ACCO Brands
Annual Report 2011

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the Fiscal Year Ended December 31, 2011 ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the transition period from to Commission File Number 001-08454ACCO Brands Corporation(Exact Name of Registrant as Specified in Its Charter) Delaware 36-2704017(State or Other Jurisdictionof Incorporation or Organization) (I.R.S. EmployerIdentification Number)300 Tower ParkwayLincolnshire, Illinois 60069(Address of Registrant’s Principal Executive Office, Including Zip Code)(847) 541-9500(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $.01 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No 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 1934during 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 filingrequirements for the past 90 days. Yes  No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was requiredto submit and post such files). Yes  No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (asdefined in Rule 12b-2 of the Exchange Act). Large accelerated filer ¨ Accelerated filer  Non-accelerated filer ¨ Smaller reporting company ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No As of June 30, 2011, the aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $282 million.As of February 1, 2012, the registrant had outstanding 55,480,751 shares of Common Stock.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement to be issued in connection with registrant’s annual stockholder’s meeting expected to be held onMay 15, 2012 are incorporated by reference into Part III of this report. Table of ContentsTABLE OF CONTENTS PART I ITEM 1. Business 1 ITEM 1A. Risk Factors 7 ITEM 1B. Unresolved Staff Comments 13 ITEM 2. Properties 14 ITEM 3. Legal Proceedings 14 ITEM 4. (Removed and Reserved) 14 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 15 ITEM 6. Selected Financial Data 17 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 39 ITEM 8. Financial Statements and Supplementary Data 41 ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 93 ITEM 9A. Controls and Procedures 93 ITEM 9B. Other Information 93 PART III ITEM 10. Directors, Executive Officers and Corporate Governance 93 ITEM 11. Executive Compensation 93 ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 94 ITEM 13. Certain Relationships and Related Transactions, and Director Independence 94 ITEM 14. Principal Accountant Fees and Services 94 PART IV ITEM 15. Exhibits and Financial Statement Schedules 95 Signatures 102 Table of ContentsPART ICautionary Statement Regarding Forward-Looking Statements. Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statementsto be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and areincluding this statement for purposes of invoking these safe harbor provisions. These forward-looking statements, which are based on certainassumptions 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 effectof future plans or strategies is inherently uncertain. Because actual results may differ from those predicted by such forward-looking statements, youshould not place undue reliance on such forward-looking statements when deciding whether to buy, sell or hold the Company’s securities. Weundertake no obligation to update these forward-looking statements in the future. The factors that could affect our results or cause plans, actions andresults to differ materially from current expectations are detailed in this report, including under “Item 1. Business,” “Item 1A. Risk Factors” and thefinancial statement line item discussions set forth in “Item 7. Management’s Discussion and Analysis of Financial Conditions and Results ofOperations” and from time to time in our other SEC filings.Website Access to Securities and Exchange Commission ReportsThe Company’s Internet website can be found at www.accobrands.com. The Company makes available free of charge on or through itswebsite 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 orfurnished 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, orfurnishes them to, the Securities and Exchange Commission. We also make available the following documents on our Internet website: the AuditCommittee Charter; the Compensation Committee Charter; the Corporate Governance and Nominating Committee Charter; our CorporateGovernance Principles; and our Code of Business Conduct and Ethics. The Company’s Code of Business Conduct and Ethics applies to all of ourdirectors, officers (including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer) and employees. You may obtaina copy of any of the foregoing documents, free of charge, if you submit a written request to ACCO Brands Corporation, 300 Tower Parkway,Lincolnshire, IL. 60069, Attn: Investor Relations.ITEM 1. BUSINESSOverviewACCO Brands is one of the world’s largest suppliers of branded office products (excluding furniture, computers, printers and bulk paper) to the officeproducts resale industry. We design, develop, manufacture and market a wide variety of traditional and computer-related office products, supplies, bindingand laminating equipment and related consumable supplies, personal computer accessory products, paper-based time management products and presentationaids and products. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of our consumers andcommercial end-users, which we believe will increase the product positioning of our brands. We compete through a balance of innovation, a low-cost operatingmodel and an efficient supply chain. 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 these end-users purchase our products from our reseller customers, which includecommercial contract stationers, retail superstores, wholesalers, mail order and internet catalogs, mass merchandisers, club stores and dealers. We also supplyour products directly to 1®®®®®®Table of Contentscommercial and industrial end-users and to the educational market. Historically we have targeted the premium-end of the product categories in which wecompete. However, we also supply private label products for our customers where we believe we have an economic advantage or where it is necessary tomerchandise a complete category.Our leading brand positions provide the scale to enable us to invest in product innovation and drive market growth across our product categories. Inaddition, the expertise we use to satisfy the exacting technical specifications of our more demanding commercial customers is in many instances the basis forexpanding our products and innovations to consumer products.Our strategy centers on a combination of growing sales and market share and generating acceptable profitability and returns. Specifically, we havesubstantially reduced our operating expenses and seek to leverage our platform for organic growth through greater consumer understanding, productinnovation, marketing and merchandising, disciplined category expansion including broader product penetration and possible strategic transactions, andcontinued cost realignment. 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.We utilize a combination of manufacturing and third-party sourcing to procure our products, depending on transportation costs, service needs and directlabor costs associated with each product.Our priority for cash flow use over the near term, after internal growth, is to fund the reduction of debt and invest in new products through both organicdevelopment and acquisitions. For a description of certain factors that may have had, or may in the future have, a significant impact on our business,financial condition or results of operations, see Item 1A, “Risk Factors”.Reportable SegmentsOur Company is organized into three business segments: ACCO Brands Americas, ACCO Brands International and Computer Products Group.The following table shows the percentages of consolidated revenue from continuing operations derived from each of our reportable segments in the yearsindicated: Segment 2011 2010 2009ACCO Brands Americas 52% 53% 55%ACCO Brands International 34% 33% 32%Computer Products Group 14% 14% 13%ACCO Brands Americas and ACCO Brands InternationalThese two segments manufacture, source and sell traditional office products and supplies and document finishing solutions. ACCO Brands Americascomprises the North, Central and South American markets, and ACCO Brands International comprises the rest of the world, principally Europe, Australiaand Asia-Pacific.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, overhead projectors, transparencies, laser pointers and screens. Theseproducts are sold under leading brands including Quartet, Rexel, Swingline, Wilson Jones, Marbig, NOBO, ACCO, Derwent and Eastlight. Examples ofour document finishing solutions are binding, lamination and punching equipment, binding and lamination supplies, report covers, archival report coversand shredders. These products are sold primarily under the GBC brand. We also provide machine maintenance and repair services sold under the GBCbrand. Included in the ACCO Brands Americas segment are our personal organization tools, including time management products, primarily under the Day-Timer brand name. 2®®®®®®Table of ContentsThe 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 thatthe 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 tobusiness end-users, which generally seek office products that have added value or ease of use features and a reputation for reliability, performance andprofessional appearance. Some of our document finishing products are sold directly to high volume end-users and commercial reprographic centers andindirectly to lower-volume consumers worldwide. Approximately two-thirds of the Day-Timer business is sold through the direct channel, which marketsproduct through the internet and periodic sales catalogs and ships product directly to our end-user customers. The remainder of the business sells to largeresellers and commercial dealers.Computer Products GroupThe Computer Products Group designs, distributes, markets and sells accessories for laptop and desktop computers, smart phones and tablets. Theseaccessories primarily include security locks, power adapters, input devices such as mice and keyboards, laptop computer carrying cases, hubs and dockingstations, ergonomic devices and technology accessories for smart phones and tablets. The Computer Products Group sells mostly under the Kensington,Microsaver and ClickSafe brand names, with the majority of its revenue coming from the U.S. and Western Europe.All of our computer products are manufactured by third-party suppliers, principally in Asia, and are stored in and distributed from our regionalfacilities. Our computer products are sold primarily to consumer electronics retailers, information technology value-added resellers, original equipmentmanufacturers and office products retailers.For further information on the Company’s business segments see Note 15, Information on Business Segments, to our consolidated financialstatements contained in Item 8 of this report.Discontinued OperationsOn June 14, 2011, the Company announced the disposition of GBC-Fordigraph Pty Ltd (“GBC-Fordigraph Business”). The Australia-based businesswas formerly part of the ACCO Brands International segment and the results of operations are included in the financial statements as a discontinued operationfor all periods presented. The GBC-Fordigraph Business represented $45.9 million in annual net sales for the year ended December 31, 2010. The Companyhas received final proceeds of $52.9 million inclusive of working capital adjustments and selling costs. In connection with this transaction, in 2011, theCompany recorded a gain on sale of $41.9 million ($36.8 million after- tax).In June 2009, the Company completed the sale of its commercial print finishing business for final gross proceeds of $16.2 million. The results ofoperations and loss on sale of this business are reported in discontinued operations for all periods presented.For further information on the Company’s discontinued operations see Note 18, Discontinued Operations, to our consolidated financial statementscontained in Item 8 of this report.AcquisitionOn November 17, 2011, the Company announced the signing of a definitive agreement to merge MeadWestvaco Corporation’s Consumer and OfficeProducts business (“Mead C&OP Business”) into the Company in a transaction that was valued at approximately $860 million as of the date the transactionwas announced. The Mead C&OP Business is a leading manufacturer and marketer of school supplies, office products, and planning and organizing tools –including the Mead, Five Star, Trapper Keeper, AT-A-GLANCE, Cambridge, Day Runner, Hilroy, Tilibra and Grafons brands in the U.S., Canadaand 3®®®®®®®®®®Table of ContentsBrazil. Upon completion of the transaction, MeadWestvaco shareholders will own 50.5% of the combined company. The transaction is subject to approval bythe Company’s shareholders and the satisfaction of customary closing conditions and regulatory approvals, including a ruling from the U.S. Internal RevenueService on the tax-free nature of the transaction for MeadWestvaco. The transaction is expected to be completed in the first half of 2012. The Company will bethe accounting acquirer in the merger and will apply purchase accounting to the assets and liabilities acquired upon consummation of the merger.Customers/CompetitionOur sales are generated principally in North America, Europe and Australia. For the fiscal year ended December 31, 2011, these markets represented59%, 25% and 11% of our net sales, respectively. Our top ten customers are Staples, Office Depot, OfficeMax, BPGI, United Stationers, S.P. Richards,Wal-Mart/Sam’s Club, Coles Group, Lyreco and Spicers, together accounting for 51% of our net sales for the fiscal year ended December 31, 2011. Sales toStaples, Inc. and subsidiaries amounted to approximately 13% of consolidated net sales for each of the three years ended 2011, 2010 and 2009. Sales to OfficeDepot, Inc. and subsidiaries amounted to approximately 11% of consolidated net sales for each of the three years ended 2011, 2010 and 2009. Sales to no othercustomer exceeded 10% of consolidated sales for any of these periods.Current trends among our customers include fostering high levels of competition among suppliers, demanding innovative new products and requiringsuppliers to maintain or reduce product prices and deliver products with shorter lead times and in smaller quantities. Other trends are for retailers to importgeneric products directly from foreign sources and sell those products, which compete with our products, under the customers’ own private-label brands. Thecombination of these market influences, along with a recent and continuing trend of consolidation among resellers, has created an intensely competitiveenvironment in which our principal customers continuously evaluate which products they will offer to their customers. This results in pricing pressures, theneed for stronger end-user brands, broader product penetration within categories, the ongoing introduction of innovative new products and continuingimprovements in customer service.Competitors of the ACCO Brands Americas and ACCO Brands International segments include Avery Dennison, Esselte, 3M, Newell Rubbermaid,Hamelin, Smead, Fellowes, MeadWestvaco, Tops Products, Franklin Covey, House of Doolittle, Dominion BlueLine, Carolina Pad, Ampad, Blue Sky,Spiral Binding and numerous private label suppliers and importers. Competitors of the Computer Products Group include Belkin, Logitech, Targus andFellowes.Certain financial information for each of our business segments and geographic regions is incorporated by reference to Note 15, Information onBusiness Segments, to our consolidated financial statements contained in Item 8 of this report.Product Development and Product Line RationalizationOur strong commitment to understanding our consumers and defining products that fulfill their needs drives our product development strategy, whichwe believe is and will continue to be a key contributor to our success in the office products industry. Our new products are developed from our own consumerunderstanding, our own research and development or through partnership initiatives with inventors and vendors. Costs related to consumer research andproduct research when paid directly by ACCO Brands are included in marketing costs and research and development expenses, respectively. Research anddevelopment expenses amounted to $20.5 million, $24.0 million and $18.6 million for the years ended December 31, 2011, 2010 and 2009, respectively.Significant product developments include the Computer Products Group development of smart phone and tablet accessory products that now represent22% of 2011 segment revenue. With respect to office products, the “Stack and Shred” range of shredders was an innovative product line launched at a timewhen there was disruption in the product market resulting from supply chain limitations suffered by a major competitor. Total shredder sales increased byapproximately 74% in 2011. Market acceptance of “Stack and Shred” shredders continues to be favorable. 