Other Charges

The Company had initiated significant restructuring actions associated with the merger of ACCO Brands Corporation and General Binding Corporation that resulted in the closure or consolidation of facilities that were engaged in manufacturing and distributing the Company’s products, primarily in North America and Europe, or which resulted in a reduction in overall employee headcount. The Company’s restructuring actions are now complete and no additional restructuring charges were initiated in the first six months of 2010 or 2011. Employee termination costs include the release of reserves no longer required. However, cash disbursements will continue throughout 2011 for obligations outstanding as of December 31, 2010.

A summary of the activity in the restructuring accounts and a reconciliation of the liability for, and as of, the six months ended June 30, 2011 are as follows:

 

(in millions of dollars)		Balance at December 31, 2010				Total Provision				Cash Expenditures				Non-cash Items/ Currency Change				Balance at June  30, 2011
Employee termination costs		$	2.2			$	(0.3	)		$	(0.6	)		$	0.1			$	1.4
Termination of lease agreements			3.0				—				(0.5	)			0.1				2.6
Total restructuring liability		$	5.2			$	(0.3	)		$	(1.1	)		$	0.2			$	4.0

Management expects the $1.4 million of employee termination costs to be substantially paid within the next twelve months. Cash payments associated with lease termination costs of $2.6 million are expected to continue until the last lease terminates in 2013.

In addition to the recognition of the restructuring costs described above, in the first quarter of 2011 the Company initiated plans to rationalize its European operations. The associated costs primarily relate to employee terminations, which were accounted for as regular business expenses and are expected to be largely offset by associated savings realized during the remainder of the 2011 year. These costs totaled $0.4 million and $4.3 million during the three months and six months ended June 30, 2011 and are included within advertising, selling, general and administrative expenses in the Consolidated Statements of Operations.

A summary of the activity in the rationalization charges and a reconciliation of the liability for, and as of, the six months ended June 30, 2011 are as follows:

 

(in millions of dollars)		Balance at December 31, 2010				Total Provision				Cash Expenditures				Non-cash Items/ Currency Change				Balance at June  30, 2011
Employee termination costs/liability		$	—			$	4.3			$	(2.6	)		$	0.1			$	1.8

Management expects the $1.8 million of employee termination costs to be substantially paid within the next nine months.

 

9.

Income Taxes

For the three months ended June 30, 2011, the Company recorded income tax expense from continuing operations of $6.0 million on income before taxes of $12.3 million. This compares to an income tax expense from continuing operations of $1.9 million on income before taxes of $6.2 million in the second quarter of 2010. The high effective tax rate for 2011 is due to no tax benefits being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits. The effective tax rate for 2010 of 30.6% is due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits, offset by a benefit of $2.8 million for the correction of an error that increased net income by $2.8 million through an increase in deferred tax assets and a corresponding reduction in income tax expense.

 

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For the six months ended June 30, 2011, the Company recorded income tax expense from continuing operations of $10.5 million on income before taxes of $7.8 million. This compares to income tax expense from continuing operations of $8.4 million on income before taxes of $7.5 million for the six months ended June 30, 2010. The high effective tax rates for 2011 and 2010 are due to no tax benefits being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits, with 2010 partially offset by the benefit of $2.8 million discussed above.

The reconciliation of income taxes for the three and six months ended June 30, 2011 and 2010, computed at the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:

 

		Three Months Ended June 30,								Six Months Ended June  30,
(in millions of dollars)		2011				2010				2011				2010
Income tax expense computed at U.S. statutory income tax rate		$	4.3			$	2.2			$	2.8			$	2.6
Increase of U.S. valuation allowance			3.0				3.0				9.5				8.4
Correction of prior period deferred taxes			—				(2.8	)			—				(2.8	)
Other			(1.3	)			(0.5	)			(1.8	)			0.2
Income taxes as reported		$	6.0			$	1.9			$	10.5			$	8.4

The U.S. federal statute of limitations related to income tax returns remains open for the year 2007 and onward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2006 forward) and the United Kingdom (2008 forward). The Company is currently under examination in the United States and in various foreign jurisdictions.

 

10.

Earnings per Share

Total outstanding shares as of June 30, 2011 and 2010 were 55.2 million and 54.9 million, respectively. The calculation of basic earnings per common share is based on the weighted average number of common shares outstanding in the year, or period, over which they were outstanding. The Company’s calculation of diluted earnings per common share assumes that any common shares outstanding were increased by shares that would be issued upon exercise of those stock units for which the average market price for the period exceeds the exercise price; less, the shares that could have been purchased by the Company with the related proceeds, including compensation expense measured but not yet recognized, net of tax.

 

		Three Months Ended June  30,								Six Months Ended June  30,
(in millions)		2011				2010				2011				2010
Weighted average number of common shares outstanding — basic			55.2				54.8				55.1				54.7
Employee stock options			0.1				0.1				0.1				0.1
Stock-settled stock appreciation rights			1.8				2.1				1.9				2.2
Restricted stock units			0.9				0.2				0.8				0.2
Adjusted weighted-average shares and assumed conversions — diluted (1)			58.0				57.2				57.9				57.2

 

(1)

Due to the loss from continuing operations during the six months ended June 30, 2011 and 2010, the denominator in the diluted earnings per share calculation does not include the effects of the stock awards for which the average market price for the period exceeds the exercise price, as it would result in a less dilutive computation. As a result, reported diluted earnings per share for the six months ended June 30, 2011 and 2010 are the same as basic earnings per share.

Awards of shares representing approximately 4.4 million and 4.9 million as of June 30, 2011 and 2010, respectively, of potentially dilutive shares of common stock were outstanding and are not included in the computation of dilutive earnings per share as their effect would have been anti-dilutive as such options’ exercise prices were higher than the average market price during the period.

 

11.

Derivative Financial Instruments

The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. The Company enters into financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments are major financial institutions. The Company continually monitors its foreign currency exposures in order to maximize the overall effectiveness of its foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar and Pound sterling. The Company is subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performance by counterparties to financial instrument contracts. Management continues to closely monitor the status of the Company’s counterparties and will take action, as appropriate, to further manage its counterparty credit risk. There are no credit contingency features in our derivative financial instruments.

 

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The date on which the Company enters into a derivative, the derivative is designated as a hedge of the identified exposure. The Company measures the effectiveness of its hedging relationships both at hedge inception and on an ongoing basis.

Forward Currency Contracts

The Company enters into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventory purchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe, Australia, Canada, Mexico and Japan.

Forward currency contracts used to hedge foreign denominated inventory purchases are designated as a cash flow hedge. Unrealized gains and losses on these contracts for inventory purchases are deferred in other comprehensive income until the contracts are settled and the underlying hedged transactions are recognized, at which time the deferred gains or losses will be reported in the “Cost of products sold” line in the Condensed Consolidated Statements of Operations. As of June 30, 2011 and December 31, 2010, the Company had cash flow designated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $87.1 million and $84.9 million, respectively.

Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within Other expense, net in the Condensed Consolidated Statements of Operations and are largely offset by the changes in the fair value of the hedged item. As of June 30, 2011 and December 31, 2010, the Company had undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $90.1 million and $92.7 million, respectively.

The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, and do not extend beyond June 2012.

The following table summarizes the fair value of the Company’s derivative financial instruments as of June 30, 2011 and December 31, 2010, respectively.

 

		Fair Value of Derivative Instruments
		Derivative Assets										Derivative Liabilities
(in millions of dollars)		Balance Sheet Location		June 30, 2011				Dec. 31, 2010				Balance Sheet Location		June 30, 2011				Dec. 31, 2010
Derivatives designated as hedging instruments:
Foreign exchange contracts		Other current assets		$	0.4			$	0.7			Other current liabilities		$	3.1			$	2.4
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Other current assets			1.1				1.4			Other current liabilities			0.1				0.8
Total derivatives				$	1.5			$	2.1					$	3.2			$	3.2

 

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The following table summarizes the pre-tax effect of the Company’s derivative financial instruments on the Consolidated Financial Statements for the three and six months ended June 30, 2011 and 2010, respectively.