4Table of ContentsIn 2011 the Computer Products Group also launched a new proprietary computer security lock product under the brand name “ClickSafe tosupplement its well recognized MicroSaver product line for which most patent protection expired in January 2012. By the end of 2011, ClickSafe productsales accounted for approximately 12% of our computer security product sales. The ClickSafe solution has patent protection through 2029.Our product line strategy emphasizes the divestiture of businesses and rationalization of product offerings that do not meet our long-term strategic goalsand objectives. We consistently review our businesses and product offerings, assess their strategic fit and seek opportunities to divest non-strategic businesses.The criteria we use in assessing the strategic fit include: the ability to increase sales for the business; the ability to create strong, differentiated brands; theimportance of the business to key customers; the business relationship with existing product lines; the impact of the business to the market; and thebusiness’s actual and potential impact on our operating performance.As a result of this review process, during 2011 we completed the sale of the GBC-Fordigraph Business, the Company’s former Australian direct salesbusiness that sold mailroom and binding and laminating equipment and supplies. This business represented approximately $46 million in annual net salesfor the year ended December 31, 2010. In addition, during 2009 we completed the sale of our former commercial print finishing business. This businessrepresented approximately $100 million in annual net sales for the year ended December 31, 2008.Raw MaterialsThe primary materials used in the manufacturing of many of our products are plastics, resin, polyester and polypropylene substrates, paper, steel,wood, aluminum, melamine, zinc and cork. These materials are available from a number of suppliers, and we are not dependent upon any single supplier forany of these materials. In general, our gross profit may be affected from time to time by fluctuations in the prices of these materials because our customersrequire advance notice and negotiation to pass through raw material price increases, giving rise to a delay before cost increases can be passed on to ourcustomers. See Item 1A, “Risk Factors.” The raw materials and labor costs we incur are subject to price increases that could adversely affect our profitability.Based on experience, we believe that adequate quantities of these materials will be available in the foreseeable future. In addition, a significant portion of theproducts we sell in our international markets are sourced from China and other Asia-Pacific countries and are paid for in U.S. dollars. Thus, movements oftheir local currency to the U.S. dollar have the same impacts as raw material price changes and we adjust our pricing in these markets to reflect these currencychanges.SupplyOur products are either manufactured or sourced to ensure that we supply our customers with appropriate customer service, quality products,innovative solutions and attractive pricing. We have built a customer-focused business model with a flexible supply chain to ensure that these factors areappropriately balanced. Using a combination of manufacturing and third-party sourcing also enables us to reduce our costs and effectively manage ourproduction assets by lowering our capital investment and working capital requirements. Our strategy is to manufacture those products that would incur arelatively high freight expense or have high service needs and source those products that have a high proportion of direct labor cost. Low-cost sourcing mainlycomes from China, but we also source from other Asian countries and Eastern Europe. Where freight costs or service issues are significant, we source fromfactories located in or near to our domestic markets.SeasonalityOur business, as it concerns both historical sales and profit, has experienced increased sales volume in the third and fourth quarters of the calendaryear. Two principal factors have contributed to this seasonality: the 5®”®®®Table of Contentsoffice products industry, its customers and ACCO Brands specifically are major suppliers of products related to the “back-to-school” season, which occursprincipally during June, July, August and September for our North American business and during November, December and January for our Australianbusiness; and our offering includes several products which lend themselves to calendar year-end purchase timing, including Day-Timer planners, paperorganization and storage products (including bindery) and Kensington computer accessories, which increase with traditionally strong fourth-quarter sales ofpersonal computers.Intellectual PropertyWe have many patents, trademarks, brand names and trade names that are, in the aggregate, important to our business. The loss of any individualpatent or license, however, would not be material to us taken as a whole, even though there can be no assurance that the royalty income we have receivedpursuant to license agreements covering patents that have expired can be replaced, or that we will not experience a decline in gross profit margin on relatedproducts that no longer have patent protection. Many of our trademarks are only important in particular geographic markets or regions. Our principalregistered trademarks are: GBC, Kensington, Quartet, Rexel, Swingline, Wilson Jones, Marbig, NOBO, Day-Timer, Microsaver, ClickSafe andACCO.Certain of our patents covering MicroSaver branded products in the computer security category expired in January 2012. We recognized approximately$5.4 million, $7.5 million and $4.6 million in royalty revenue related to these patents in the years ended December 31, 2011, 2010 and 2009, respectively. Asthese patents have expired, competitors may be able to legally utilize the technology that was protected by those patents and competition could increase,resulting in the Company realizing lower gross margin from the loss of royalty receipts and possibly lower gross margin for MicroSaver branded products.The development of the ClickSafe product will enable the Company to continue to offer a proprietary computer security product although no licenseagreements have yet been entered into for the patents related to ClickSafe. See “Product Development and Product Line Rationalization.”Environmental MattersWe are subject to federal, state and local laws and regulations concerning the discharge of materials into the environment and the handling, disposal andclean-up of waste materials and otherwise relating to the protection of the environment. It is not possible to quantify with certainty the potential impact ofactions regarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future. In the opinion of ourmanagement, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have amaterial adverse effect upon our capital expenditures, financial condition, results of operations or competitive position. See Item 1A, “Risk Factors.”EmployeesAs of December 31, 2011, the Company had approximately 3,800 full-time and part-time employees. There have been no strikes or material labordisputes at any of our facilities during the past five years. We consider our employee relations to be good. 6®®®®®®®®®®®Table of ContentsITEM 1A. RISK FACTORSThe factors that are discussed below, as well as the matters that are generally set forth in this report on Form 10-K and the documentsincorporated by reference herein, could materially and adversely affect the Company’s business, results of operations and financial condition.Risks Related to Our BusinessSales of our products may be adversely affected by issues that affect business, commercial and consumer spending decisions during periodsof economic uncertainty or weakness.Sales of our products can be very sensitive to uncertain U.S. and global economic conditions, particularly in categories where we compete againstprivate label, other branded and/or generic products that are competitive on price, quality, service or other grounds. In periods of economic uncertainty orweakness, the demand for our products may be adversely affected, as businesses and consumers may seek or be forced to purchase more lower cost, privatelabel or other economy brands, may more readily switch to electronic, digital or web-based products serving similar functions, or may forego certainpurchases altogether. As a result, adverse changes in the U.S. or global economy or sustained periods of economic uncertainty or weakness could negativelyaffect our earnings and could have a material adverse effect on our business, results of operations, cash flows and financial position.Challenges related to the highly competitive business segments in which we operate could have a negative effect on our ongoing operations,revenues, results, cash flows or financial position.We operate in highly competitive business segments that face a number of challenges, including competitors with strong brands or brand recognition,significant private label producers, imports from a range of countries, low entry barriers, sophisticated and large buyers of office products, and potentialsubstitution from a range of products and services including electronic, digital or web-based products that can replicate or render obsolete or less desirablesome of the products we sell. In particular, our business is likely to be affected by: (1) the decisions and actions of our major customers, including theirdecisions on whether to increase their purchases of private label products; (2) decisions of current and potential suppliers of competing products on whether totake advantage of low entry barriers to expand their production; and (3) the decisions of end-users of our products to expand their use of substitute productsand, in particular, to shift their use of time management and planning products toward electronic and other substitutes. In addition, our competitive positiondepends on continued investment in innovation and product development, manufacturing and sourcing, quality standards, marketing and customer serviceand support. Our success will depend in part on our ability to anticipate and offer products that appeal to the changing needs and preferences of our customersin a market where many of our product categories are affected by continuing improvements in technology and shortened product lifecycles. We may not havesufficient resources to make the investments that may be necessary to anticipate those changing needs and may not anticipate, identify, develop and marketproducts successfully or otherwise be successful in maintaining their competitive position.Our business depends on a limited number of large and sophisticated customers, and a substantial reduction in sales to these customerscould significantly impact our operating results.The office products industry is characterized by a small number of major customers, principally office products superstores (which combine contractstationers, retail and mail order), office products resellers and mass merchandisers. A relatively limited number of customers account for a large percentage ofour total net sales. Our top ten customers accounted for 51% of our net sales for the fiscal year ended December 31, 2011. Sales to Staples, Inc. and OfficeDepot, Inc. and subsidiaries during the same period amounted to approximately 13% and 11%, respectively, of our 2011 net sales. Our large customers havethe ability to obtain favorable terms, to directly source their own private label products and to create and support new and competing suppliers. The loss of, ora significant reduction in, business from one or more of our major customers could have a material adverse effect on our business, financial condition andresults of operations. 7Table of ContentsOur substantial indebtedness may adversely affect our ability to raise additional capital to fund our operations, limit our ability to react tochanges in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt, prevent us from meeting ourobligations under our indebtedness and otherwise adversely affect our results of operations and financial condition.As of December 31, 2011, we had $669.0 million of outstanding debt. This indebtedness could have negative consequences to us, such as: • requiring us to dedicate a substantial portion of our cash flow from operating activities to payments on our indebtedness, thereby reducing theavailability of our cash flow to fund working capital, capital expenditures, research and development efforts, potential strategic acquisitions andother general corporate purposes; • limiting our ability to obtain additional financing to fund growth, working capital or capital expenditures, or to fulfill debt service requirements orother cash requirements; • increasing our vulnerability to economic downturns and changing market conditions; • limiting our operational flexibility due to the covenants contained in our debt agreements; • placing us at a competitive disadvantage relative to competitors that have less debt; • to the extent that our debt is subject to floating interest rates, increasing our vulnerability to fluctuations in market interest rates; and • limiting our ability to buy back our stock or pay cash dividendsThe agreements governing our indebtedness contain financial and other restrictive covenants that limit our ability to engage in activities that may be inour long-term best interests. Our ability to meet our expense and debt service obligations will depend on our future performance, which will be affected byfinancial, business, economic and other factors, including potential changes in customer preferences, the success of product and marketing innovation andpressure from competitors. Should our sales decline, we may not be able to generate sufficient cash flow to pay our debt service obligations when due. If we areunable to meet our debt service obligations or should we fail to comply with our financial and other restrictive covenants, we may be required to refinance all orpart of our existing debt (in all likelihood on terms less favorable than our current terms), sell important strategic assets at unfavorable prices or borrow moremoney. We may not be able to, at any given time, refinance our debt, sell assets or borrow more money on terms acceptable to us or at all. The inability torefinance our debt could have a material adverse effect on our financial condition and results from operations.Our failure to comply with certain restrictive debt covenants could result in an event of default which, if not cured or waived, could result inthe acceleration of all of our debts.Certain covenants we have made in connection with our existing borrowings restrict our ability to, among other things, incur additional indebtedness,incur certain liens on our assets, issue preferred stock or certain disqualified stock, pay dividends on capital stock, make other restricted payments,including investments, sell our assets, and enter into consolidations or mergers or other transactions with affiliates. Our asset-based revolving credit facilityalso requires us to maintain specified financial ratios under certain conditions and satisfy financial condition tests. Our ability to meet those financial ratiosand tests and otherwise comply with our financial covenants may be affected by events beyond our control, and we may not be able to continue to meet thoseratios, tests and covenants. Our ability to generate sufficient cash from operations to meet our debt obligations will depend upon our future operatingperformance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. Abreach of any of these covenants, ratios, tests or restrictions, as applicable, or any inability to pay interest on, or principal of, our outstanding debt as itbecomes due could result in an event of default under any of the agreements governing any 8Table of Contentsof our debt obligations, in which case our lenders could elect to declare all amounts outstanding to be immediately due and payable. If the lenders accelerate thepayment of any of our indebtedness, our assets may not be sufficient to repay in full such indebtedness and any other indebtedness that would become due asa result of such acceleration and, if we were unable to obtain replacement financing or any such replacement financing was on terms that were less favorablethan the indebtedness being replaced, our liquidity and results of operations would be materially and adversely affected. See “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”We require a significant amount of cash to service our debt. Our ability to meet our cash requirements and service our debt could beimpacted by many factors that are outside our control, including global economic conditions and access to credit markets.Our future operating performance is dependent on many factors, some of which are beyond our control, including prevailing economic, financial andindustry conditions. Worsening global economic conditions would adversely impact commercial spending and our sales would likely decline or becomeincreasingly concentrated in lower margin products, and our business, financial condition, results of operations and/or cash flows could be materiallyadversely affected.The impact of any negative global economic conditions and the ability of our suppliers and customers to access credit markets is also unpredictable,and may create additional risks for us, both directly and indirectly. The inability of suppliers to access financing or the insolvency of one or more of oursuppliers could lead to disruptions in our supply chain, which could adversely impact our sales and/or increase our costs. Our suppliers may require us topay cash in advance or obtain letters of credit for their benefit as a condition to selling us their products and services. If one or more of our principal customerswere to file for bankruptcy, our sales could be adversely impacted and our ability to collect outstanding accounts receivable from any such customer could belimited. Any of these risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.Our operating performance and ability to comply with covenants under our borrowing arrangements are dependent on our continued ability to accessfunds under our credit and loan agreements, including under our asset-based revolving credit facility, and from cash on hand, maintain sales volumes, driveprofitable growth, realize cost savings and generate cash from operations. The financial institutions that fund our asset-based revolving credit facility are alsoimpacted by any volatility in the credit markets, and if one or more of them cannot fulfill our revolving credit requests, our operations may be adverselyimpacted.During the third quarter of 2009, the Company completed a series of transactions to refinance its indebtedness. These transactions resulted in both anincreased amount of indebtedness as well as an increase to the weighted average interest rate on our indebtedness. As such, these transactions have increasedthe cost of servicing our debt, which has negatively impacted our results of operations and cash flows.Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbatethe risks associated with our substantial leverage.We and our subsidiaries may be able to incur substantial additional indebtedness in the future because the terms of our existing indebtedness do notprohibit us or our subsidiaries from doing so, within certain limits. Based on our borrowing base, as of December 31, 2011 our revolving credit facilitypermitted borrowing of up to an additional $165.5 million. If new indebtedness is added to our and our subsidiaries’ current debt levels, the related risks thatwe and they now face could intensify.Failure to maintain our credit ratings could limit our access to the capital markets, adversely affect the cost and terms upon which we areable to obtain additional financing and negatively impact our business.Although we believe existing cash, funds generated by operations and amounts available under our asset-based revolving credit facility will collectivelyprovide adequate resources to fund our ongoing operating 9Table of Contentsrequirements, we may be required to seek additional financing to compete effectively in our market. In light of the current difficulties in the financial markets,there can be no assurance that we will be able to maintain our credit ratings. We have experienced downgrades in the past and may experience furtherdowngrades. Failure to maintain these credit ratings could, among other things, limit our access to the capital markets and adversely affect the cost and termsupon which we are able to obtain additional financing, including any financing from our suppliers, which could negatively impact our business.A bankruptcy of one or more of our major customers could have a material adverse effect on our financial condition and results ofoperations.Our concentrated customer base increases our customer credit risk. Were any of our major customers to make a bankruptcy filing, we could beadversely impacted due to not only a reduction in future sales but also losses associated with the potential inability to collect any outstanding accountsreceivable from such customer. Such a result could negatively impact our financial results and cash flows.Our pension costs could substantially increase as a result of volatility in the equity markets or interest rates.The difference between plan obligations and assets, or the funded status of our defined benefit pension plans, is a significant factor in determining thenet periodic benefit costs of our pension plans and the ongoing funding requirements of those plans. Changes in interest rates and the market value of planassets impact the funded status of these plans and cause volatility in the net periodic benefit cost and future funding requirements of these plans. The exactamount of cash contributions made to pension plans in any year is dependent upon a number of factors, including the investment returns on pension planassets, and a significant increase in our pension funding requirements could have a negative impact on our cash flow and financial condition.Impairment charges could have a material adverse effect on our financial results.In prior years we have recorded significant amounts of goodwill and other asset impairment charges adversely affecting financial results. Future eventsmay occur that may also adversely affect the reported value of our assets and require impairment charges, which could further adversely affect our financialresults. Such events may include, but are not limited to, a sustained decline in our stock price, strategic decisions made in response to changes in economicand competitive conditions, the impact of the economic environment on our customer base or a material adverse change in our relationship with significantcustomers.Our customers may further consolidate, which could adversely impact our margins and sales.Customers within our customer base have steadily consolidated over the last two decades. If that trend continues, it is likely to result in further pricingpressures on us that could result in reduced margin and sales. Further, there can be no assurance that following consolidation large customers will continue tobuy from us across different product segments or geographic regions, which could negatively impact our financial results.Our business is subject to risks associated with seasonality, which could adversely affect our cash flow, financial condition or results ofoperations.Our business, as it concerns both historical sales and profit, has experienced higher sales volume in the third and fourth quarters of the calendar year.Two principal factors have contributed to this seasonality: the office products industry’s customers and our product line. We are major suppliers of productsrelated to the “back-to-school” season, which occurs principally during June, July, August and September for our North American business and November,December and January for our Australian business; and our product line includes several products that lend themselves to calendar year-end purchase timing.If either of these typical seasonal increases in sales of certain portions of our product line does not materialize, we could experience a material adverse effect onour business, financial condition and results of operations. 10Table of ContentsThe raw materials and labor costs we incur are subject to price increases that could adversely affect our profitability.The primary materials used in the manufacturing of many of our products are resin, plastics, polyester and polypropylene substrates, paper, steel,wood, aluminum, melamine, zinc and cork. In general, our gross profit may be affected from time to time by fluctuations in the prices of these materialsbecause our customers require advance notice and negotiation to pass through raw material price increases, giving rise to a delay before cost increases can bepassed to our customers. We attempt to reduce our exposure to increases in these costs through a variety of measures, including periodic purchases, futuredelivery contracts and longer-term price contracts together with holding our own inventory; however, these measures may not always be effective. Inflationaryand other increases in costs of materials and labor have occurred in the past and may recur, and raw materials may not continue to be available in adequatesupply in the future. Shortages in the supply of any of the raw materials we use in our products and other factors, such as inflation, could result in priceincreases that could have a material adverse effect on our financial condition or results of operations.We are subject to supplier credit and order fulfillment risk.We purchase products for resale under credit arrangements with our vendors. In weak global markets, vendors may seek credit insurance to protectagainst non-payment of amounts due to them. During any period of declining operating performance, or should we experience severe liquidity challenges,vendors may demand that we accelerate our payment for their products. Also, credit insurers may curtail or eliminate coverage to the vendors. If vendors beginto demand accelerated payment of amounts due to them or if they begin to require advance payments or letters of credit before goods are shipped to us, thesedemands could have a significant adverse impact on our operating cash flow and result in a severe drain on our liquidity. In addition, if our vendors areunable to access liquidity or become insolvent, they could be unable to supply us with product. Also, some of our vendors are dependent upon other industriesfor raw materials and other products and services necessary to produce and provide the products they supply to us. Any adverse impacts to those industriescould have a ripple effect on these vendors, which could adversely impact their ability to supply us at levels we consider necessary or appropriate for ourbusiness, or at all. Any such disruptions could negatively impact our ability to deliver products and services to our customers, which in turn could have anadverse impact on our business, operating results, financial condition or cash flow.Risks associated with currency volatility could harm our sales, profitability and cash flows.Approximately 53% of our net sales for the fiscal year ended December 31, 2011 were from foreign sales. While the recent relative volatility of the U.S.dollar to other currencies has impacted our businesses’ sales, profitability and cash flows as the results of non-U.S. operations have increased when reportedin U.S. dollars, we cannot predict the rate at which the U.S. dollar will trade against other currencies in the future. If the U.S. dollar were to substantiallystrengthen, making the dollar significantly more valuable relative to other currencies in the global market, such an increase could harm our ability to compete,and therefore, materially and adversely affect our financial condition and our results of operations. More specifically, a significant portion of the products wesell are sourced from China and other Asia-Pacific countries and are paid for in U.S. dollars. Thus, movements of their local currency to the U.S. dollar havethe same impacts as raw material price changes in addition to the currency translation impact noted above.Risks associated with outsourcing the production of certain of our products could materially and adversely affect our business, financialcondition and results of operations.Historically, we have outsourced certain manufacturing functions to third-party service providers in China and other Asia-Pacific countries.Outsourcing generates a number of risks, including decreased control over the manufacturing process potentially leading to production delays or interruptions,inferior product quality control and misappropriation of trade secrets. In addition, performance problems by these third-party service providers 11Table of Contentscould result in cost overruns, delayed deliveries, shortages, quality issues or other problems, which could result in significant customer dissatisfaction andcould materially and adversely affect our business, financial condition and results of operations.If one or more of these third-party service providers becomes insolvent or unable or unwilling to continue to provide services of acceptable quality, atacceptable costs, in a timely manner or any combination thereof, our ability to deliver our products to our customers could be severely impaired. Furthermore,the need to identify and qualify substitute service providers or increase our internal capacity could result in unforeseen operational problems and additionalcosts. Substitute service providers might not be available or, if available, might be unwilling or unable to offer services on acceptable terms. Moreover, ifcustomer demand for our products increases, we may be unable to secure sufficient additional capacity from our current service providers, or others, oncommercially reasonable terms, if at all.Any inability to secure, protect and maintain rights to intellectual property could have material adverse impact on our business.We own and license many patents, trademarks, brand names and trade names that are, in the aggregate, important to our business. The loss of anyindividual patent or license may not be material to us taken as a whole, but the loss of a number of patents or licenses that represent principal portions of ourbusiness, or expenses related to defending or maintaining the patents or licenses, could have a material adverse effect on our business.We may become involved in intellectual property claims being asserted against us that could cause us to incur substantial costs, divert the efforts of ourmanagement, and require us to pay substantial damages or require us to obtain a license, which might not be available on reasonable terms, if at all. We couldalso incur substantial costs to pursue legal actions relating to the unauthorized use by third parties of our intellectual property, which could have a materialadverse effect on our business, results of operation or financial condition. If our brands become diluted, if our patents are infringed or if our competitorsintroduce brands and products that cause confusion with our brands in the marketplace, the value that our consumers associate with our brands may becomediminished, which could negatively impact our sales. If third parties assert claims against our intellectual property rights and we are not able to successfullyresolve those claims, or our intellectual property becomes invalidated, we could lose our ability to use the technology, brand names or other intellectual propertythat were the subject of those claims, which, if such intellectual property is material to the operation of our business or our financial results, could have amaterial adverse effect on our business, financial condition and results from operations.Our success depends on our ability to attract and retain qualified personnel.Our success will depend on our ability to attract and retain qualified personnel, including executive officers and other key management personnel. Wemay not be able to attract and retain qualified management and other personnel necessary for the development, manufacture and sale of our products, and keyemployees may not remain with us in the future. If we fail to retain our key employees, we may experience substantial disruption in our businesses. The lossof key management personnel or other key employees or our potential inability to attract such personnel may adversely affect our ability to manage our overalloperations and successfully implement our business strategy.We are subject to global environmental regulation and environmental risks.We and our operations, both in the U.S. and abroad, are subject to national, state, provincial and/or local environmental laws and regulations thatimpose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal and management of, certain materials andwaste. We are also subject to laws regulating the content of toxic chemicals and materials in the products we sell. Environmental and product content laws andregulations can be complex and may change often. Capital and operating expenses required to comply with environmental and product content laws andregulations can be significant, and violations may result in substantial fines, penalties and civil damages. The costs of complying with 12Table of Contentsenvironmental and product content laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the futurecould have a material adverse effect on our financial condition or results of operations.Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our end-user brands.Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our business. In addition to the risk ofsubstantial monetary judgments, product liability claims or regulatory actions could result in negative publicity that could harm our reputation in themarketplace or the value of our end-user brands. We also could be required to recall and possibly discontinue the sale of possible defective or unsafe products,which could result in adverse publicity and significant expenses. Although we maintain product liability insurance coverage, potential product liability claimsare subject to a self-insured deductible or could be excluded under the terms of the policy.We may not consummate our acquisition of the Mead C&OP Business or realize the anticipated benefits if we do complete the acquisition.Our proposed acquisition of the Mead C&OP Business may not be consummated in a timely manner or at all. If we are unable to complete the proposedacquisition, we will have incurred substantial expenses and diverted significant management time and resources from our ongoing business. Even if weconsummate the proposed acquisition, we will still have incurred substantial expenses but may not realize the anticipated cost synergies and other benefits ofthe acquisition. Given the size and significance of the acquisition, we may encounter difficulties in the integration of the operations of the Mead C&OPBusiness, which could adversely affect our combined business and financial performance.If the proposed transaction is not completed the price of the our common stock may decline to the extent that the market price of the Company’s commonstock reflects positive market assumptions that the proposed acquisition will be completed and the related anticipated benefits will be realized. We also may besubject to additional risks if the proposed transaction is not completed, including, depending on the reasons for termination of the merger agreement, therequirement that we pay MeadWestvaco Corporation a termination fee of $15.0 million or reimburse MeadWestvaco Corporation for their expenses inconnection with the transactions in an amount up to $5.0 million. ITEM 1B.UNRESOLVED STAFF COMMENTSNone. 