 

		The Effect of Derivative Instruments in Cash Flow Hedging  Relationships on the Consolidated Financial Statements for the Three Months Ended June 30, 2011 and 2010
(in millions of dollars)		Amount of (Gain) Loss Recognized in OCI (Effective Portion)								Location of (Gain) Loss Reclassified from OCI to Income		Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)
		2011				2010						2011				2010
Cash flow hedges:
Foreign exchange contracts		$	2.1			$	(2.5	)		Cost of products sold		$	2.5			$	(1.1	)
										Income from discontinued operations, net of income taxes			0.2				0.2
Total		$	2.1			$	(2.5	)				$	2.7			$	(0.9	)
		The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Financial Statements for the Six Months Ended June 30, 2011 and 2010
(in millions of dollars)		Amount of (Gain) Loss Recognized in OCI (Effective Portion)								Location of (Gain) Loss Reclassified from OCI to Income		Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)
		2011				2010						2011				2010
Cash flow hedges:
Foreign exchange contracts		$	5.5			$	(3.3	)		Cost of products sold		$	4.4			$	(1.1	)
										Income from discontinued operations, net of income taxes			0.5				0.5
Total		$	5.5			$	(3.3	)				$	4.9			$	(0.6	)

 

		The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations
		Location of (Gain) Loss Recognized in Income on Derivatives		Amount of (Gain)  Loss Recognized in Income Three Months Ended June 30,								Amount of (Gain)  Loss Recognized in Income Six Months Ended June 30,
(in millions of dollars)				2011				2010				2011				2010
Foreign exchange contracts		Other (income) expense		$	(0.6	)		$	(0.3	)		$	0.2			$	(4.2	)

 

12.

Fair Value of Financial Instruments

The authoritative guidance for fair value measurements requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The guidance classifies the inputs used to measure fair value into the following hierarchy:

 

Level 1		Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2		Unadjusted quoted prices in active markets for similar assets or liabilities, or Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or Inputs other than quoted prices that are observable for the asset or liability
Level 3		Unobservable inputs for the asset or liability

 

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The Company utilizes the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has determined that its financial assets and liabilities are Level 2 in the fair value hierarchy. The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

 

		June 30, 2011				December 31, 2010
Assets:
Forward currency contracts		$	1.5			$	2.1
Liabilities:
Forward currency contracts		$	3.2			$	3.2

The Company’s forward currency contracts are included in Other Current Assets or Other Current Liabilities and mature within 12 months. The forward foreign currency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. As such, these derivative instruments are classified within Level 2.

The fair values of cash and cash equivalents, notes payable to banks, accounts receivable and accounts payable approximate carrying amounts due principally to their short maturities. The carrying amount of total debt was $717.3 million and $727.6 million and the estimated fair value of total debt was $770.1 million and $794.5 million at June 30, 2011 and December 31, 2010, respectively. The fair values are determined from quoted market prices, where available, and from investment bankers using current interest rates considering credit ratings and the remaining terms of maturity.

 

13.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as net income (loss) and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. The table below presents total comprehensive income (loss) for the three and six months ended June 30, 2011 and 2010, respectively.

 

		Three Months Ended June 30,								Six Months Ended June 30,
(in millions of dollars)		2011				2010				2011				2010
Net income		$	43.7			$	4.9			$	35.6			$	0.2
Other comprehensive income (loss), net of tax
Derivative instruments, net of tax			0.4				1.1				(0.8	)			2.5
Amortization of costs associated with pension and post- retirement benefit obligations, net of tax			1.6				1.7				1.2				6.5
Currency translation adjustments			1.0				(17.0	)			12.8				(20.0	)
Other comprehensive income (loss)			3.0				(14.2	)			13.2				(11.0	)
Comprehensive income (loss)		$	46.7			$	(9.3	)		$	48.8			$	(10.8	)

 

14.

Information on Business Segments

The Company’s three business segments are described below.

ACCO Brands Americas and ACCO Brands International

These two segments manufacture, source and sell traditional office products and supplies and document finishing solutions. ACCO Brands Americas comprises the North, Central and South American markets and ACCO Brands International comprises the rest of the world, principally Europe, Australia and Asia-Pacific.

As discussed in Note 1, during the second quarter of 2011 the Company sold its GBC Fordigraph Pty Ltd business which was formerly part of the ACCO Brands International segment and is included in the financial statement caption “Discontinued Operations.” The ACCO Brands International segment is now presented on a continuing operations basis excluding the GBC Fordigraph Pty Ltd business.

 

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Examples of our traditional office products and supplies are staplers, staples, punches, ring binders, trimmers, sheet protectors, hanging file folders, clips and fasteners, dry-erase boards, dry-erase markers, easels, bulletin boards, laser pointers and shredders. These products are sold under leading brands including Quartet ^® , Rexel, Swingline ^® , GBC ^® , Wilson Jones ^® , Marbig, NOBO, ACCO ^® , Derwent and Eastlight. Examples of our document finishing solutions are binding, lamination and punching equipment, binding and lamination supplies, report covers and archival report covers. These products are sold primarily under the GBC ^® brand. We also provide machine maintenance and repair services sold under the GBC brand. Included in the ACCO Brands Americas segment are our personal organization tools, including time management products, primarily sold under the Day-Timer ^® brand name.

The customer base to which our products are sold is made up of large global and regional resellers of our products. It is through these large resellers that the Company’s products reach the end consumer. Our customer base includes commercial contract stationers, office products superstores, wholesalers, distributors, mail order and internet catalogs, mass merchandisers, club stores and independent dealers. The majority of sales by our customers are to business end-users, which generally seek premium office products that have added value or ease of use features and a reputation for reliability, performance and professional appearance. Some of our document finishing products are sold directly to high volume end-users and commercial reprographic centers and indirectly to lower-volume consumers worldwide. Approximately two-thirds of the Day-Timer business is sold through the direct channel, which markets product through periodic sales catalogs and ships product directly to our end-user customers. The remainder of the business sells to large resellers and commercial dealers.

Computer Products Group

This Group designs, distributes, markets and sells accessories for laptop and desktop computers and Apple ^® iPad ^® , iPod ^® and iPhone ^® products. These accessories primarily include security products, power adapters, input devices such as mice and keyboards, laptop computer carrying cases, hubs and docking stations, ergonomic devices and technology accessories for iPads ^® , iPods ^® and iPhones ^® . The Computer Products Group sells mostly under the Kensington and Kensington Microsaver ^® brand names, with the majority of its revenue coming from the U.S. and Europe.

All of our computer products are manufactured to our specifications by third-party suppliers, principally in Asia, and are stored and distributed from our regional facilities. Our computer products are sold primarily to consumer electronic retailers, information technology value-added resellers, original equipment manufacturers and office products retailers.

Financial information by reportable segment is set forth below.

Net sales by business segment are as follows:

 

		Three Months Ended June  30,								Six Months Ended June 30,
(in millions of dollars)		2011				2010				2011				2010
ACCO Brands Americas		$	175.7			$	169.9			$	327.9			$	328.5
ACCO Brands International			105.8				93.2				210.7				195.4
Computer Products Group			48.7				42.1				90.0				81.8
Net sales		$	330.2			$	305.2			$	628.6			$	605.7

Operating income by business segment is as follows ⁽¹⁾ :

 

		Three Months Ended June  30,								Six Months Ended June 30,
(in millions of dollars)		2011				2010				2011				2010
ACCO Brands Americas		$	14.5			$	14.4			$	20.0			$	22.7
ACCO Brands International			9.0				4.9				13.1				14.0
Computer Products Group			13.1				10.7				22.4				18.8
Segment operating income			36.6				30.0				55.5				55.5
Corporate			(6.0	)			(5.0	)			(11.6	)			(10.0	)
Operating income			30.6				25.0				43.9				45.5
Interest expense			19.5				19.7				38.7				39.2
Equity in earnings of joint ventures			(1.2	)			(1.1	)			(2.4	)			(2.3	)
Other (income) expense, net			—				0.2				(0.2	)			1.1
Income from continuing operations before income taxes		$	12.3			$	6.2			$	7.8			$	7.5

 

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(1)	Operating income as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less advertising, selling, general and administrative expenses; iv) less amortization of intangibles; v) less restructuring and vi) less asset impairment charges.

 

15.

Joint Venture Investments

Summarized below is the aggregated financial information for the Company’s joint ventures, Pelikan-Artline Pty Ltd and Neschen GBC Graphic Films LLC, which are accounted for under the equity method. Accordingly, the Company has recorded its proportionate share of earnings or losses on the line entitled, “Equity in earnings of joint ventures” in the Condensed Consolidated Statements of Operations. The Company’s share of the net assets of the joint ventures are included within “Other assets” in the Condensed Consolidated Balance Sheets.

 

		Three Months Ended June 30,								Six Months Ended June 30,
(in millions of dollars)		2011				2010				2011				2010
Net sales		$	39.3			$	35.0			$	76.6			$	69.9
Gross profit			22.0				19.5				42.6				38.8
Operating income			4.0				3.5				7.7				7.4
Net income			2.6				2.3				5.1				4.8

 

(in millions of dollars)		June 30, 2011				December 31, 2010
Current assets		$	84.9			$	89.6
Non-current assets			39.7				37.9
Current liabilities			39.0				37.6
Non-current liabilities			21.7				23.8

 

16.

Commitments and Contingencies

Pending Litigation

The Company and its subsidiaries are defendants in various claims and legal proceedings associated with their business and operations. It is not possible to predict the outcome of the pending actions, but management believes that there are meritorious defenses to these actions and that these actions, if adjudicated or settled in a manner adverse to the Company, would not have a material adverse effect upon the results of operations, cash flows or financial condition of the Company.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made adequate provisions therefore. Nonetheless, assessing and predicting the outcomes of these matters involve substantial uncertainties. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluations or predictions could arise that could have a material adverse impact on the Company’s financial condition or results of operations.

Environmental

The Company is subject to laws and regulations relating to the protection of the environment. While it is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that the Company’s subsidiaries may undertake in the future, in the opinion of management, compliance with the present environmental protection laws, before taking into account any estimated recoveries from third parties, will not have a material adverse effect upon the results of operations, cash flows or financial condition of the Company.

 

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17.

Discontinued Operations

In June of 2011, and with effect from May 31, 2011, the Company sold its GBC Fordigraph Pty Ltd business to The Neopost Group. The Australia-based business was formerly part of the ACCO Brands International segment and is included in the financial statements as discontinued operations. The GBC Fordigraph business represented approximately $46 million in annual net sales for the year ended December 31, 2010. The Company has received net proceeds of $54.8 million and anticipates pre-tax net proceeds of $53.0 million, inclusive of working capital adjustments and estimated selling costs. In connection with this transaction, in the second quarter of 2011, the Company recorded a gain on sale of $36.9 million, net of tax.

Also included in discontinued operations are the results of the Company’s commercial print finishing business, which was sold during the second quarter of 2009. During each of the six month periods ended June 30, 2011 and 2010, the Company recorded expenses of $0.2 million attributable to the wind-down of the disposed operations.

The operating results and financial position of discontinued operations are as follows:

 

(in millions, except per share data)		Three Months Ended June 30,								Six Months Ended June 30,
		2011				2010				2011				2010
Operating Results:
Net sales		$	8.0			$	11.3			$	19.9			$	21.6
Income from operations before income taxes			1.0				1.2				2.2				1.9
Gain (loss) on sale before income taxes			41.8				(0.3	)			41.8				(0.2	)
Income tax expense			5.4				0.3				5.7				0.6
Income from discontinued operations		$	37.4			$	0.6			$	38.3			$	1.1
Per share:
Basic income from discontinued operations		$	0.68			$	0.01			$	0.69			$	0.02
Diluted income from discontinued operations		$	0.64			$	0.01			$	0.69			$	0.02

 

(in millions of dollars)		June 30, 2011				December 31, 2010
Financial Position:
Current assets		$	—			$	23.7
Long-term assets			—				9.4
Total assets		$	—			$	33.1
Current liabilities		$	3.4			$	14.6
Long-term liabilities			—				5.3
Total liabilities		$	3.4			$	19.9

Remaining liabilities related to discontinued operations consist principally of selling costs related to the sale of GBC Fordigraph and litigation accruals. These liabilities are expected to be settled within the next twelve months.

 

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18.

Condensed Consolidated Financial Information

The Company’s 100% owned domestic subsidiaries have jointly/severally, fully and unconditionally guaranteed our existing Senior Secured Notes and Senior Subordinated Notes. Rather than filing separate financial statements for each guarantor subsidiary with the Securities and Exchange Commission, the Company has elected to present the following condensed consolidating financial statements, which detail the results of operations and cash flows for the six months ended June 30, 2011 and 2010 and balance sheet as of June 30, 2011 and December 31, 2010 of the Company and its guarantor and non-guarantor subsidiaries (in each case carrying investments under the equity method), and the eliminations necessary to arrive at the reported consolidated financial statements of the Company.

 

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Condensed Consolidating Balance Sheets (Unaudited)

 

		June 30, 2011
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Eliminations				Consolidated
Assets
Current assets
Cash and cash equivalents		$	50.1			$	14.8			$	27.8			$	—			$	92.7
Accounts receivable, net			—				93.1				176.3				—				269.4
Inventories			—				111.2				110.4				—				221.6
Receivables from affiliates			177.8				55.1				37.7				(270.6	)			—
Deferred income taxes			3.0				—				5.8				—				8.8
Other current assets			2.8				15.0				13.8				—				31.6
Total current assets			233.7				289.2				371.8				(270.6	)			624.1
Property, plant and equipment, net			0.8				80.3				78.1				—				159.2
Deferred income taxes			1.0				—				10.0				—				11.0
Goodwill			—				70.6				69.2				—				139.8
Identifiable intangibles, net			57.9				52.0				25.2				—				135.1
Other assets			17.1				6.4				43.1				—				66.6
Investment in, long-term receivable from, affiliates			708.8				687.0				200.0				(1,595.8	)			—
Total assets		$	1,019.3			$	1,185.5			$	797.4			$	1,866.4	)		$	1,135.8
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities
Notes payable to banks		$	—			$	—			$	0.3			$	—			$	0.3
Current portion of long-term debt			0.1				0.1				—				—				0.2
Accounts payable			—				55.1				50.9				—				106.0
Accrued compensation			1.3				7.6				10.8				—				19.7
Accrued customer program liabilities			—				20.2				40.8				—				61.0
Accrued interest			21.7				—				—				—				21.7
Other current liabilities			1.6				21.9				49.0				—				72.5
Payables to affiliates			59.1				366.2				278.9				(704.2	)			—
Liabilities of discontinued operations			—				0.3				3.1				—				3.4
Total current liabilities			83.8				471.4				433.8				(704.2	)			284.8
Long-term debt			716.5				0.2				0.1				—				716.8
Long-term notes payable to affiliates			178.2				16.4				—				(194.6	)			—
Deferred income taxes			62.1				—				21.9				—				84.0
Pension and post-retirement benefit obligations			4.6				32.7				27.6				—				64.9
Other non-current liabilities			2.4				5.8				5.4				—				13.6
Total liabilities			1,047.6				526.5				488.8				(898.8	)			1,164.1
Stockholders’ (deficit) equity			—				—				—				—				—
Common stock			0.6				561.3				76.0				(637.3	)			0.6
Treasury stock			(1.7	)			—				—				—				(1.7	)
Paid-in capital			1,404.0				695.0				339.6				(1,034.6	)			1,404.0
Accumulated other comprehensive income (loss)			(72.9	)			(44.9	)			6.8				38.1				(72.9	)
Accumulated deficit			(1,358.3	)			(552.4	)			(113.8	)			666.2				(1,358.3	)
Total stockholders’ (deficit) equity			(28.3	)			659.0				308.6				(967.6	)			(28.3	)
Total liabilities and stockholders’ (deficit) equity		$	1,019.3			$	1,185.5			$	797.4			$	(1,866.4	)		$	1,135.8

 

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Condensed Consolidating Balance Sheets

 

		December 31, 2010
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Eliminations				Consolidated
Assets
Current assets
Cash and cash equivalents		$	39.5			$	(0.4	)		$	44.1			$	—			$	83.2
Accounts receivable, net			—				87.5				187.3				—				274.8
Inventories			—				100.2				105.7				—				205.9
Receivables from affiliates			235.5				58.5				38.1				(332.1	)			—
Deferred income taxes			3.0				—				6.1				—				9.1
Other current assets			2.5				11.6				9.9				—				24.0
Assets of discontinued operations			—				—				23.7				—				23.7
Total current assets			280.5				257.4				414.9				(332.1	)			620.7
Property, plant and equipment, net			1.0				85.6				76.6				—				163.2
Deferred income taxes			0.9				—				9.7				—				10.6
Goodwill			—				70.5				66.4				—				136.9
Identifiable intangibles, net			57.9				53.8				25.3				—				137.0
Other assets			21.6				6.3				43.9				—				71.8
Investment in, long-term receivable from, affiliates			616.9				711.4				200.0				(1,528.3	)			—
Assets of discontinued operations			—				—				9.4				—				9.4
Total assets		$	978.8			$	1,185.0			$	846.2			$	(1,860.4	)		$	1,149.6
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities
Current portion of long-term debt		$	0.1				0.1			$	—			$	—			$	0.2
Accounts payable			—				60.4				49.9				—				110.3
Accrued compensation			1.6				10.0				12.3				—				23.9
Accrued customer program liabilities			—				24.6				48.2				—				72.8
Accrued interest			22.0				—				—				—				22.0
Other current liabilities			2.2				23.7				58.2				—				84.1
Payables to affiliates			60.9				427.2				277.5				(765.6	)			—
Liabilities of discontinued operations			—				0.6				14.0				—				14.6
Total current liabilities			86.8				546.6				460.1				(765.6	)			327.9
Long-term debt			727.1				0.3				—				—				727.4
Long-term notes payable to affiliates			178.2				16.4				1.7				(196.3	)			—
Deferred income taxes			59.6				—				21.6				—				81.2
Pension and post retirement benefit obligations			4.7				39.9				30.3				—				74.9
Other non-current liabilities			2.2				5.6				4.9				—				12.7
Liabilities of discontinued operations			—				—				5.3				—				5.3
Total liabilities			1,058.6				608.8				523.9				(961.9	)			1,229.4
Stockholders’ (deficit) equity
Common stock			0.6				561.3				76.0				(637.3	)			0.6
Treasury stock			(1.5	)			—				—				—				(1.5	)
Paid-in capital			1,401.1				632.0				336.4				(968.4	)			1,401.1
Accumulated other comprehensive income (loss)			(86.1	)			(47.0	)			(4.4	)			51.4				(86.1	)
Accumulated deficit			(1,393.9	)			(570.1	)			(85.7	)			655.8				(1,393.9	)
Total stockholders’ (deficit) equity			(79.8	)			576.2				322.3				(898.5	)			(79.8	)
Total liabilities and stockholders’ (deficit) equity		$	978.8			$	1,185.0			$	846.2			$	(1,860.4	)		$	1,149.6