13Table of ContentsITEM 2. PROPERTIESWe have manufacturing facilities in North America, Europe and Australia, and maintain distribution centers in relation to the regional markets weservice. We lease our principal U.S. headquarters in Lincolnshire, Illinois. The following table indicates the principal manufacturing and distribution facilitiesof our subsidiaries as of December 31, 2011: Location Functional Use Owned/LeasedU.S. Properties: Ontario, California Distribution/Manufacturing LeasedBooneville, Mississippi Distribution/Manufacturing Owned/LeasedOgdensburg, New York Distribution/Manufacturing Owned/LeasedEast Texas, Pennsylvania Distribution/Manufacturing/Office OwnedPleasant Prairie, Wisconsin Distribution/Manufacturing LeasedNon-U.S. Properties: Sydney, Australia Distribution/Manufacturing OwnedBrampton, Canada Distribution/Manufacturing/Office LeasedTabor, Czech Republic Manufacturing OwnedDenton, England Manufacturing OwnedHalesowen, England Distribution OwnedLillyhall, England Manufacturing LeasedTornaco, Italy Distribution LeasedLerma, Mexico Manufacturing/Office OwnedBorn, Netherlands Distribution LeasedWellington, New Zealand Distribution/Office OwnedArcos de Valdevez, Portugal Manufacturing OwnedWe believe that the properties are suitable to the respective businesses and have production capacities adequate to meet the needs of the businesses.ITEM 3. LEGAL PROCEEDINGSWe are, from time to time, involved in routine litigation incidental to our operations. None of the legal proceedings in which we are currently involved,individually or in the aggregate, is material to our consolidated financial condition or results of operations nor are we aware of any material pending orcontemplated proceedings. We intend to vigorously defend, or resolve by settlement, any such matters as appropriate.ITEM 4. (REMOVED AND RESERVED) 14Table of ContentsPART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESOur common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “ABD.” The following table sets forth, for the periodsindicated, the high and low sales prices for our common stock as reported on the NYSE for 2010 and 2011: High Low 2010 First Quarter $8.62 $5.92 Second Quarter $9.47 $4.93 Third Quarter $6.81 $4.63 Fourth Quarter $8.89 $5.52 2011 First Quarter $9.66 $7.77 Second Quarter $10.39 $6.91 Third Quarter $8.89 $4.62 Fourth Quarter $10.20 $4.33 As of February 1, 2012, the Company had approximately 11,459 registered holders of its common stock.Dividend PolicyWe have not paid any dividends on our common stock since becoming a public company. We intend to retain any future earnings to fund thedevelopment and growth of our business and reduce our indebtedness. Currently our debt agreements restrict our ability to make dividend payments and wedo not anticipate paying any cash dividends in the foreseeable future. Any determination as to the declaration of dividends is at our board of directors’ solediscretion based on factors it deems relevant. 15Table of ContentsSTOCK PERFORMANCE GRAPHThe following graph compares the cumulative total stockholder return on our common stock to that of the S&P Office Services and Supplies(SuperCap1500) Index and the Russell 2000 Index assuming an investment of $100 in each from December 31, 2006 through December 31, 2011. Cumulative Total Return 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11ACCO Brands Corporation. $100.00 $60.60 $13.03 $27.50 $32.19 $36.46Russell 2000 100.00 98.43 65.18 82.89 105.14 100.75S & P Office Services & Supplies(SuperCap1500)... 100.00 88.69 54.96 64.56 76.41 62.19 16Table of ContentsITEM 6. SELECTED FINANCIAL DATASELECTED HISTORICAL FINANCIAL DATAThe following table sets forth our selected consolidated financial data. The selected consolidated financial data as of and for the five fiscal years endedDecember 31 are derived from our consolidated financial statements. The data should be read in conjunction with the consolidated financial statements andrelated notes included elsewhere in this annual report. Year Ended December 31, 2011 2010 2009 2008 2007 (in millions of dollars, except per share data) Income Statement Data: Net sales $1,318.4 $1,284.6 $1,233.3 $1,539.2 $1,798.5 Cost of products sold (1) 903.7 887.5 868.7 1,071.4 1,241.2 Gross profit 414.7 397.1 364.6 467.8 557.3 Operating costs and expenses: Advertising, selling, general and administrative expenses (1) 293.9 281.2 263.0 367.6 422.5 Amortization of intangibles 6.3 6.7 7.1 7.5 7.8 Restructuring (income) charges (0.7) (0.5) 17.4 28.8 21.0 Goodwill and asset impairment charges (2) — — 1.7 263.8 2.3 Total operating costs and expenses 299.5 287.4 289.2 667.7 453.6 Operating income (loss) 115.2 109.7 75.4 (199.9) 103.7 Interest expense, net 77.2 78.3 67.0 63.7 64.1 Income (loss) from continuing operations (3) 18.6 7.8 (118.6) (255.1) 31.3 Per common share: Income (loss) from continuing operations (3) Basic $0.34 $0.14 $(2.18) $(4.71) $0.58 Diluted $0.32 $0.14 $(2.18) $(4.71) $0.57 Balance Sheet Data (at year end): Total assets $1,116.7 $1,149.6 $1,106.8 $1,282.2 $1,898.5 External debt 669.0 727.6 725.8 708.7 775.3 Total stockholders’ equity (deficit) (61.9) (79.8) (117.2) (3.4) 438.3 Other Data: Cash provided by operating activities $61.8 $54.9 $71.5 $37.2 $81.2 Cash provided (used) by investing activities 40.0 (14.9) (3.9) (18.7) (55.2) Cash used by financing activities (63.1) (0.1) (44.5) (37.7) (35.4) (1)Income (loss) from continuing operations for the years 2009, 2008 and 2007 was impacted by certain other charges that have been recorded within costof products sold, and advertising, selling, general and administrative expenses. These charges are incremental to the cost of the Company’s underlyingrestructuring actions and do not qualify as restructuring. These charges include redundant warehousing or storage costs during the transition to newdistribution centers, equipment and other asset move costs, ongoing facility overhead and maintenance costs after exit, gains on the sale of exitedfacilities, certain costs associated with the Company’s debt refinancing and employee retention incentives. Within cost of products sold on theConsolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007, these charges totaled $3.4 million, $7.5 million, and$17.2 million, respectively. Within advertising, selling, general and administrative expenses on the Consolidated Statements of Operations for the yearsended December 31, 2009, 2008, and 2007, these charges totaled $1.2 million, $3.1 million, and $16.3 million, respectively. Included within the 2008result, is a charge for $4.2 million related to the exit of the 17Table of Contents Company’s former CEO, a $3.5 million gain on the sale of a manufacturing facility and net gains of $2.4 million on the sale of three additionalproperties. The Company did not incur these other charges in 2011 and 2010.(2)The following table sets forth the Company’s pre-tax impacts of the non-cash goodwill and asset impairment charges recorded during 2009, 2008 and2007, respectively. (in millions of dollars) 2009 2008 2007 Continuing Operations Segment: ACCO Brands Americas $0.9 $160.6 $1.6 ACCO Brands International 0.8 100.4 0.7 Computer Products Group — 2.8 — Total Continuing Operations $1.7 $263.8 $2.3 (3)During 2009, the Company recorded a non-cash charge of $108.1 million to establish a valuation allowance against its U.S. deferred taxes. For a furtherdiscussion of the valuation allowance, see Note 10, Income Taxes, to our consolidated financial statements, contained in Item 8 of this report. 18Table of ContentsITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSINTRODUCTIONACCO Brands is one of the world’s largest suppliers of branded office products (excluding furniture, computers, printers and bulk paper) to the officeproducts resale industry. We design, develop, manufacture and market a wide variety of traditional and computer-related office products, supplies, bindingand laminating equipment and related consumable supplies, personal computer accessory products, paper-based time management products and presentationaids and products. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of our consumers andcommercial end-users, which we believe will increase the product positioning of our brands. We compete through a balance of innovation, a low-cost operatingmodel and an efficient supply chain. We sell products in highly competitive markets, and compete against large international and national companies, regionalcompetitors 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, amongothers.The majority of our office products are used by businesses. Most of these end-users purchase our products from our reseller customers, which includecommercial contract stationers, retail superstores, wholesalers, mail order and internet catalogs, mass merchandisers, club stores and dealers. We also supplyour products directly to commercial and industrial end-users and to the educational market. Historically we have targeted the premium-end of the productcategories in which we compete. However, we also supply private label products for our customers where we believe we have an economic advantage or where itis necessary to merchandise a complete category.Our leading brand positions provide the scale to enable us to invest in product innovation and drive market growth across our product categories. Inaddition, the expertise we use to satisfy the exacting technical specifications of our more demanding commercial customers is in many instances the basis forexpanding our product range to include consumer products.Our strategy centers on a combination of growing sales and market share and generating acceptable profitability and returns. Specifically, we havesubstantially reduced our operating expenses and seek to leverage our platform for organic growth through greater consumer understanding, productinnovation, marketing and merchandising, disciplined category expansion including broader product penetration and possible strategic transactions, andcontinued cost realignment. 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.On November 17, 2011, the Company announced the signing of a definitive agreement to merge the Mead C&OP Business into the Company in atransaction valued at approximately $860 million as of the date the transaction was announced. The Mead C&OP Business is a leading manufacturer andmarketer of school supplies, office products, and planning and organizing tools – including the Mead, Five Star, Trapper Keeper, AT-A-GLANCE,Cambridge, Day Runner, Hilroy, Tilibra and Grafons brands in the U.S., Canada and Brazil. Upon completion of the transaction, MeadWestvacoshareholders will own 50.5% of the combined company. The transaction is subject to approval by the Company’s shareholders and the satisfaction ofcustomary closing conditions and regulatory approvals, including a ruling from the U.S. Internal Revenue Service on the tax-free nature of the transaction forMeadWestvaco. The transaction is expected to be completed in the first half of 2012. The Company will be the accounting acquirer in the merger and willapply purchase accounting to the assets and liabilities acquired upon consummation of the merger. In connection with this transaction, in the year endedDecember 31, 2011, the Company has incurred expenses of $5.6 million.On June 14, 2011, the Company announced the disposition of GBC-Fordigraph Business. The Australia-based business was formerly part of theACCO Brands International segment and the results of operations are 19®®®®®®®®®®®®Table of Contentsincluded in the financial statements as a discontinued operation for all periods presented. The GBC-Fordigraph Business represented $45.9 million in annualnet sales for the year ended December 31, 2010. The Company has received final proceeds of $52.9 million inclusive of working capital adjustments andselling costs. In connection with this transaction, in 2011, the Company recorded a gain on sale of $41.9 million ($36.8 million after-tax).In June 2009, the Company completed the sale of its commercial print finishing business for final gross proceeds of $16.2 million, after final workingcapital adjustments. As a result of the adjustments, the Company received net cash proceeds before expenses of $12.5 million and a $3.65 million note duefrom the buyer payable in installments, $1.325 million of which was paid in June, 2011 and $2.325 million that is due June, 2012. Interest on the unpaidbalance is payable at the rate of 4.9 percent per annum. The gross proceeds received are before fees and expenses related to the transactions and provisionsarising from continuing litigation related to the transaction. The commercial print finishing business has been classified as a discontinued operation in ourconsolidated financial statements for all periods presented.For further information on the Company’s discontinued operations see Note 18, Discontinued Operations, to our consolidated financial statementscontained in Item 8 of this report.Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financialstatements of ACCO Brands Corporation and the accompanying notes contained therein. Unless otherwise noted, the following discussion pertains only to ourcontinuing operations.Overview of Company PerformanceACCO Brands’ results are dependent upon a number of factors affecting sales, including pricing and competition. Historically, key drivers of demandin the office products industry have included trends in white collar employment levels, gross domestic product (GDP) and growth in the number of smallbusinesses and home offices together with usage of personal computers. Pricing and demand levels for office products have also reflected a substantialconsolidation within the global resellers of office products. This consolidation has led to multiple years of industry pricing pressure and a more efficient levelof asset utilization by customers, resulting in lower sales volumes for suppliers of office products.With 53% of revenues for the fiscal year ended December 31, 2011 arising from foreign operations, exchange rate fluctuations can play a major role inour reported results. Foreign currency fluctuations impact our business in two important ways. The first and more obvious foreign exchange impact comesfrom the translation of our foreign operations results into U.S. dollars: a weak U.S. dollar therefore benefits ACCO Brands and a strong U.S. dollar willdiminish the contribution from our foreign operations. The second, but potentially larger and less obvious impact is from foreign currency fluctuations on ourcost 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.We respond to these market changes by adjusting our sales prices, but this response can be difficult during periods of rapid fluctuation. A significantportion of our foreign-currency cost of goods purchases is hedged with forward foreign currency contracts, which delays the economic effect of a fluctuatingU.S. dollar helping us align market pricing changes. The financial impact on our business from foreign exchange movements for cost of goods is also furtherdelayed until we sell the inventory. The two foreign exchange exposures impact the business at different times: the translation of results is impactedimmediately when the exchange rates move, whereas the impact on our cost of goods is typically delayed due to a combination of currency hedging and theinventory cycle. 20Table of ContentsDuring the second half of 2010 and into 2011, the cost of certain commodities used to make our products increased significantly, negatively impactingour cost of goods. We continue to monitor commodity costs and work with our suppliers and customers to negotiate balanced and fair pricing that best reflectthe current economic environment. Select price increases took effect during the third quarter of 2010 and the Company implemented additional price increasesin the first and third quarters of 2011. These increases are intended to further help offset our additional cost increases.The Company did not incur restructuring charges in 2011 and 2010, but adjusted outstanding reserve estimates as necessary. Cash payments related toprior years’ restructuring and integration activities amounted to $3.4 million during 2011. It is expected that additional disbursements of $1.0 million will becompleted by the end of 2013 as the Company spends amounts accrued on its balance sheet. Any residual cash payments beyond 2011 are anticipated to beoffset by expected proceeds from real estate held for sale. Additionally, in the first quarter of 2011, the Company initiated plans to rationalize its Europeanoperations. The associated costs primarily related to employee terminations, which were accounted for as regular business expenses and were primarilyincurred in the first half of 2011; these were largely offset by associated savings realized in the second half of 2011. These costs totaled $4.5 million duringthe year December 31, 2011.The Company funds liquidity needs for capital investment, working capital and other financial commitments through cash flow from continuingoperations and its $175.0 million revolving credit facility. Based on our borrowing base, as of December 31, 2011, approximately $165.5 million remainedavailable for borrowing under our revolving credit facility.During 2009, the Company determined that it was no longer more likely than not that its U.S. deferred tax assets would be realized, and as a result, theCompany recorded a non-cash charge of $108.1 million to establish a valuation allowance against its U.S. deferred tax assets. In addition, during 2009, theCompany recorded a non-cash impairment charge of $1.7 million on certain of its trade names.Refinancing TransactionsOn September 30, 2009, the Company issued $460.0 million aggregate principal amount of its 10.625% Senior Secured Notes due March 15, 2015(the “Senior Secured Notes”), and entered into a four-year senior secured asset-based revolving credit facility (“ABL Facility”) providing for borrowings of upto $175.0 million subject to borrowing base limitations including a $40 million sub-limit for letters of credit and an optional $50 million accordion feature(available to fund working capital growth if needed). Initial borrowings under the ABL Facility were $16.1 million. These funds, together with the $453.1million in proceeds from the issuance of the Senior Secured Notes, were used to (i) repay all outstanding borrowings under and terminate the Company’s priorsenior secured credit agreements, (ii) repay all outstanding borrowings under and terminate the Company’s accounts receivable securitization program,(iii) terminate the Company’s cross-currency swap agreement, (iv) repurchase approximately $29.1 million aggregate principal amount of its 7 5/8% seniorsubordinated notes due August 15, 2015 (“Senior Subordinated Notes”) and (v) pay the fees, expenses and other costs relating to such transactions.On November 17, 2011, the Company announced the signing of a definitive agreement to merge the Mead C&OP Business into the Company. Subjectto this transaction closing, the Company has underwritten financing that will fund a $460 million dividend to MeadWestvaco and refinance the Company’sSenior Secured Notes, which had a principal amount outstanding of $425.1 million as of December 31, 2011, and its $175.0 million revolving creditfacility, together with transaction and refinancing expenses. 