 

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Condensed Consolidating Income Statements (Unaudited)

 

		Three months ended June 30, 2011
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Eliminations				Consolidated
Unaffiliated sales		$	—			$	160.8			$	169.4			$	—			$	330.2
Affiliated sales			—				4.7				2.1				(6.8	)			—
Net sales			—				165.5				171.5				(6.8	)			330.2
Cost of products sold			—				117.3				114.2				(6.8	)			224.7
Gross profit			—				48.2				57.3				—				105.5
Advertising, selling, general and administrative expenses			6.6				35.0				32.0				—				73.6
Amortization of intangibles			—				0.9				0.7				—				1.6
Restructuring income			—				—				(0.3	)			—				(0.3	)
Operating (loss) income			(6.6	)			12.3				24.9				—				30.6
Interest (income) expense from affiliates			(0.3	)			—				0.3				—				—
Interest expense, net			17.0				2.6				(0.1	)			—				19.5
Equity in (earnings) losses of joint ventures			—				0.1				(1.3	)			—				(1.2	)
Other expense (income), net			(0.1	)			(5.1	)			5.2				—				—
(Loss) income before taxes and earnings of wholly owned subsidiaries			(23.2	)			14.7				20.8				—				12.3
Income tax expense			1.5				—				4.5				—				6.0
Income (loss) from continuing operations			(24.7	)			14.7				16.3				—				6.3
Income (loss) from discontinued operations, net of income taxes			—				(0.1	)			37.5				—				37.4
Income (loss) before earnings of wholly owned subsidiaries			(24.7	)			14.6				53.8				—				43.7
Earnings of wholly owned subsidiaries			68.4				50.9				—				(119.3	)			—
Net income (loss)		$	43.7			$	65.5			$	53.8			$	(119.3	)		$	43.7
		Three months ended June 30, 2010
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Eliminations				Consolidated
Unaffiliated sales		$	—			$	157.6			$	147.6			$	—			$	305.2
Affiliated sales			—				4.9				1.3				(6.2	)			—
Net sales			—				162.5				148.9				(6.2	)			305.2
Cost of products sold			—				115.9				101.0				(6.2	)			210.7
Gross profit			—				46.6				47.9				—				94.5
Advertising, selling, general and administrative expenses			5.7				33.6				29.3				—				68.6
Amortization of intangibles			—				1.0				0.6				—				1.6
Restructuring income			—				(0.3	)			(0.4	)			—				(0.7	)
Operating (loss) income			(5.7	)			12.3				18.4				—				25.0
Interest (income) expense from affiliates			(0.3	)			—				0.3				—				—
Interest expense, net			19.5				—				0.2				—				19.7
Equity in (earnings) losses of joint ventures			—				0.1				(1.2	)			—				(1.1	)
Other expense (income), net			0.1				(4.2	)			4.3				—				0.2
(Loss) income before taxes and earnings of wholly owned subsidiaries			(25.0	)			16.4				14.8				—				6.2
Income tax expense			1.5				—				0.4				—				1.9
Income (loss) from continuing operations			(26.5	)			16.4				14.4				—				4.3
Income (loss) from discontinued operations, net of income taxes			—				(0.3	)			0.9				—				0.6
Income (loss) before earnings of wholly owned subsidiaries			(26.5	)			16.1				15.3				—				4.9
Earnings of wholly owned subsidiaries			31.4				14.0				—				(45.4	)			—
Net income (loss)		$	4.9			$	30.1			$	15.3			$	(45.4	)		$	4.9

 

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		Six months ended June 30, 2011
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Eliminations				Consolidated
Unaffiliated sales		$	—			$	295.8			$	332.8			$	—			$	628.6
Affiliated sales			—				9.4				3.2				(12.6	)			—
Net sales			—				305.2				336.0				(12.6	)			628.6
Cost of products sold			—				220.0				226.5				(12.6	)			433.9
Gross profit			—				85.2				109.5				—				194.7
Advertising, selling, general and administrative expenses			12.6				69.6				65.7				—				147.9
Amortization of intangibles			—				1.8				1.5				—				3.3
Restructuring income			—				—				(0.4	)			—				(0.4	)
Operating (loss) income			(12.6	)			13.8				42.7				—				43.9
Interest (income) expense from affiliates			(0.6	)			—				0.6				—				—
Interest expense, net			33.7				5.1				(0.1	)			—				38.7
Equity in (earnings) losses of joint ventures			—				0.2				(2.6	)			—				(2.4	)
Other expense (income), net			—				(10.0	)			9.8				—				(0.2	)
(Loss) income before taxes and earnings of wholly owned subsidiaries			(45.7	)			18.5				35.0				—				7.8
Income tax expense			3.0				—				7.5				—				10.5
Income (loss) from continuing operations			(48.7	)			18.5				27.5				—				(2.7	)
Income (loss) from discontinued operations, net of income taxes			—				(0.1	)			38.4				—				38.3
Income (loss) before earnings of wholly owned subsidiaries			(48.7	)			18.4				65.9				—				35.6
Earnings of wholly owned subsidiaries			84.3				61.5				—				(145.8	)			—
Net income (loss)		$	35.6			$	79.9			$	65.9			$	(145.8	)		$	35.6
		Six months ended June 30, 2010
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Eliminations				Consolidated
Unaffiliated sales		$	—			$	300.8			$	304.9			$	—			$	605.7
Affiliated sales			—				9.5				2.4				(11.9	)			—
Net sales			—				310.3				307.3				(11.9	)			605.7
Cost of products sold			—				222.9				209.2				(11.9	)			420.2
Gross profit			—				87.4				98.1				—				185.5
Advertising, selling, general and administrative expenses			11.2				68.7				57.5				—				137.4
Amortization of intangibles			—				2.0				1.4				—				3.4
Restructuring income			—				(0.4	)			(0.4	)			—				(0.8	)
Operating (loss) income			(11.2	)			17.1				39.6				—				45.5
Interest (income) expense from affiliates			(0.7	)			—				0.7				—				—
Interest expense, net			38.9				—				0.3				—				39.2
Equity in (earnings) losses of joint ventures			—				0.2				(2.5	)			—				(2.3	)
Other expense (income), net			—				(8.5	)			9.6				—				1.1
(Loss) income before taxes and earnings of wholly owned subsidiaries			(49.4	)			25.4				31.5				—				7.5
Income tax expense			3.1				—				5.3				—				8.4
Income (loss) from continuing operations			(52.5	)			25.4				26.2				—				(0.9	)
Income (loss) from discontinued operations, net of income taxes			—				(0.7	)			1.8				—				1.1
Income (loss) before earnings of wholly owned subsidiaries			(52.5	)			24.7				28.0				—				0.2
Earnings of wholly owned subsidiaries			52.7				25.2				—				(77.9	)			—
Net income (loss)		$	0.2			$	49.9			$	28.0			$	(77.9	)		$	0.2

 

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Condensed Consolidating Statement of Cash Flows (Unaudited)

 

		Six Months Ended June 30, 2011
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Consolidated
Net cash (used) provided by operating activities		$	(44.9	)		$	(4.6	)		$	20.6			$	(28.9	)
Investing activities:
Additions to property, plant and equipment			—				(3.3	)			(3.8	)			(7.1	)
Assets acquired			—				(0.6	)			(0.8	)			(1.4	)
Proceeds (payments) from the sale of discontinued operations			—				(0.4	)			55.0				54.6
Proceeds from the disposition of assets			—				—				0.2				0.2
Other			—				—				0.6				0.6
Net cash provided (used) by investing activities			—				(4.3	)			51.2				46.9
Financing activities:
Intercompany financing			1.3				(3.9	)			2.6				—
Net dividends			65.4				28.0				(93.4	)			—
Repayments of long-term debt			(11.0	)			—				—				(11.0	)
Borrowings of short-term debt, net			—				—				0.3				0.3
Other			(0.2	)			—				—				(0.2	)
Net cash provided (used) by financing activities			55.5				24.1				(90.5	)			(10.9	)
Effect of foreign exchange rate changes on cash			—				—				2.4				2.4
Net increase (decrease) in cash and cash equivalents			10.6				15.2				(16.3	)			9.5
Cash and cash equivalents at the beginning of the period			39.5				(0.4	)			44.1				83.2
Cash and cash equivalents at the end of the period		$	50.1			$	14.8			$	27.8			$	92.7
		Six Months Ended June 30, 2010
(in millions of dollars)		Parent				Guarantors				Non- Guarantors				Consolidated
Net cash (used) provided by operating activities		$	(43.9	)		$	12.7			$	34.9			$	3.7
Investing activities:
Additions to property, plant and equipment			—				(1.7	)			(3.2	)			(4.9	)
Assets acquired			—				(0.8	)			—				(0.8	)
Proceeds (payments) from the sale of discontinued operations			—				(4.9	)			1.2				(3.7	)
Proceeds from the disposition of assets			—				—				0.3				0.3
Net cash used by investing activities			—				(7.4	)			(1.7	)			(9.1	)
Financing activities:
Intercompany financing			47.8				(31.8	)			(16.0	)			—
Net dividends			1.4				23.1				(24.5	)			—
Repayments of long-term debt			—				—				(0.1	)			(0.1	)
Repayments of short-term debt, net			—				—				(0.1	)			(0.1	)
Cost of debt issuance			(0.7	)			—				—				(0.7	)
Other			(0.1	)			—				—				(0.1	)
Net cash provided (used) by financing activities			48.4				(8.7	)			(40.7	)			(1.0	)
Effect of foreign exchange rate changes on cash			—				—				(2.7	)			(2.7	)
Net increase (decrease) in cash and cash equivalents			4.5				(3.4	)			(10.2	)			(9.1	)
Cash and cash equivalents at the beginning of the period			14.2				(1.5	)			30.9				43.6
Cash and cash equivalents at the end of the period		$	18.7			$	(4.9	)		$	20.7			$	34.5

 

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

ACCO Brands Corporation is one of the world’s largest suppliers of branded office products (excluding furniture, computers, printers and bulk paper) to the office products resale industry. We design, develop, manufacture and market a wide variety of traditional and computer-related office products, supplies, binding and laminating equipment and related consumable supplies, personal computer accessory products, paper-based time management products and presentation aids and products. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of our consumers and commercial end-users, which we believe will increase the product positioning of our brands. We compete through a balance of innovation, a low-cost operating model and an efficient supply chain. We sell products in highly competitive markets, and compete against large international and national companies, regional competitors and against our own customers’ direct sourcing of private-label products. We sell our products primarily to markets located in North America, Europe and Australia. Our brands include GBC ^® , Kensington ^® , Quartet ^® , Rexel, Swingline ^® , Wilson Jones ^® , Marbig, NOBO and Day-Timer ^® , among others.

The majority of our office products are used by businesses. Most of the business end-users purchase our products from our customers who resell our products in various capacities, which include commercial contract stationers, retail superstores, wholesalers, mail order and internet catalogs, mass merchandisers, club stores and dealers. We also supply certain of our products directly to commercial end-users and to the educational market. Historically we have targeted the premium-end of the product categories in which we compete. However, we also supply private label products for our customers where we believe we have an economic advantage or where it is necessary to merchandise a complete category.

Our leading brand positions provide the scale to enable us to invest in product innovations and drive market growth across our product categories. In addition, the expertise we use to satisfy the exacting technical specifications of our more demanding commercial customers is in many instances the basis for expanding our product range to include consumer products.

Our current strategy centers on a combination of growing sales and market share and generating acceptable profitability and returns. Specifically, we have substantially reduced our operating expenses and seek to leverage our platform for organic growth through greater consumer understanding, product innovation, marketing and merchandising, disciplined category expansion including broader product penetration and possible strategic transactions. To achieve these goals, we plan to continue to execute the following strategies: (1) invest in research, marketing and innovation, (2) penetrate the full product spectrum of our categories and (3) opportunistically pursue strategic transactions.

Management’s discussion and analysis of financial condition and results of operations for the three and six months ended June 30, 2011 and 2010, should be read in conjunction with the condensed consolidated financial statements of ACCO Brands Corporation and the accompanying notes contained therein. Unless otherwise noted, the following discussion pertains only to our continuing operations.

Overview of Company Performance

ACCO Brands’ results are dependent upon a number of factors affecting sales, including pricing and competition. Historically, key drivers of demand in the office products industry have included trends in white collar employment levels, gross domestic product (GDP) and growth in the number of small businesses and home offices together with increasing usage of personal computers. Pricing and demand levels for office products have also reflected a substantial consolidation within the global resellers of office products. This consolidation has led to multiple years of industry pricing pressure and a more efficient level of asset utilization by customers, resulting in lower sales volume for suppliers of office products.

With 52% of revenues for the fiscal year ended December 31, 2010 arising from foreign operations, exchange rate fluctuations can play a major role in our reported results. Foreign currency fluctuations impact our business in two important ways. The first and more obvious foreign exchange impact comes from the translation of our foreign operations results into U.S. dollars: a weak US dollar therefore benefits ACCO Brands and a strong U.S. dollar will diminish the contribution from our foreign operations. The second, but potentially larger and less obvious impact from foreign currency fluctuations is on our cost of goods sold. A significant portion of the products we sell worldwide are sourced from Asia (approximately 70%) and paid for in U.S. dollars. However, our international operations sell in their local currency, and are exposed to their domestic currency movements against the U.S. dollar. A strong U.S. dollar, therefore, increases our cost of goods sold and a weak U.S. dollar decreases our cost of goods sold for our international operations.

 

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We respond to these market changes by adjusting our sales prices, but this response can be difficult during periods of rapid fluctuation. A significant portion of our foreign-currency cost of goods purchases is hedged with forward foreign currency contracts, which delays the economic effect of a fluctuating U.S. dollar helping us align market pricing changes. The financial impact on our business of foreign exchange movements for cost of goods is also further delayed by inventory, which is valued on a first- in, first-out (“FIFO”) basis. The two foreign exchange exposures impact the business at different times: the translation of results is impacted immediately when the exchange rates move, whereas the impact on our cost of goods is typically delayed due to a combination of currency hedging strategies and the inventory cycle.

During the second half of 2010 and into 2011, the cost of certain commodities used to make our products increased significantly, negatively impacting our cost of goods. We continue to monitor commodity costs and work with our suppliers and customers to negotiate balanced and fair pricing that best reflects the current economic environment. Select price increases took effect during the third quarter of 2010. The Company has implemented additional price increases in the first quarter of 2011 and communicated a further increase effective for third quarter of 2011. These increases are intended to further help offset our additional cost increases .

In the first half of 2011, the Company incurred approximately $4 million of cash expenses, which principally consist of employee termination costs, related to the rationalization of its European operations. It is expected that savings realized in the remainder of 2011 will largely offset the costs related to this rationalization.

In June 2011, and with effect from May 31, 2011, the Company sold its GBC Fordigraph Pty Ltd business. The Australian-based business was formerly part of the ACCO Brands International segment and is included in the financial statements as discontinued operations. The GBC Fordigraph business represented approximately $46 million in annual net sales. The Company has received net proceeds of $54.8 million and anticipates pre-tax net proceeds of $53.0 million, inclusive of working capital adjustments and estimated selling costs. In connection with this transaction, in the second quarter of 2011, the Company recorded a gain on sale of $36.9 million, net of tax.

The Company’s free cash flow generation has improved significantly due to the sale of the GBC Fordigraph Pty Ltd business. As a result, during the second quarter of 2011 the Company reduced its debt by $11 million.

The Company funds liquidity needs for capital investment, working capital and other financial commitments through cash flow from continuing operations and its $175.0 million ABL Facility. Based on our borrowing base, as of June 30, 2011, approximately $167.2 million remained available for borrowing under our ABL Facility, which expires in September 2013.

 

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Three Months Ended June 30, 2011 versus June 30, 2010

Results

The following table presents the Company’s results for the three months ended June 30, 2011 and 2010, respectively.