21Table of ContentsFiscal 2011 versus Fiscal 2010The following table presents the Company’s results for the years ended December 31, 2011 and 2010. Twelve Months EndedDecember 31, Amount of Change (in millions of dollars) 2011 2010 $ % Net sales $1,318.4 $1,284.6 $33.8 3% Cost of products sold 903.7 887.5 16.2 2% Gross profit 414.7 397.1 17.6 4% Gross profit margin 31.5% 30.9% 0.6 pts Advertising, selling, general and administrative expenses 293.9 281.2 12.7 5% Amortization of intangibles 6.3 6.7 (0.4) (6)% Restructuring income (0.7) (0.5) (0.2) 40% Operating income 115.2 109.7 5.5 5% Operating income margin 8.7% 8.5% 0.2 pts Interest expense, net 77.2 78.3 (1.1) (1)% Equity in earnings of joint ventures (8.5) (8.3) (0.2) 2% Other expense, net 3.6 1.2 2.4 200% Income tax expense 24.3 30.7 (6.4) (21)% Effective tax rate 56.6% 79.7% (23.1)pts Income from continuing operations 18.6 7.8 10.8 138% Income from discontinued operations, net of income taxes 38.1 4.6 33.5 728% Net income 56.7 12.4 44.3 357% Net SalesNet sales increased $33.8 million, or 3%, to $1.32 billion, primarily due to translation gains from the U.S. dollar weakening relative to the prior year,which favorably impacted sales by $39.8 million, or 3%. Underlying sales declined modestly as lower volume in the International and Americas segmentswere partially offset by higher pricing and volumes gains in the Computer Products segment.Cost of Products SoldCost of products sold includes all product sourcing, manufacturing and distribution costs, including depreciation related to assets used in themanufacturing and distribution process, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials andpackaging used in the production processes. Cost of products sold increased $16.2 million to $903.7 million. The increase reflects the impact of unfavorablecurrency translation of $25.6 million as well as higher commodity and fuel costs, which were partially offset by lower sales volume and improvedmanufacturing, freight and distribution efficiencies.Gross ProfitManagement believes that gross profit and gross profit margin provide enhanced shareholder appreciation of underlying profit drivers. Gross profitincreased $17.6 million, or 4%, to $414.7 million. The increase in gross profit was primarily due to the benefit from favorable currency translation of $14.2million. Gross profit margin increased to 31.5% from 30.9%, primarily due to improved freight and distribution efficiencies, particularly in Europe. 22Table of ContentsSG&A (Advertising, selling, general and administrative expenses)SG&A expenses include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related toassets outside the manufacturing and distribution processes and all other general and administrative expenses outside the manufacturing and distributionfunctions (e.g., finance, human resources, information technology, etc.). SG&A increased $12.7 million, or 5%, to $293.9 million, of which currencytranslation contributed $7.0 million of the increase. SG&A as a percentage of sales increased to 22.3% from 21.9%. This increase was due to $5.6 million incosts associated with the pending acquisition of the Mead C&OP Business. Business rationalization charges of $4.5 million, primarily incurred in the firstquarter of 2011, were offset by savings during the rest of the 2011.Operating IncomeOperating income increased $5.5 million, or 5%, to $115.2 million, and as a percentage of sales, operating income increased modestly to 8.7% from8.5%. The increase in operating income was driven by $7.0 million of favorable currency translation and improved gross margins, partly offset by theSG&A cost increases described above.Interest Expense, Net, Equity in Earnings of Joint Ventures and Other Expense, NetInterest expense was $77.2 million compared to $78.3 million in the prior-year. The decrease in interest was due to repurchases of the Company’s SeniorSecured Notes and Senior Subordinated Notes totaling $34.9 million and $25.0 million, respectively, as well as lower borrowings under its revolving creditfacility during the year. This reduction was partly offset by the acceleration of debt origination amortization costs resulting from bond repurchases of $1.2million.Other expense was $3.6 million compared to $1.2 million in the prior-year period. The increase was due to $3.0 million of premium paid on therepurchase of $34.9 million of the Senior Secured Notes, partly offset by lower foreign exchange losses in the current year.Income TaxesFor the year ended December 31, 2011, the Company recorded income tax expense from continuing operations of $24.3 million on income before taxes of$42.9 million, which compares to an income tax expense from continuing operations of $30.7 million on income before taxes of $38.5 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 wherevaluation reserves are recorded against future tax benefits. Included in the 2011 amount is a $2.8 million benefit from the reversal of a valuation reserve in theU.K. Included in the 2010 amount is an $8.6 million expense recorded to reflect the tax impact of foreign currency fluctuations on an intercompany debtobligation, partially offset by the benefit of a $2.8 million out-of-period adjustment to increase deferred tax assets of a non-U.S. subsidiary.Income from Continuing OperationsIncome from continuing operations was $18.6 million, or $0.32 per diluted share, compared to income of $7.8 million, or $0.14 per diluted share in theprior-year.Income from Discontinued OperationsIncome from discontinued operations was $38.1 million, or $0.66 per diluted share, compared to income of $4.6 million, or $0.08 per diluted share inthe prior-year.Discontinued operations include the results of the Company’s GBC-Fordigraph Business, which was sold during the second quarter of 2011, and thecommercial print finishing business, which was sold during 2009. For a further discussion of the Company’s discontinued operations see Note 18,Discontinued Operations, to our consolidated financial statements contained in Item 8 of this report. 23Table of ContentsThe components of discontinued operations for the years ended December 31, 2011 and 2010 are as follows: (in millions of dollars) 2011 2010 Income from operations before income tax $2.5 $6.6 Gain (loss) on sale before income tax 41.5 (0.1) Income tax expense 5.9 1.9 Income from discontinued operations $38.1 $4.6 Net IncomeNet income was $56.7 million, or $0.98 per diluted share, compared to net income of $12.4 million, or $0.22 per diluted share, in the prior year.Segment Discussion Year EndedDecember 31, 2011 2010 Amount of change (in millions of dollars) Net Sales $ % ACCO Brands Americas $684.9 $688.3 $(3.4) — ACCO Brands International 443.2 419.3 23.9 6% Computer Products 190.3 177.0 13.3 8% Total segment sales $1,318.4 $1,284.6 $33.8 Year Ended December 31, 2011 2010 Amount of change (in millions of dollars) OperatingIncome OperatingIncomeMargin OperatingIncome OperatingIncomeMargin $ % MarginPoints ACCO Brands Americas $50.7 7.4% $56.3 8.2% $(5.6) (10)% (80) ACCO Brands International 45.6 10.3% 31.5 7.5% 14.1 45% 280 Computer Products 47.1 24.8% 43.0 24.3% 4.1 10% 50 Total segment operating income $143.4 $130.8 $12.6 Segment operating income excludes corporate costs; interest expense, net; equity in earnings of joint ventures and other expense, net. See Note 15,Information on Business Segments, to our consolidated financial statements contained in Item 8 of this report for a reconciliation of total segment operatingincome to income from continuing operations before income taxes.ACCO Brands AmericasResultsACCO Brands Americas net sales decreased $3.4 million to $684.9 million. Foreign currency translation favorably impacted sales by $5.3 million.Sales volume declined 3%, primarily in the U.S. due to inventory management initiatives by certain customers. The decline was partially offset by higherpricing and increased volumes in Latin America and Canada.Operating income decreased $5.6 million, or 10%, to $50.7 million and included favorable foreign currency translation of $0.9 million. Operatingincome margin decreased to 7.4% from 8.2% in the prior-year period primarily due to the deleveraging of fixed costs due to lower sales volume. 24Table of ContentsACCO Brands InternationalResultsACCO Brands International net sales increased $23.9 million, or 6%, to $443.2 million. The increase was driven by foreign currency translation,which increased sales by $30.0 million, or 7%. Sales volume declined 4% due to weak European market demand, partially offset by European price increasesand small volume gains in the Asia-Pacific region.Operating income increased $14.1 million, or 45%, to $45.6 million, including a $4.6 million benefit from foreign currency translation. Operatingincome margin increased to 10.3% from 7.5%, mainly due to the substantial improvements in European operations, resulting from higher pricing, improvedfreight and distribution efficiencies, as well as SG&A savings. Included in the net SG&A savings were $4.5 million of business rationalization chargeswithin Europe.Computer Products GroupResultsComputer Products net sales increased $13.3 million, or 8%, to $190.3 million. The favorable impact from foreign currency translation increased salesby $4.5 million, or 3%. The remainder of the increase primarily reflects volume gains from sales of new accessory products for smart phones and tablets.Operating income increased $4.1 million, or 10%, to $47.1 million, resulting from a $1.5 million benefit from foreign currency translation, highervolume and lower SG&A expenses, partially offset by lower security product sales, which adversely impacted both margin and royalty income. Operatingincome margins increased to 24.8% from 24.3% primarily due to the favorable benefit from increased sales, partially offset by the adverse sales mix.Fiscal 2010 versus Fiscal 2009The following table presents the Company’s results for the years ended December 31, 2010 and 2009. Year EndedDecember 31, Amount of Change (in millions of dollars) 2010 2009 $ % Net sales $1,284.6 $1,233.3 $51.3 4% Cost of products sold 887.5 868.7 18.8 2% Gross profit 397.1 364.6 32.5 9% Gross profit margin 30.9% 29.6% 1.3pts Advertising, selling, general and administrative expenses 281.2 263.0 18.2 7% Amortization of intangibles 6.7 7.1 (0.4) (6)% Restructuring (income) charges (0.5) 17.4 (17.9) (103)% Intangible asset impairment charges — 1.7 (1.7) (100)% Operating income 109.7 75.4 34.3 45% Operating income margin 8.5% 6.1% 2.4pts Interest expense, net 78.3 67.0 11.3 17% Equity in earnings of joint ventures (8.3) (4.4) (3.9) 89% Other expense, net 1.2 5.4 (4.2) (78)% Income taxes 30.7 126.0 (95.3) (76)% Effective tax rate 79.7% NM NM Income (loss) from continuing operations 7.8 (118.6) 126.4 107% Income (loss) from discontinued operations, net of income taxes 4.6 (7.5) 12.1 161% Net income (loss) 12.4 (126.1) 138.5 110% 25Table of ContentsNet SalesNet sales increased $51.3 million, or 4%, to $1.3 billion led by solid performance in the Computer Products Group and translation gains from theweaker U.S. dollar relative to the prior year, which favorably impacted sales by 2%, or $24.5 million. All segments reported volume increases. Sales growthwas partially offset by reduced pricing in the International and Americas segments.Cost of Products SoldCost of products sold includes all manufacturing, product sourcing and freight and distribution costs, including depreciation related to assets used inthe manufacturing and distribution process, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials andpackaging used in the production processes. Cost of products sold increased $18.8 million, or 2%, to $887.5 million. The increase principally reflects theimpact of currency translation of $14.4 million, increased sales volume, and commodity and compensation cost increases, partially offset by improvedsourcing and production efficiencies.In addition, the prior-year period includes certain other charges that have been recorded within cost of products sold that did not qualify as restructuring.Those charges include redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs,ongoing facility overhead and maintenance costs after exit and employee retention incentives. For the year ended December 31, 2009, those charges totaled $3.4million.Gross ProfitGross profit increased $32.5 million, or 9%, to $397.1 million and gross profit margin increased to 30.9% from 29.6%. The increases in gross profitand margin were primarily due to increased sales volume, favorable product mix, sourcing, production, freight and distribution efficiencies compared to theperiod last year, partially offset by increased commodity costs and compensation costs. Product mix was favorable due to higher royalty income from securityproducts and from both higher margin security products and new products. Gross profit also increased from favorable currency translation of $10.1 million.SG&A (Advertising, selling, general and administrative expenses)Advertising, selling, general and administrative expenses (“SG&A”) include advertising, marketing, selling, research and development, customerservice, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrative expenses outside themanufacturing and distribution functions (e.g., finance, human resources, information technology, etc.). SG&A increased $18.2 million, or 7%, to $281.2million, with currency translation contributing $3.2 million of the increase and, as a percentage of sales, SG&A increased to 21.9% from 21.3%. The 2010year results include $24.2 million of additional salary, management incentive and employee benefits expense. The lower expense in 2009 was largely due totemporary reductions in salary and benefits.In addition, certain other charges have been recorded within SG&A. These charges are incremental to the cost of the Company’s underlyingrestructuring actions and do not qualify as restructuring. These charges include redundant costs during the transition to a new location, asset move costs,facility overhead and maintenance costs after exit, gains on the sale of exited facilities, certain costs associated with the Company’s debt refinancing andemployee retention incentives. For the year ended December 31, 2009, those charges totaled $1.2 million.Operating IncomeOperating income increased 45%, or $34.3 million, to $109.7 million principally as a result of favorable currency translation contributing $6.9million, and the absence of $23.7 million in impairment, restructuring and other charges incurred in the prior year. As a percentage of sales, operating incomeimproved to 8.5% from 6.1%. 26Table of ContentsThe improvement in operating income margin was driven by improved gross margin, as discussed above, and the decrease in impairment, restructuring andother charges, which was partially offset by the SG&A increase as discussed above.Interest Expense, Net, Equity in Earnings of Joint Ventures and Other Expense, NetInterest expense was $78.3 million compared to $67.0 million in the prior-year period. The increase principally reflects higher average interest ratesassociated with the Company’s refinancing, which was completed at the end of September 2009.Equity in earnings of joint ventures increased $3.9 million to $8.3 million reflecting higher revenue and reduced expenses related to an acquisition madeby one of our unconsolidated joint ventures in the prior year.Other expense was $1.2 million, compared to $5.4 million in the prior-year period. In the prior year, in connection with the refinancing transactions, theCompany recorded a $9.1 million loss on the early extinguishment of debt associated with the repayment of $403.0 million of borrowings outstanding underits senior secured credit agreements and accounts receivable securitization facility, partially offset by a $4.9 million gain on the early extinguishment of debt inconnection with the repurchase of $29.1 million of Senior Subordinated Notes.Income TaxesFor the year ended December 31, 2010, the Company recorded income tax expense from continuing operations of $30.7 million on income before taxes of$38.5 million. This compares to prior year income tax expense from continuing operations of $126.0 million on income before taxes of $7.4 million. Duringthe second quarter of 2009, the Company recorded a non-cash charge of $108.1 million to establish a valuation allowance on its U.S. deferred tax assets. Thehigh effective tax rate for 2010 is due to an increase in the valuation allowance of $15.7 million because no tax benefit is being provided on losses incurred inthe U.S. and certain foreign jurisdictions where valuation allowances are recorded against future tax benefits, and because of an $8.6 million expense recordedto reflect the tax impact of foreign currency fluctuations on an intercompany debt obligation, partially offset by the benefit of a $2.8 million out-of-periodadjustment recorded in the second quarter to increase deferred tax assets of a non-U.S. subsidiary.Income (Loss) from Continuing OperationsIncome from continuing operations was $7.8 million, or $0.14 per diluted share, compared to a loss of $118.6 million, or $2.18 per diluted share, inthe prior year.Income (Loss) from Discontinued OperationsIncome from discontinued operations was $4.6 million, or $0.08 per diluted share, compared to a $7.5 million loss, or $0.14 per diluted share, in theprior-year period.The financial statement caption “discontinued operations” includes the results of the Company’s former commercial print finishing business, whichsupplied commercial laminating film and equipment to printers