 

		Three Months  Ended June 30,								Amount of Change
(in millions of dollars)		2011				2010				$				%
Net sales		$	330.2			$	305.2			$	25.0				8	%
Cost of products sold			224.7				210.7				14.0				7	%
Gross profit			105.5				94.5				11.0				12	%
Gross profit margin			32.0	%			31.0	%							1.0	pts
Advertising, selling, general and administrative expenses			73.6				68.6				5.0				7	%
Amortization of intangibles			1.6				1.6				—				—
Restructuring income			(0.3	)			(0.7	)			0.4				57	%
Operating income			30.6				25.0				5.6				22	%
Operating income margin			9.3	%			8.2	%							1.1	pts
Interest expense, net			19.5				19.7				(0.2	)			(1	)%
Equity in earnings of joint ventures			(1.2	)			(1.1	)			(0.1	)			9	%
Other expense, net			—				0.2				(0.2	)			(100	)%
Income tax expense			6.0				1.9				4.1				216	%
Effective tax rate			48.8	%			30.6	%							18.2	pts
Income from continuing operations			6.3				4.3				2.0				47	%
Income from discontinued operations, net of income taxes			37.4				0.6				36.8				NM
Net income			43.7				4.9				38.8				NM

Net Sales

Net sales increased by $25.0 million to $330.2 million primarily due to translation gains resulting from the weakening of the U.S. dollar relative to the prior year, which favorably impacted sales by 6%, or $18.7 million. Underlying sales growth was due to higher pricing in all segments and volume increases in Computer Products as a result of growth in iPhone ^® and iPad ^® accessories.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in the manufacturing and distribution process, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes. Cost of products sold increased $14.0 million, to $224.7 million. The increase reflects the impact of unfavorable currency translation of $12.1 million and commodity cost increases, which have been partially offset by improved freight, distribution and manufacturing efficiencies.

Gross Profit

Management believes that gross profit and gross profit margin provide enhanced shareholder appreciation of underlying profit drivers. Gross profit increased $11.0 million, or 12%, to $105.5 million. The increase in gross profit was due to the benefit from favorable currency translation of $6.6 million, higher pricing and sales volume, along with improved freight and distribution efficiency, partly offset by relatively higher commodity costs. Gross profit margin increased to 32.0% from 31.0%. The increase in gross profit margin was primarily due to improved freight and distribution efficiency.

SG&A (Advertising, selling, general and administrative expenses)

SG&A expenses include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrative expenses outside the manufacturing and distribution functions (e.g., finance, human resources, information technology, etc.). SG&A increased $5.0 million, or 7%, to $73.6 million, driven by currency translation, which contributed $3.4 million of the increase. The remaining increase was driven by the timing of management incentives versus the prior year and the rationalization of our European operations with employee termination costs totaling $0.4 million.

 

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Operating Income

Operating income increased $5.6 million, or 22%, to $30.6 million and as a percentage of sales operating income increased to 9.3% from 8.2%. The increase was driven by $3.3 million of favorable currency translation and improved freight and distribution efficiency.

Interest Expense and Other (Income) Expense

Interest expense was $19.5 million compared to $19.7 million in the prior-year quarter, reflecting reduced borrowings during the quarter.

Other income was zero compared to expense of $0.2 million in the prior-year quarter. The favorable change in other (income) expense principally reflects a lower level of foreign exchange losses in the current quarter.

Income Taxes

For the three months ended June 30, 2011, the Company recorded income tax expense from continuing operations of $6.0 million on income before taxes of $12.3 million. This compares to an income tax expense from continuing operations of $1.9 million on income before taxes of $6.2 million in the prior year. The high effective tax rate for 2011 is due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits. The effective tax rate for 2010 of 30.6% is due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits, offset by a benefit of $2.8 million for the correction of an error that increased net income by $2.8 million through an increase in deferred tax assets and a corresponding reduction in income tax expense.

Income from Continuing Operations

Income from continuing operations was $6.3 million, or $0.11 per diluted share, compared to income of $4.3 million, or $0.08 per diluted share in the prior-year quarter.

Income from Discontinued Operations

Discontinued operations include the results of the Company’s former GBC Fordigraph Pty Ltd business, which was sold during the second quarter of 2011 and the commercial print finishing business, which was sold during the second quarter of 2009. (See Note 17, Discontinued Operations, in the Notes to the Consolidated Financial Statements for further details).

The components of discontinued operations for the three months ended June 30, 2011 and 2010 are as follows:

 

(in millions of dollars)		2011				2010
Income from operations		$	1.0			$	1.2
Gain (loss) on sale			41.8				(0.3	)
Income tax expense			5.4				0.3
Income from discontinued operations		$	37.4			$	0.6

Net Income

Net income was $43.7 million, or $0.75 per diluted share, compared to net income of $4.9 million, or $0.09 per diluted share, in the prior-year quarter.

 

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Segment Discussion

 

		Three Months Ended June 30,
		2011				2010				Amount of change
(in millions of dollars)		Net Sales								$				%
ACCO Brands Americas		$	175.7			$	169.9			$	5.8				3	%
ACCO Brands International			105.8				93.2				12.6				14	%
Computer Products			48.7				42.1				6.6				16	%
Total segment sales		$	330.2			$	305.2			$	25.0

 

		Three Months Ended June 30,
		2011								2010								Amount of change
(in millions of dollars)		Operating Income				Operating Income Margin				Operating Income				Operating Income Margin				$				%				Margin Points
ACCO Brands Americas		$	14.5				8.3	%		$	14.4				8.5	%		$	0.1				1	%			(20	)
ACCO Brands International			9.0				8.5	%			4.9				5.3	%			4.1				84	%			320
Computer Products			13.1				26.9	%			10.7				25.4	%			2.4				22	%			150
Total segment operating income		$	36.6							$	30.0							$	6.6

Segment operating income excludes corporate costs, interest expense, equity in earnings of joint ventures and other expense (see reconciliation of total segment operating income to income (loss) from continuing operations before income taxes in Note 14 in the Notes to the Consolidated Financial Statements).

ACCO Brands Americas

Results

ACCO Brands Americas net sales increased $5.8 million, or 3%, to $175.7 million. Foreign currency translation of $2.6 million and higher pricing each impacted sales by nearly 2%. Sales volume increased modestly.

ACCO Brands Americas operating income increased $0.1 million, to $14.5 million, and operating income margin decreased to 8.3% from 8.5% in the prior year period. The decrease in operating margin was due to higher commodity costs and incentive compensation expense, which was only partially offset by higher pricing and increased distribution and manufacturing efficiencies.

ACCO Brands International

Results

ACCO Brands International net sales increased $12.6 million, or 14%, to $105.8 million. The favorable impact from foreign currency translation increased sales by $13.6 million, or 15% and pricing added 3%. Volumes declined 4% principally due to reduced demand in the U.K. and some declines from planned customer transition activities, partially offset by gains in sales and market share for the new shredder range.

ACCO Brands International operating income increased $4.1 million, to $9.0 million, and operating income margin increased to 8.5% from 5.3% in the prior year period. The increase in operating income was the result of the benefit from favorable currency translation of $1.6 million, freight and distribution efficiencies, largely from the transition of small European customers to channel partners, and reduced headcount and benefit expenses.

 

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Computer Products Group

Results

Computer Products net sales increased $6.6 million, or 16%, to $48.7 million. The favorable impact from foreign currency translation increased sales by $2.5 million, or 6%. The remaining increase primarily reflects volume gains from the sales of new products for iPhones ^® and iPads ^® accessories as well as higher net pricing, reflecting lower promotional spending.

Operating income increased $2.4 million, or 22%, to $13.1 million, with operating income margins increasing to 26.9% from 25.4%. The increase in operating income was primarily due to higher sales volume and the benefit from favorable currency translation of $0.8 million.

Six Months Ended June 30, 2011 versus June 30, 2010

Results

The following table presents the Company’s results for the six months ended June 30, 2011 and 2010, respectively.

 

		Six Months Ended June 30,								Amount of Change
(in millions of dollars)		2011				2010				$				%
Net sales		$	628.6			$	605.7			$	22.9				4	%
Cost of products sold			433.9				420.2				13.7				3	%
Gross profit			194.7				185.5				9.2				5	%
Gross profit margin			31.0	%			30.6	%							0.4	pts
Advertising, selling, general and administrative expenses			147.9				137.4				10.5				8	%
Amortization of intangibles			3.3				3.4				(0.1	)			(3	)%
Restructuring charges (income)			(0.4	)			(0.8	)			0.4				50	%
Operating income			43.9				45.5				(1.6	)			(4	)%
Operating income margin			7.0	%			7.5	%							(0.5	) pts
Interest expense, net			38.7				39.2				(0.5	)			(1	)%
Equity in earnings of joint ventures			(2.4	)			(2.3	)			(0.1	)			4	%
Other (income) expense, net			(0.2	)			1.1				(1.3	)			NM	%
Income tax expense			10.5				8.4				2.1				25	%
Effective tax rate			134.6	%			112.0	%							22.6	pts
Loss from continuing operations			(2.7	)			(0.9	)			(1.8	)			(200	)%
Income from discontinued operations, net of income taxes			38.3				1.1				37.2				NM
Net income			35.6				0.2				35.4				NM

Net Sales

Net sales increased by $22.9 million to $628.6 million primarily due to translation gains from the U.S. dollar weakening relative to the prior year favorably impacting sales by 4%, or $26.3 million and higher pricing. Volumes declined in the International and the Americas segments.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in the manufacturing and distribution process, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes. Cost of products sold increased $13.7 million, to $433.9 million. The increase reflects the impact of unfavorable currency translation of $17.0 million and commodity cost increases, which have been partially offset by lower sales volume and improved freight and distribution efficiency.

 

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Gross Profit

Management believes that gross profit and gross profit margin provide enhanced shareholder appreciation of underlying profit drivers. Gross profit increased $9.2 million, or 5%, to $194.7 million. The increase in gross profit was primarily due to the benefit from favorable currency translation of $9.3 million. Gross profit margin increased to 31.0% from 30.6%. The increase in gross profit margin was primarily due to higher pricing and improved freight and distribution efficiency, which was partially offset by higher commodity cost increases that exceeded sales price increases.

SG&A (Advertising, selling, general and administrative expenses)

SG&A expenses include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrative expenses outside the manufacturing and distribution functions (e.g., finance, human resources, information technology, etc.). SG&A increased $10.5 million, or 8%, to $147.9 million, driven by currency translation which contributed $4.7 million of the increase and the rationalization of our European operations with employee termination costs totaling $4.3 million and increased incentive expenses of $3.6 million. SG&A as a percentage of sales increased to 23.5% from 22.7% due to the European employee rationalization costs and higher incentives.

Operating Income

Operating income decreased $1.6 million, or 4%, to $43.9 million and as a percentage of sales operating income decreased to 7.0% from 7.5%. The decrease was driven by $4.3 million of European rationalization costs and lower sales volume, partly offset by $4.5 million of favorable currency translation and improved freight and distribution efficiency.

Interest Expense and Other (Income) Expense

Interest expense was $38.7 million compared to $39.2 million in the prior-year quarter, reflecting reduced borrowings during the year.

Other income was $(0.2) million compared to expense of $1.1 million in the prior-year quarter. The favorable change in other (income) expense principally reflects a lower level of foreign exchange losses in the current year.

Income Taxes

For the six months ended June 30, 2011, the Company recorded income tax expense from continuing operations of $10.5 million on income before taxes of $7.8 million. This compares to an income tax expense from continuing operations of $8.4 million on income before taxes of $7.5 million in the prior year. The high effective tax rates for 2011 and 2010 are due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits. Included in the 2010 amount is an out-of-period adjustment made to correct an error related to inaccurate calculations of deferred taxes at a foreign subsidiary. The correction of the error increased net income by $2.8 million through an increase in deferred tax assets and a corresponding reduction in income tax expense.

Loss from Continuing Operations

Loss from continuing operations was $2.7 million, or $0.05 per diluted share, compared to a loss of $0.9 million, or $0.02 per diluted share in the prior-year quarter.

Income from Discontinued Operations

Discontinued operations include the results of the Company’s GBC Fordigraph Pty Ltd business, which was sold during the second quarter of 2011 and the commercial print finishing business, which was sold during the second quarter of 2009. (See Note 17, Discontinued Operations, in the Notes to the Consolidated Financial Statements for further details).

The components of discontinued operations for the six months ended June 30, 2011 and 2010 are as follows:

 

(in millions of dollars)		2011				2010
Income from operations		$	2.2			$	1.9
Gain (loss) on sale			41.8				(0.2	)
Income tax expense			5.7				0.6
Income from discontinued operations		$	38.3			$	1.1

 

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Net Income

Net income was $35.6 million, or $0.65 per diluted share, compared to net income of $0.2 million, or $0.00 per diluted share, in the prior year.

Segment Discussion

 

		Six Months Ended June 30,
		2011				2010				Amount of change
(in millions of dollars)		Net Sales								$				%
ACCO Brands Americas		$	327.9			$	328.5			$	(0.6	)			—
ACCO Brands International			210.7				195.4				15.3				8	%
Computer Products			90.0				81.8				8.2				10	%
Total segment sales		$	628.6			$	605.7			$	22.9

 

		Six Months Ended June 30,
		2011								2010								Amount of change
(in millions of dollars)		Operating Income				Operating Income Margin				Operating Income				Operating Income Margin				$				%				Margin Points
ACCO Brands Americas		$	20.0				6.1	%		$	22.7				6.9	%		$	(2.7	)			(12	)%			(80	)
ACCO Brands International			13.1				6.2	%			14.0				7.2	%			(0.9	)			(6	)%			(100	)
Computer Products			22.4				24.9	%			18.8				23.0	%			3.6				19	%			190
Total segment operating income		$	55.5							$	55.5							$	—

Segment operating income excludes corporate costs, interest expense, equity in earnings of joint ventures and other expense (see reconciliation of total segment operating income to income (loss) from continuing operations before income taxes in Note 14 in the Notes to the Consolidated Financial Statements).

ACCO Brands Americas

Results

ACCO Brands Americas net sales decreased modestly to $327.9 million. Sales volume declined 3%, primarily in the United States during the first quarter, when certain customers reduced inventory levels and were purchasing below their point of sale levels. The decline was partially offset by foreign currency translation, which favorably impacted sales by $4.9 million, and higher pricing.

ACCO Brands Americas operating income decreased $2.7 million, or 12%, to $20.0 million, and operating income margin decreased to 6.1% from 6.9% in the prior year period. The decrease in operating income primarily reflects the impact of lower gross profit due to commodity costs increasing more than sales prices and lower sales volume, which was partially offset by improved freight and distribution efficiency as well as favorable foreign currency translation of $1.0 million.

 

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ACCO Brands International

Results

ACCO Brands International net sales increased $15.3 million, or 8%, to $210.7 million. The favorable impact from foreign currency translation increased sales by $18.4 million, or 9%. Volume declined 4%, due to weak European market demand and customers reducing inventory levels, primarily in the first quarter. This was partially offset by price increases and volume gains in the Asia-Pacific region.

ACCO Brands International operating income decreased $0.9 million, or 6%, to $13.1 million, and operating income margin decreased to 6.2% from 7.2% in the prior year period. The decrease in operating income was primarily the result of $4.2 million of business rationalization charges within its European operations, which were partially offset by favorable foreign currency translation of $2.5 million, improved freight and distribution efficiencies largely from the planned transition of small European customers to channel partners and reduced headcount and benefit expenses.

Computer Products Group

Results

Computer Products net sales increased $8.2 million, or 10%, to $90.0 million. The favorable impact from foreign currency translation increased sales by $3.0 million, or 4%. The increase primarily reflects volume gains principally in the U.S. from sales of new products for iPhones ^® and iPads ^® accessories as well as higher net pricing, reflecting lower promotional spending.

Operating income increased $3.6 million, or 19%, to $22.4 million, with operating income margins increasing to 24.9% from 23.0%. The increase in operating income was primarily due to the higher sales and $1.0 million of favorable currency translation.

Liquidity and Capital Resources

Our primary liquidity needs are to service indebtedness, fund capital expenditures and support working capital requirements. Our principal sources of liquidity are cash flows from operating activities, cash and cash equivalents held and borrowings under our ABL Facility. We maintain adequate financing arrangements at market rates. Our priority for cash flow over the near term, after internal growth, is to fund the reduction of debt and invest in new products through both organic development and acquisitions.

Six months ended June 30, 2011 versus six months ended June 30, 2010

Cash Flow from Operating Activities

For the six months ended June 30, 2011 cash used by operating activities was $28.9 million compared to cash provided of $3.7 million in the prior year period. Net income was $35.6 million in 2011 and $0.2 million in 2010. Non-cash adjustments to net income on a pre-tax basis in 2011 were a net gain of $17.5 million due to the sale of the GBC Fordigraph business, compared to expense of $24.6 million in 2010. Pre-tax net income adjusted for non-cash charges was $23.8 million in 2011 compared to $25.4 million in 2010, as calculated below:

 

		Six Months Ended
		June 30, 2011				June 30, 2010
Pre-tax net loss from continuing operations			(2.7	)			(0.9	)
Pre-tax net income from discontinued operations			44.0				1.7
Pre-tax net income			41.3				0.8
Pre-tax non-cash charges (gains)			(17.5	)			24.6
Pre-tax net income adjusted for non-cash charges (1)		$	23.8			$	25.4

 

(1)	The Company believes this to be a meaningful indicator of cash flow from operations as it eliminates non-cash charges.