and packaging suppliers and represented approximately $100 million in annual net sales.During the fourth quarter of 2008, the Company’s Board of Directors authorized management to sell its commercial print finishing business and in the firstquarter of 2009, the Company announced it had reached a definitive agreement to sell this business and to exit from selling high volume laminating film andequipment.In June 2009, the Company completed the sale of its commercial print finishing business for final proceeds of $16.2 million, after final working capitaladjustments made during the third quarter. As a result of the adjustments, the Company received net cash proceeds before expenses of $12.5 million and a$3.65 million note 27Table of Contentsdue from the buyer payable in installments of $1.325 million in June 2011 and $2.325 million in June 2012. Interest on the unpaid balance is payable at therate of 4.9 percent per annum. The sale resulted in a pre-tax loss for the year 2009 of $0.8 million ($1.1 million after-tax), which included a pre-tax pensioncurtailment gain of $0.5 million. During the fourth quarter of 2010, the Company completed the sale of a property formerly occupied by its commercial printfinishing business, resulting in a gain on sale of $1.7 million. Also in 2010, the Company recorded a loss on sale of $0.1 million ($0.2 million after-tax)related to the settlement of litigation attributable to the wind-down of the disposed operations.During the year ended December 31, 2010 discontinued operations included $5.2 million in income from operations ($3.7 million after-tax) from theGBC-Fordigraph Business. During the year ended December 31, 2009 discontinued operations included $4.7 million of income from operations ($2.8 millionafter-tax) from the GBC-Fordigraph Business.For a further discussion of the Company’s discontinued operations see Note 18, Discontinued Operations, to our consolidated financial statementscontained in Item 8 of this report.The components of discontinued operations for the years ended December 31, 2010 and 2009 are as follows: (in millions of dollars) 2010 2009 Income (loss) from operations before income taxes $6.6 $(4.3) Loss on sale before income tax (0.1) (0.8) Provision for income taxes 1.9 2.4 Income (loss) from discontinued operations $4.6 $(7.5) Net Income (Loss)Net income was $12.4 million, or $0.22 per diluted share, compared to a net loss of $126.1 million, or $2.32 per diluted share in the prior year.Segment Discussion Year EndedDecember 31, 2010 2009 Amount of change (in millions of dollars) Net Sales $ % ACCO Brands Americas $688.3 $671.5 $16.8 3% ACCO Brands International 419.3 398.8 20.5 5% Computer Products 177.0 163.0 14.0 9% Total segment sales $1,284.6 $1,233.3 $51.3 Year EndedDecember 31, 2010 2009 Amount of change (in millions of dollars) OperatingIncome OperatingIncomeMargin OperatingIncome OperatingIncomeMargin $ % MarginPoints ACCO Brands Americas $56.3 8.2% $38.6 5.7% $17.7 46% 250 ACCO Brands International 31.5 7.5% 23.0 5.8% 8.5 37% 170 Computer Products 43.0 24.3% 31.7 19.4% 11.3 36% 490 Total segment operating income $130.8 $93.3 $37.5 28Table of ContentsSegment operating income excludes corporate costs; interest expense net; equity in earnings of joint ventures and other expense, net. See Note 15,Information on Business Segments, to our consolidated financial statements contained in Item 8 of this report for a reconciliation of total segment operatingincome to income from continuing operations before income taxes.ACCO Brands AmericasResultsACCO Brands Americas net sales increased $16.8 million, or 3%, to $688.3 million. The favorable impact from foreign currency translation increasedsales by $12.1 million, or 2%. Sales volume increased 2% driven by growth in all markets, partially offset by reduced pricing.ACCO Brands Americas operating income increased $17.7 million, to $56.3 million, and operating income margin increased to 8.2% from 5.7% in theprior year period. The increase in operating income primarily reflects the impact of an improved gross margin resulting from improved customer channel mixand a favorable product mix due to increased sales in the higher margin stapling category and decreased sales in the lower margin bindery and accessoriescategory. Also contributing were sourcing, production, freight and distribution efficiencies; the absence of $6.9 million in impairment, restructuring and othercharges incurred in the 2009 period; and $2.0 million of foreign exchange benefit. This increase was partially offset by $17.3 million of higher compensationexpense resulting primarily from temporary salary reductions and suspension of management incentive programs and retirement plan contributions in 2009together with increased commodity costs in 2010.ACCO Brands InternationalResultsACCO Brands International net sales increased $20.5 million, or 5%, to $419.3 million. The favorable impact from foreign currency translationincreased sales by $12.5 million, or 3%. All regions experienced volume growth, offset by lower pricing, principally in Australia where foreign exchangevolatility required significant price increases in 2009, which were reversed in 2010.ACCO Brands International operating income increased $8.5 million, to $31.5 million, and operating income margin increased to 7.5% from 5.8% inthe prior-year period. The increase in operating income was primarily the result of the absence of $13.4 million in impairment, restructuring and other chargesincurred in the 2009 period. Reduced operating performance came from our European operations, which suffered increases in its cost of goods sold due tohigher commodity costs and weak local currencies versus the U.S. dollar together with increased customer program costs. This decrease in operating incomewas partially offset by improved operating performance from our other international regions.Computer Products GroupResultsComputer Products net sales increased $14.0 million, or 9%, to $177.0 million. The increase reflects strong growth in sales mainly from securityproducts in most regions. There was no net impact due to currency translation on the full year results.Operating income increased 36%, or $11.3 million, to $43.0 million due to higher royalty income from security products, favorable product mix, highersales volumes and the absence of $2.6 million in restructuring and other charges incurred in the 2009 period, partially offset by $4.0 million of highercompensation expense resulting primarily from temporary salary reductions, and the suspension of management incentive programs and retirement plancontributions in 2009. Operating income margins increased to 24.3% from 19.4% primarily due to higher royalty income from security products and favorableproduct mix from both higher margin security products and new products. 29Table of ContentsLiquidity and Capital ResourcesOur primary liquidity needs are to service indebtedness, fund capital expenditures and support working capital requirements. Our principal sources ofliquidity are cash flows from operating activities, cash and cash equivalents held and borrowings under our ABL Facility (defined below). Because of theseasonality of our business we typically carry greater cash balances in the third and fourth quarters of our fiscal year. Lower cash balances are typicallycarried during the first and second quarters due to the timing of payments made by the Company pursuant to customer rebate and management incentiveprograms. We maintain adequate financing arrangements at market rates. Our priority for cash flow use over the near term, after internal growth, is to investin new products through both organic development and acquisitions and to fund the reduction of debt.Any available overseas cash is repatriated on a continuous basis. Undistributed earnings of foreign subsidiaries that are expected to be permanentlyreinvested, aggregated to approximately $517 million at December 31, 2011 and $495 million at December 31, 2010. If these amounts were distributed to theU.S., in the form of a dividend or otherwise, the Company would be subject to additional U.S. income taxes.On November 17, 2011, the Company announced the signing of a definitive agreement to merge the Mead C&OP Business into the Company. Subjectto this transaction closing, the Company has underwritten financing that will fund a $460 million dividend to MeadWestvaco and refinance the Company’sSenior Secured Notes, which had a principal amount outstanding of $425.1 million as of December 31, 2011, and its $175.0 million revolving creditfacility, together with transaction and refinancing expenses.Loan CovenantsThe indentures governing our Senior Secured Notes and Senior Subordinated Notes do not contain quarterly or annual financial performance covenants.However, these indentures restrict, among other things, ACCO Brands’ ability and the ability of ACCO Brands’ restricted subsidiaries to, subject to certainexceptions, incur additional indebtedness, create liens, pay dividends, make certain investments, enter into certain types of transactions with affiliates andprovide for limitations on any restricted subsidiary’s ability to pay dividends, make loans, or transfer assets to ACCO Brands or other restricted subsidiaries.The ABL Facility contains customary terms and conditions, including limitations on liens and indebtedness, asset sales, and intercompanytransactions. A springing fixed charge financial covenant would be triggered if the excess availability under the ABL Facility falls below $20.0 million or 15%of total commitments. The ABL Facility also contains cash dominion provisions that apply in the event that the Company’s excess availability fails to meetcertain thresholds. Further, it limits the ability of the Company to repurchase Senior Subordinated Notes while the facility is utilized.The Senior Secured Notes, Senior Subordinated Notes and the ABL Facility contain customary events of default, including payment default, breach ofrepresentation and warranties, covenant defaults, cross-defaults and cross-accelerations, certain bankruptcy or insolvency events, judgment defaults, certainERISA-related events, changes in control or ownership and invalidity of any collateral or guarantee or other document. Any inability to pay interest on, orprincipal of, our outstanding debt as it becomes due could result in an event of default under any of the agreements governing any of our debt obligations, inwhich case our lenders could elect to declare all amounts outstanding to be immediately due and payable. If the lenders accelerate the payment of any of ourindebtedness, our assets may not be sufficient to repay in full such indebtedness and any other indebtedness that would become due as a result of suchacceleration and, if we were unable to obtain replacement financing or any such replacement financing was on terms that were less favorable than theindebtedness being replaced, our liquidity and results of operations would be materially and adversely affected.Compliance with Loan CovenantsBased on our borrowing base, as of December 31, 2011, the amount available for borrowings under the Company’s ABL Facility was $165.5 million(allowing for $9.5 million of letters of credit outstanding on that date). The Company’s ABL Facility would not be affected by a change in its credit rating.As of and for the period ended December 31, 2011, the Company was in compliance with all applicable loan covenants. 30Table of ContentsGuarantees and SecurityThe Senior Secured Notes are guaranteed on a senior secured basis by the Company’s existing and future domestic subsidiaries, with certain exceptions,and are secured on a first-priority basis by a lien on substantially all of the Company’s and guarantors’ present and future assets (other than receivables andinventory and their related general intangibles and certain other assets), including equipment, certain owned and leased real property interests, trade names andcertain other intellectual property, certain intercompany receivables and all present and future equity interests of each of the Company’s and guarantors’directly owned domestic subsidiaries and up to 65% of the present and future equity interests of certain of the Company’s and the guarantors’ directly ownedforeign subsidiaries, in each case subject to certain exceptions and customary permitted liens. The Senior Secured Notes and the related guarantees also aresecured on a second-priority basis by a lien on the assets that secure the Company’s and the guarantors’ obligations under the ABL Facility, includingaccounts receivable, inventory and the other assets identified as excluded first-lien assets above.The Company’s obligations under the ABL Facility are guaranteed by the same subsidiaries that guarantee the Senior Secured Notes together with certainof the Company’s foreign subsidiaries and are secured on a first-priority basis by a lien on substantially all of the Company’s and such guarantors’ accountsreceivable, inventory and the other assets identified as excluded first-lien assets above with respect to the Notes.Cash FlowFiscal 2011 versus Fiscal 2010Cash Flow from Operating ActivitiesFor the year ended December 31, 2011, cash provided by operating activities was $61.8 million, compared to $54.9 million in the prior year. Netincome for 2011 was $56.7 million, compared to $12.4 million in 2010. Non-cash and non-operating adjustments to net income on a pre-tax basis in 2011totaled $10.0 million, compared to $46.2 million in 2010. The 2011 net adjustments were substantially lower than 2010, largely due to the sale of the GBC-Fordigraph Business which resulted in a pre-tax net gain of $41.9 million.The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2011 and 2010,respectively: 2011 2010 Accounts receivable $0.6 $(18.5) Inventories 5.4 (9.8) Accounts payable 16.8 14.8 Cash flow from net working capital $22.8 $(13.5) Operating cash flow in 2011 of $61.8 million was the result of the realization of income from operations and net working capital, partly offset by theuse of cash to fund income tax and interest payments and contributions to our pension plans. Compared to the prior year, accounts receivable levels reflectimproved customer collections and increased sales in the early part of the fourth quarter, which allowed us to collect more of our receivables before the end ofthe quarter. Inventory levels demonstrate improved supply chain management. Payments associated with the 2010 annual incentive plan of approximately $9million were made during the first quarter of 2011, compared to approximately $1 million in the prior year. Income tax payments were $27.7 million in 2011,compared to only $13.9 million in the 2010 period when the Company benefited from substantial refunds related to prior years and had lower operating profit.Interest payments of $71.9 million were slightly higher than the prior year, while contributions to the Company’s pension plans of $13.5 million were slightlyless than payments made during the prior year. Payments associated with the Company’s wind-down of restructuring activities were $3.4 million, whileEuropean business rationalization activity resulted in payments of $4.2 million during 2011. In addition, the second half of 2011 included payments inpursuit of the Mead C&OP Business acquisition of $4.8 million. 31Table of ContentsDuring the 2010 year, a recurring pattern of strong sales during the final month of each quarter lead to high quarter-end accounts receivable balances. Inaddition, inventory levels increased due to higher commodity costs and in support of the sales growth anticipated during the first quarter of 2011.Cash Flow from Investing ActivitiesCash provided by investing activities was $40.0 million for the year ended December 31, 2011 and cash used was $14.9 million for the year endedDecember 31, 2010. The sale of the Company’s GBC-Fordigraph Business during the second quarter of 2011 generated net proceeds of $52.9 million, andapproximately $5.4 million of taxes associated with the sale are expected to be paid in 2012. The Company also received $0.6 million of net proceedsassociated with the 2009 sale of the Company’s former commercial print finishing business, and anticipates additional cash proceeds of $2.6 million andadditional payments associated with the sale of approximately $1.1 million in the years 2012 and 2013. Gross capital expenditures were $13.5 million and$12.6 million for the periods ended December 31, 2011 and 2010, respectively. Additional cash payments of $1.4 million associated with the purchase of twominor product line acquisitions were also recognized during the first half of 2011.Cash Flow from Financing ActivitiesCash used by financing activities was $63.1 million and $0.1 million for the years ended December 31, 2011 and 2010, respectively. During 2011,principally during the third quarter, the Company repurchased $59.9 million of its Senior Subordinated Notes and Senior Secured Notes debt.Fiscal 2010 versus Fiscal 2009Cash Flow from Operating ActivitiesFor the year ended December 31, 2010, cash provided from operating activities was $54.9 million, compared to $71.5 million in the prior year. Netincome for 2010 was $12.4 million. The net loss for 2009 was $126.1 million, and was principally the result of a $108.1 million non-cash charge related tothe impairment of U.S. deferred tax assets. Non-cash and non-operating adjustments to pre-tax net income in 2010 totaled $46.2 million, compared to $59.9million in 2009.The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2010 and 2009,respectively: 2010 2009 Accounts receivable $(18.5) $41.5 Inventories (9.8) 78.7 Accounts payable 14.8 (54.9) Cash flow from net working capital $(13.5) $65.3 Operating cash flow in 2010 of $54.9 million was the result of the realization of income from operations, partly offset by the use of cash to fund networking capital and contributions to our pension plans. During the 2010 year, a recurring pattern of strong sales during the final month of each quarter lead tohigher quarter end accounts receivable balances. In addition, inventory levels increased in comparison to the prior year due to higher commodity costs and insupport of the sales growth anticipated during the first quarter of 2011. Reduced cash payments associated with restructuring and integration activities of$30.8 million were partially offset by interest payments that were $16.2 million and cash contributions to our pension plans that were $7.7 million higherthan the prior year, respectively. The operating cash flow of $71.5 million in 2009 was generated as we focused on right-sizing our net working capital.Significant inventory reductions were achieved across our global businesses and our accounts receivable remained well-controlled as we responded to salesvolume declines due to the economic downturn. Because of the inability of some of our suppliers to obtain credit insurance, we were required to pay certainsuppliers more promptly, offsetting some of our gains from working capital management. 