For the 2011 period the use of cash by operating activities of $28.9 million includes a use of net working capital (accounts receivable, inventories and accounts payable) of $2.2 million during the six months ended June 30, 2011, primarily due to timing of customer collections and payments to vendors, as well as inventory levels which increased due to the timing of customer demand. Payments associated with the 2010 annual incentive plan of approximately $9 million were made during the first half of 2011, compared to approximately $1 million in the prior year period. Income tax payments were $15.5 million in 2011, compared to only $5.3 million in the 2010 period when the Company benefited from substantial refunds related to prior years. In addition, reduced operating profit compared to the prior year was partially due to the Company’s European business rationalization which has resulted in payments of $2.6 million during the first six months. Interest payments of $36.3 million and contributions to the Company’s pension plans of $11.5 million were slightly higher than payments made during the prior year period.

 

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For the 2010 period, the net source of cash from operating activities of $3.7 million was primarily generated from our operating working capital (accounts receivable, inventories and accounts payable) and from our operating profit. Partially offsetting this was the use of cash to fund interest payments of $34.4 million, contributions to the Company’s pension plans of $10.0 million and $5.5 million of payments associated with restructuring activities.

The table below shows our cash flow from accounts receivable, inventories and accounts payable for the six months ended June 30, 2011 and 2010, respectively.

 

		Six Months Ended
		June 30, 2011				June 30, 2010
Accounts receivable		$	15.7			$	10.4
Inventories			(10.2	)			(16.1	)
Accounts payable			(7.7	)			13.8
Cash flow from net working capital		$	(2.2	)		$	8.1

Cash Flow from Investing Activities

Cash provided by investing activities was $46.9 million for the period ended June 30, 2011 and cash used was $9.1 million for the period ended June 30, 2010. The sale of the Company’s GBC Fordigraph business during the second quarter of 2011 has generated net proceeds of $54.8 million. Additional costs associated with that sale of $1.8 million are expected to be paid before the end of 2011, and approximately $5.4 million of taxes associated with the sale are expected to be paid in 2012. Gross capital expenditures were $7.1 million and $4.9 million for the periods ended June 30, 2011 and 2010, respectively. Additional cash payments of $1.4 million associated with the purchase of two minor product line acquisitions were also recognized during the first half of 2011.

Cash Flow from Financing Activities

Cash used by financing activities was $10.9 million and $1.0 million for the six months ended June 30, 2011 and 2010 respectively. During the second quarter of 2011, $10.9 million was used to reduce the Company’s Senior Subordinated Note debt.

Compliance with Loan Covenants

Based on our borrowing base, as of June 30, 2011, the amount available for borrowings under the Company’s ABL Facility was $167.2 million (allowing for $6.8 million of letters of credit outstanding on that date). The ABL Facility would not be affected by a change in the Company’s credit rating.

As of and for the period ended June 30, 2011, the Company was in compliance with all applicable loan covenants.

Capitalization

We had approximately 55.2 million common shares outstanding as of June 30, 2011.

Adequacy of Liquidity Sources

The Company believes that cash flow from operations, its current cash balance and other sources of liquidity, including borrowings available under our ABL Facility will be adequate to support requirements for working capital, capital expenditures and to service indebtedness for the foreseeable future. The Company’s existing credit facilities would not be affected by a change in its credit rating.

 

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Forward-Looking Statements

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and sections elsewhere in this report contain, and other periodic reports and press releases of the Company may contain, certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from those predicted by such forward-looking statements, you should not place undue reliance on such forward-looking statements when deciding whether to buy, sell or hold the Company’s securities. The Company undertakes no obligation to update these forward-looking statements in the future. Among the factors that could cause plans, actions and results to differ materially from current expectations are: fluctuations in cost and availability of raw materials; competition within the markets in which the Company operates; the effects of both general and extraordinary economic, political and social conditions, including continued volatility and disruption in the capital and credit markets; the dependence of the Company on certain suppliers of manufactured products; the effect of consolidation in the office products industry; the liquidity and solvency of our major customers; our continued ability to access the capital and credit markets; the risk that targeted cost savings and synergies from previous business combinations may not be fully realized or take longer to realize than expected; future goodwill and/or impairment charges; foreign exchange rate fluctuations; the development, introduction and acceptance of new products; the degree to which higher raw material costs, and freight and distribution costs, can be passed on to customers through selling price increases and the effect on sales volume as a result thereof; increases in health care, pension and other employee welfare costs; as well as other risks and uncertainties detailed from time to time in the Company’s SEC filings.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management through the period ended June 30, 2011 or through the date of this report.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision of, and with the participation of the Company’s Disclosure Committee, the Company’s management, and including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective.

(b) Changes in Internal Control Over Financial Reporting.

There has been no change in the Company’s internal control over financial reporting that occurred during the three month period ended June 30, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are defendants in various claims and legal proceedings associated with their business and operations. It is not possible to predict the outcome of the pending actions, but management believes that these actions if adjudicated or settled in a manner adverse to the Company, would not have a material adverse effect upon the results of operations, cash flows or financial condition of the Company.

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made adequate provisions therefore. Nonetheless, assessing and predicting the outcomes of these matters involve substantial uncertainties. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluations or predictions could arise that could have a material adverse impact on the Company’s financial condition or results of operations.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A - Risk Factors in our annual report on Form 10-K for the year ended December 31, 2010. The risk factors described in that annual report could materially adversely affect our business, financial condition or future results. The risks described in that annual report are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently consider immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 5. OTHER INFORMATION

None.

 

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ITEM 6. EXHIBITS

 

Number		Description
2.1		Share Sale Agreement dated May 25, 2011 entered into by and between GBC Australia Pty Ltd, ACCO Brands Corporation, Neopost Holding Pty Ltd and NEOPOST S.A.*
4.1		Amendment No. 1, dated as of May 27, 2011 to the Syndicated Facility Agreement—ABL Revolving Facility, dated as of September 30, 2009, among the Company, certain direct and indirect subsidiaries of the Company party thereto, the Lenders party thereto from time to time, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, and Deutsche Bank AG New York Branch, Bank of America, N.A. and General Electric Capital Corporation, as Co-Collateral Agents.*
10.1		2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.2		Form of Directors Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.3		Form of Nonqualified Stock Option Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.3 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.4		Form of Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.4 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.5		Form of Performance Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.5 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.6		Form of Stock-Settled Stock Appreciation Rights Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
99.1		June 28, 2011 Amendment of Amended and Restated ACCO Brands Corporation 401(k) Plan*
101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related notes to those financial statements tagged as blocks of text.+

 

*	Filed herewith.

**	Furnished herewith.

+

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 shall not be deemed to be “filed” for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under those sections, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

REGISTRANT:
ACCO BRANDS CORPORATION
By:		/s/ Robert J. Keller
Robert J. Keller
Chairman of the Board and
Chief Executive Officer
(principal executive officer)
By:		/s/ Neal V. Fenwick
Neal V. Fenwick
Executive Vice President and Chief Financial Officer
(principal financial officer)
By:		/s/ Thomas P. O’Neill, Jr.
Thomas P. O’Neill, Jr.
Senior Vice President, Finance and Accounting
(principal accounting officer)

July 27, 2011

 

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EXHIBIT INDEX

 

Number		Description
2.1		Share Sale Agreement dated May 25, 2011 entered into by and between GBC Australia Pty Ltd, ACCO Brands Corporation, Neopost Holding Pty Ltd and NEOPOST S.A.*
4.1		Amendment No. 1, dated as of May 27, 2011 to the Syndicated Facility Agreement—ABL Revolving Facility, dated as of September 30, 2009, among the Company, certain direct and indirect subsidiaries of the Company party thereto, the Lenders party thereto from time to time, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, and Deutsche Bank AG New York Branch, Bank of America, N.A. and General Electric Capital Corporation, as Co-Collateral Agents.*
10.1		2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.2		Form of Directors Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.3		Form of Nonqualified Stock Option Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.3 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.4		Form of Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.4 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.5		Form of Performance Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.5 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
10.6		Form of Stock-Settled Stock Appreciation Rights Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)).
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
99.1		June 28, 2011 Amendment of Amended and Restated ACCO Brands Corporation 401(k) Plan*
101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related notes to those financial statements tagged as blocks of text.+

 

*	Filed herewith.

**	Furnished herewith.

+

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 shall not be deemed to be “filed” for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability under those sections, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

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