32Table of ContentsCash Flow from Investing ActivitiesCash used by investing activities was $14.9 million and $3.9 million for the years ended December 31, 2010 and 2009, respectively. Gross capitalexpenditures were $12.6 million and $10.3 million for the years ended December 31, 2010 and 2009, respectively, with the increase related to investments ininformation technology projects, primarily in our foreign operations. Litigation settlements associated with discontinued operations resulted in payments of$3.7 million in 2010, in comparison to $9.2 million of net cash proceeds that were received in the prior year when the discontinued operations were sold.Proceeds from the disposition of assets were $2.5 million for the year ended 2010, an increase of $1.9 million from the prior year, principally due to the saleof a former property of our discontinued operations during the fourth quarter of 2010.Cash Flow from Financing ActivitiesCash used by financing activities was $0.1 million and $44.5 million for the years ended December 31, 2010 and 2009, respectively. The decrease incash used by financing activities primarily reflects the impact of the Company’s refinancing transactions, which were completed at the end of the third quarterof 2009 and included the settlement of a Euro debt cross-currency swap at a cost of $40.8 million and $20.6 million of debt issuance payments.CapitalizationWe had approximately 55.5 million common shares outstanding as of December 31, 2011.Adequacy of Liquidity SourcesThe Company is subject to credit risk relative to the ability of counterparties to meet their contractual payment obligations or the potential non-performance of counterparties to deliver contracted commodities or services at the contracted price. The impact of any global economic downturn and theability of our suppliers and customers to access credit markets is also unpredictable, outside of our control and may create additional risks for us, bothdirectly and indirectly. The inability of suppliers to access financing or the insolvency of one or more of our suppliers could lead to disruptions in our supplychain, which could adversely impact our sales and/or increase our costs. Our suppliers may require us to pay cash in advance or obtain letters of credit fortheir benefit as a condition to selling us their products and services. If one or more of our principal customers were to file for bankruptcy, our sales could beadversely impacted and our ability to collect outstanding accounts receivable from any such customer could be limited. Any of these risks and uncertaintiescould have a material adverse effect on our business, financial condition, results of operations or cash flows.Based on its 2012 business plan and latest forecasts, the Company believes that cash flow from operations, its current cash balance and other sourcesof liquidity, including borrowings available under our ABL Facility will be adequate to support requirements for working capital and capital expenditures toservice indebtedness for the foreseeable future. Our future operating performance is dependent on many factors, some of which are beyond our control,including prevailing economic, financial and industry conditions (see Item 1A, “Risk Factors”).Our operating performance and ability to comply with restrictions under our borrowing arrangements are dependent on our continued ability to accessfunds under our credit and loan agreements, including under our ABL Facility and from cash on hand, maintain sales volumes, drive profitable growth,realize cost savings and generate cash from operations. The financial institutions that fund our ABL Facility could also be impacted by any volatility in thecredit markets, and if one or more of them could not fulfill our revolving credit requests, our operations may be adversely impacted. If our revolving credit isunavailable due to a lender not being able to fund requested amounts, or because we have not maintained compliance with our covenants, or we do not meet oursales or growth initiatives within the time frame we expect, our cash flow could be materially adversely impacted. A material decrease in our cash flow couldcause us to fail to meet our obligations under our borrowing arrangements. A default under our credit or loan agreements could restrict or terminate our accessto borrowings and materially impair our ability to meet our obligations as they come due. If we do not comply with 33Table of Contentsany of our covenants and thereafter we do not obtain a waiver or amendment that otherwise addresses that non-compliance, our lenders may accelerate paymentof all amounts outstanding under the affected borrowing arrangements, which amounts would immediately become due and payable, together with accruedinterest. Such acceleration would cause a default under the indentures governing the Senior Secured Notes and the Senior Subordinated Notes and otheragreements that provide us with access to funding. Any one or more defaults, or our inability to generate sufficient cash flow from our operations in the futureto service our indebtedness and meet our other needs, may require us to refinance all or a portion of our existing indebtedness or obtain additional financing orreduce expenditures that we deem necessary to our business. There can be no assurance that any refinancing of this kind would be possible or that anyadditional financing could be obtained. The inability to obtain additional financing could have a material adverse effect on our financial condition and on ourability to meet our obligations to noteholders.Our cash flows from operating activities are dependent upon a number of factors that affect our sales, including demand, pricing and competition.Historically, key drivers of demand in the office products industry have included economic conditions generally, and specifically trends in gross domesticproduct (GDP), which affects business confidence and the propensity to purchase consumer durables, white collar employment levels, and growth in thenumber of small businesses and home offices together with increasing usage of personal computers. Pricing and demand levels for office products have alsoreflected a substantial consolidation within the global resellers of office products. Those resellers are our principal customers. This consolidation has led toincreased pricing pressure on suppliers and a more efficient level of asset utilization by customers, resulting in lower sales volumes and higher costs frommore frequent small orders for suppliers of office products. We sell products in highly competitive markets, and compete against large international andnational companies, regional competitors and against our own customers’ direct and private-label sourcing initiatives.Off-Balance-Sheet Arrangements and Contractual Financial ObligationsWe do not have any material off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financialcondition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.Our contractual obligations and related payments by period at December 31, 2011 were as follows: Total 2012 2013 - 2014 2015 - 2016 Thereafter (in millions of dollars) Contractual obligations Long-term debt $673.2 $0.2 $0.5 $672.5 $— Interest on long-term debt 231.5 64.0 127.9 39.6 — Operating lease obligations 63.6 19.7 22.9 14.2 6.8 Purchase obligations 26.9 26.0 0.5 0.4 — Other long-term liabilities 16.3 16.3 — — — Total $1,011.5 $126.2 $151.8 $726.7 $6.8 (1)Debt obligations include an amount in excess of the carrying value of debt which reflects the original issue discount on the Senior Secured Notes ($4.2million as of December 31, 2011). (2)Purchase obligations primarily consist of contracts and non-cancelable purchase orders for raw materials and finished goods. (3)Obligations related to the other long-term liabilities consist of payments for the Company’s pension plans.Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2011, we are unableto make reasonably reliable estimates of the period of cash 34(1)(2)(3)Table of Contentssettlement with the respective taxing authorities. Therefore, $5.5 million of unrecognized tax benefits have been excluded from the contractual obligations tableabove. See Note 10, Income Taxes, to our consolidated financial statements contained in Item 8 of this report for a discussion on income taxes.Critical Accounting PoliciesOur financial statements are prepared in conformity with accounting principles generally accepted in the U.S. Preparation of our financial statementsrequire us to make judgments, estimates and assumptions that affect the amounts of actual assets, liabilities, revenues and expenses presented for eachreporting period. Actual results could differ significantly from those estimates. We regularly review our assumptions and estimates, which are based onhistorical experience and, where appropriate, current business trends. We believe that the following discussion addresses our critical accounting policies,which require more significant, subjective and complex judgments to be made by our management.Revenue RecognitionWe recognize revenue from product sales when earned, net of applicable provisions for discounts, returns and allowances. We consider revenue to berealized or realizable and earned when all of the following criteria are met: title and risk of loss have passed to the customer, persuasive evidence of anarrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. We also provide for our estimate ofpotential bad debt at the time of revenue recognition.Allowances for Doubtful Accounts and Sales ReturnsTrade receivables are recorded at the stated amount, less allowances for discounts, doubtful accounts and returns. The allowance for doubtful accountsrepresents estimated uncollectible receivables associated with potential customer defaults on contractual obligations, usually due to customers’ potentialinsolvency. The allowance includes amounts for certain customers where a risk of default has been specifically identified. In addition, the allowance includesa provision for customer defaults on a general formula basis when it is determined the risk of some default is probable and estimable, but cannot yet beassociated with specific customers. The assessment of the likelihood of customer defaults is based on various factors, including the length of time thereceivables are past due, historical experience and existing economic conditions.The allowance for sales returns represents estimated uncollectible receivables associated with the potential return of products previously sold tocustomers, and is recorded at the time that the sales are recognized. The allowance includes a general provision for product returns based on historical trends.In addition, the allowance includes a reserve for currently authorized customer returns that are considered to be abnormal in comparison to the historical basis.InventoriesInventories are priced at the lower of cost (principally first-in, first-out with minor amounts at average) or market. A reserve is established to adjust thecost of inventory to its net realizable value. Inventory reserves are recorded for obsolete or slow moving inventory based on assumptions about future demandand marketability of products, the impact of new product introductions and specific identification of items, such as product discontinuance orengineering/material changes. These estimates could vary significantly, either favorably or unfavorably, from actual requirements if future economicconditions, customer inventory levels or competitive conditions differ from expectations.Property, Plant and EquipmentProperty, plant and equipment are carried at cost. Depreciation is provided, principally on a straight-line basis, over the estimated useful lives of theassets. Gains or losses resulting from dispositions are included in 35Table of Contentsoperating income. Betterments and renewals, that improve and extend the life of an asset, are capitalized; maintenance and repair costs are expensed. Purchasedcomputer software is capitalized and amortized over the software’s useful life. The following table shows estimated useful lives of property, plant andequipment: Buildings 40 to 50 yearsLeasehold improvements Lesser of lease term or the life of the assetMachinery, equipment and furniture 3 to 10 yearsLong-Lived AssetsWe test long-lived assets for impairment whenever events or changes in circumstances indicate that the assets’ carrying amount is not recoverable fromits undiscounted cash flows. When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventualdisposition of the asset or asset group to the carrying amount of a long-lived asset or asset group. The cash flows are based on our best estimate at the time offuture cash flow, derived from the most recent business projections. If this comparison indicates that there is an impairment, the amount of the impairment istypically calculated using discounted expected future cash flows. The discount rate applied to these cash flows is based on our weighted average cost ofcapital, computed by selecting market rates at the valuation dates for debt and equity that are reflective of the risks associated with an investment in theCompany’s industry as estimated by using comparable publicly traded companies.Indefinite-Lived IntangiblesIndefinite-lived intangibles are tested for impairment on an annual basis and written down when impaired. An interim impairment test is performed if anevent occurs or conditions change that would more likely than not reduce the fair value below the carrying value.In addition, purchased intangible assets other than goodwill are amortized over their useful lives unless their lives are determined to be indefinite. Certainof our trade names have been assigned an indefinite life as we currently anticipate that these trade names will contribute cash flows to ACCO Brandsindefinitely.We review indefinite-lived intangibles for impairment annually, and whenever market or business events indicate there may be a potential adverse impacton a particular intangible. We consider the implications of both external factors (e.g., market growth, pricing, competition, and technology) and internal factors(e.g., product costs, margins, support expenses, and capital investment) and their potential impact on cash flows for each business in both the near and longterm, as well as their impact on any identifiable intangible asset associated with the business. Based on recent business results, consideration of significantexternal and internal factors, and the resulting business projections, indefinite-lived intangible assets are reviewed to determine whether they are likely toremain indefinite-lived, or whether a finite life is more appropriate. In addition, based on events in the period and future expectations, management considerswhether the potential for impairment exists.Goodwill and Intangible AssetsWe test goodwill for impairment at least annually, normally in the second quarter, and on an interim basis if an event or circumstance indicates that it ismore likely than not that an impairment has been incurred. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. Inapplying a fair-value-based test, estimates are made of the expected future cash flows to be derived from each reporting unit. The resulting fair valuedetermination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors.Given the current economic environment and the uncertainties regarding the impact on our business, there can be no assurance that our estimates andassumptions made for purposes of our impairment testing during 2011 will prove to be accurate predictions of the future. If our assumptions regardingforecasted revenue or margin 36Table of Contentsgrowth rates of certain reporting units are not achieved, we may be required to record additional impairment charges in future periods, whether in connectionwith our next annual impairment testing in the second quarter of fiscal year 2012 or prior to that, if any such change constitutes a triggering event outside ofthe quarter from when the annual impairment test is performed. It is not possible at this time to determine if any such future impairment charge would resultor, if it does, whether such charge would be material.Employee Benefit PlansWe provide a range of benefits to our employees and retired employees, including pensions, post-retirement, post-employment and health care benefits.We record annual amounts relating to these plans based on calculations specified by accounting principles generally accepted in the U.S., which includevarious actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates.Actuarial assumptions are reviewed on an annual basis and modifications to these assumptions are made based on current rates and trends when it is deemedappropriate. As required by accounting principles generally accepted in the U.S., the effect of our modifications are generally recorded and amortized overfuture periods. We believe that the assumptions utilized in recording our obligations under the plans are reasonable based on our experience. The actuarialassumptions used to record our plan obligations could differ materially from actual results due to changing economic and market conditions, higher or lowerwithdrawal rates or other factors which may impact the amount of retirement related benefit expense recorded by us in future periods.The discount rate assumptions used to determine the postretirement obligations of the benefit plans is based on a spot-rate yield curve that matchesprojected future benefit payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. The assumed discountrates reflect market rates for high-quality corporate bonds currently available. The Company’s discount rates were determined by considering the average ofpension yield curves constructed of a large population of high quality corporate bonds. The resulting discount rates reflect the matching of plan liability cashflows to the yield curves.The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested based onour investment profile to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation, fixedincome returns and equity returns, while also considering historical returns over the last 10 years, and asset allocation and investment strategy.Pension expenses were $6.9 million, $8.2 million and $6.3 million, respectively, in the years ended December 31, 2011, 2010 and 2009. Post-retirement expenses were $0.2 million, $0.0 million and $0.0 million, respectively, for the years ended December 31, 2011, 2010 and 2009. In 2012, we expectpension expenses of approximately $9.9 million and post-retirement expenses of approximately $0.2 million. On January 20, 2009, the Company’s Board ofDirectors approved plan amendments to temporarily freeze the Company’s U.S. pension and non-qualified supplemental retirement plans effective March 7,2009. No additional benefits will accrue under these plans after that date until further action by the Board of Directors.A 25-basis point change (0.25%) in our discount rate assumption would lead to an increase or decrease in our pension expense of approximately $1.7million for 2012. A 25-basis point change (0.25%) in our long-term rate of return assumption would lead to an increase or decrease in pension expense ofapproximately $0.9 million for 2012.Customer Program CostsCustomer programs and incentives are a common practice in the office products industry. We incur customer program costs to obtain favorable productplacement, to promote sell-through of products and to maintain competitive pricing. Customer program costs and incentives, including rebates, promotionalfunds and volume allowances, are accounted for as a reduction to gross sales. These costs are recorded at the time of sale 37Table of Contentsbased on management’s best estimates. Estimates are based on individual customer contracts and projected sales to the customer in comparison to anythresholds indicated by contract. In the absence of a signed contract, estimates are based on historical or projected experience for each program type orcustomer. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a resultof a change in sales volume expectations or customer contracts).Income TaxesDeferred tax liabilities or assets are established for temporary differences between financial and tax reporting bases and are subsequently adjusted toreflect changes in tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is recorded to reduce deferred tax assets to anamount that is more likely than not to be realized. Facts and circumstances may change that cause the Company to revise the conclusions on its ability torealize certain net operating losses and other deferred tax attributes.The amount of income taxes that we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome ofany uncertain tax position is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. We believe that we haveadequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorableadjustments to our estimated tax liabilities in the period the assessments are revised or resolved.Deferred income taxes are not provided on certain undistributed earnings of foreign subsidiaries that are expected to be permanently reinvested in thosecompanies, aggregating approximately $517 million at December 31, 2011 and $495 million at December 31, 2010. If these amounts were distributed to theU.S., in the form of a dividend or otherwise, the Company would be subject to additional U.S. income taxes. Determination of the amount of unrecognizeddeferred income tax liabilities on these earnings is not practicable.Stock–Based CompensationStock-based compensation cost is estimated at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over thevesting period. Determining the appropriate fair value model to use requires judgment. Determining the assumptions that enter into the model is highlysubjective and also requires judgment, including long-term projections regarding stock price volatility, employee exercise, post-vesting termination, and pre-vesting forfeiture behaviors, interest rates and dividend yields. The grant date fair value of each award is estimated using the Black-Scholes option-pricingmodel.We have utilized historical volatility for a pool of peer companies for a period of time that is comparable to the expected life of the option to determinevolatility assumptions. The weighted average expected option term reflects the application of the simplified method, which defines the life as the average of thecontractual term of the options and the weighted average vesting period for all option tranches. The risk-free interest rate for the expected term of the option isbased on the U.S. Treasury yield curve in effect at the time of grant. Forfeitures are estimated at the time of grant in order to calculate the amount of share-based payment awards ultimately expected to vest. The forfeiture rate is based on historical rates.The use of different assumptions would result in different amounts of stock compensation expense. Holding all other variables constant, the indicatedchange in each of the assumptions below increases or decreases the fair value of an option (and hence, expense), as follows: Assumption Change toAssumption Impact on Fair Valueof Option Expected volatility Higher Higher Expected life Higher Higher Risk-free interest rate Higher Higher Dividend yield Higher Lower 38Table of ContentsThe pre-vesting forfeitures assumption is ultimately adjusted to the actual forfeiture rate. Therefore, changes in the forfeitures assumption would notimpact the total amount of expense ultimately recognized over the vesting period. Different forfeitures assumptions would only impact the timing of expenserecognition over the vesting period. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances.Management is not able to estimate the probability of actual results differing from expected results, but believes our assumptions are appropriate, basedupon our historical and expected future experience.Recent Accounting PronouncementsIn June 2011 the Financial Accounting Standards Board (“FASB”) issued an update, Accounting Standards Update (“ASU”) No. 2011-5, to existingstandards on comprehensive income (Accounting Standards Codification (“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 iseffective for annual and interim periods beginning after December 15, 2011, and early adoption is permitted. In December 2011 the FASB issued an update toASU No. 2011-5, ASU No. 2011-12, which was issued to defer the effective date for amendments to the reclassifications of items out of accumulated othercomprehensive income in ASU No. 2011-05. The Company has adopted these new standards as of December 2011. The Company has provided the requireddisclosure in its Consolidated Statements of Comprehensive Income (Loss).In September 2011, the FASB issued an update, ASU No. 2011-08, to existing standards on intangibles – goodwill and other ASC Topic 350. ASUNo. 2011-08 was issued to simplify the testing of goodwill for impairment by allowing an optional qualitative factors test to determine whether it is more likelythan not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-stepgoodwill impairment test already included in ASC Topic 350. ASU No. 2011-08 is effective for annual and interim goodwill tests performed for fiscal yearsafter December 15, 2011. The Company will adopt the standard in 2012, and it will not have a significant impact on its consolidated financial statements orresults of operations.In December 2011 the FASB issued an update, ASU No. 2011-11 to existing standards regarding the disclosures involving the offsetting of assets andliabilities relating to financial instruments. ASU No. 2011-11 was issued to improve disclosures regarding offsetting and related arrangements to enable usersof financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-011 is effective for annual and interim periodsbeginning on or after January 1, 2013. The Company is currently assessing the impact on its current disclosures.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe office products industry is concentrated in a small number of major customers, principally office products superstores, large retailers, wholesalersand contract stationers. Customer consolidation and share growth of private-label products continue to increase pricing pressures, which may adversely affectmargins for the Company and its competitors. The Company is addressing these challenges through design innovations, value-added features and services, aswell as continued cost and asset reduction.The Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. The Company entersinto financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financialinstruments are major financial institutions. 39Table of ContentsForeign Exchange Risk ManagementThe Company enters into forward foreign currency and option contracts principally to hedge currency fluctuations in transactions (primarily anticipatedinventory purchases and intercompany loans) denominated in foreign currencies, thereby limiting the risk that would otherwise result from changes inexchange rates. The majority of the Company’s exposure to local currency movements is in Europe, Australia, Japan and Canada. All of the existing foreignexchange contracts as of December 31, 2011 have maturity dates in 2012. Increases and decreases in the fair market values of the forward agreements areexpected to be offset by gains/losses in recognized net underlying foreign currency transactions or loans. Notional amounts of outstanding foreign currencyforward exchange contracts were $147.5 million and $185.6 million at December 31, 2011 and 2010, respectively. The net fair value of these foreigncurrency contracts was $2.5 million and $(1.8) million at December 31, 2011 and 2010, respectively. At December 31, 2011, a 10% unfavorable exchangerate movement in our portfolio of foreign currency forward contracts would have reduced our unrealized gains by $14.5 million. Consistent with the use ofthese contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses,respectively, in the remeasurement of the underlying transactions being hedged. When taken together, the Company believes these forward contracts and theoffsetting underlying commitments do not create material market risk.For more information related to outstanding foreign currency forward exchange contracts see Note 13, Fair Value of Financial Instruments and Note12, Derivative Financial Instruments, to our consolidated financial statements contained in Item 8 of this report.Interest Rate Risk ManagementOur Senior Secured Notes and Senior Subordinated Notes have fixed interest rates and, accordingly, are not exposed to market risk resulting fromchanges in interest rates. However, the fair market value of our long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market valueof fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. In addition, fair market values will also reflect the credit markets’view of credit risk spreads. These interest rate changes may affect the fair market value of the fixed interest rate debt and any repurchases of these notes, butdo not impact our earnings or cash flows.Interest rates under the ABL Facility are based on the London Interbank Offered Rate (LIBOR). Pricing is subject to quarterly adjustment based on theaverage availability under the ABL Facility during the prior quarter. The range of borrowing costs under the pricing grid is LIBOR plus 3.75% to LIBOR plus4.25% with a LIBOR rate floor of 1.50%. The Company is required to pay a quarterly commitment fee on the unused portion of the ABL facility ranging from0.5% to 1.0%. There were no borrowings outstanding under the Company’s ABL Facility as of December 31, 2011.The following table summarizes information about the Company’s major fixed rate debt components as of December 31, 2011, including the principalcash payments (excluding the original issue discount on the Senior Secured Notes) and interest rates.Debt Obligations Stated Maturity Date FairValue 2012 2013 2014 2015 2016 Thereafter Total (in millions) Long term debt: Fixed rate (U.S. dollars) Senior SecuredNotes (U.S. dollars) $— $— $— $425.1 $— $— $425.1 $472.9 Average fixed interest rate 10.63% 10.63% 10.63% 10.63% 10.63% — 10.63% Senior Subordinated Notes (U.S. dollars) $— $— $— $246.3 $— $— $246.3 $252.5 Average fixed interest rate 7.63% 7.63% 7.63% 7.63% 7.63% — 7.63% 40Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 42 Management’s Report on Internal Control Over Financial Reporting 43 Consolidated Balance Sheets as of December 31, 2011 and 2010 44 Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 45 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2011, 2010 and 2009 46 Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009 47 Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2011, 2010 and 2009 48 Notes to Consolidated Financial Statements 49 41Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of ACCO Brands Corporation:We have audited the accompanying consolidated balance sheets of ACCO Brands Corporation and subsidiaries as of December 31, 2011 and 2010, andthe related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2011. In connection with our audits of the consolidated financial statements, we also audited the related consolidated financialstatement schedule, Schedule II – Valuation and Qualifying Accounts and Reserves. We also have audited ACCO Brands Corporation’s internal control overfinancial reporting as of December 31, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). ACCO Brands Corporation’s management is responsible for these consolidated financialstatements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying management report on internal control over financial reporting. Our responsibility is toexpress an opinion on these consolidated financial statements and financial statement schedule and an opinion on the Company’s internal control overfinancial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whethereffective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements includedexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, the consolidated financial statements and financial statement schedule referred to above present fairly, in all material respects, thefinancial position of ACCO Brands Corporation and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flowsfor each of the years in the three-year period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also in our opinion,ACCO Brands Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteriaestablished in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission./s/ KPMG LLPChicago, IllinoisFebruary 23, 2012 42Table of ContentsMANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGManagement of ACCO Brands Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal controls over financialreporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting isdesigned and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of theCompany’s financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accountingprinciples.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.As required by Section 404 of the Sarbanes-Oxley Act of 2002, management assessed the effectiveness of the Company’s internal control over financialreporting as of December 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (COSO) in Internal Control-Integrated Framework.Based on our assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31,2011.The effectiveness of the Company’s internal control over financial reporting as of December 31, 2011 has been audited by KPMG LLP, an independentregistered public accounting firm, as stated in their report that appears herein. /s/ ROBERT J. KELLER /s/ NEAL V. FENWICKRobert J. Keller Neal V. FenwickChairman of the Board and Executive Vice President andChief Executive Officer Chief Financial Officer(principal executive officer) (principal financial officer)February 23, 2012 February 23, 2012 43Table of ContentsACCO Brands Corporation and SubsidiariesConsolidated Balance Sheets December 31, 2011 December 31, 2010 (in millions of dollars, except share data) Assets Current assets: Cash and cash equivalents $121.2 $83.2 Accounts receivable less allowances for discounts, doubtful accounts and returns of $13.9 and$15.6, respectively 269.5 274.8 Inventories 197.7 205.9 Deferred income taxes 7.6 9.1 Other current assets 26.9 24.0 Assets of discontinued operations — 23.7 Total current assets 622.9 620.7 Total property, plant and equipment 463.3 474.1 Less accumulated depreciation (316.1) (310.9) Property, plant and equipment, net 147.2 163.2 Deferred income taxes 16.7 10.6 Goodwill 135.0 136.9 Identifiable intangibles, net of accumulated amortization of $102.3 and $96.4, respectively 130.4 137.0 Other non-current assets 64.5 71.8 Assets of discontinued operation — 9.4 Total assets $1,116.7 $1,149.6 Liabilities and Stockholders’ Deficit Current liabilities: Current portion of long-term debt $0.2 $0.2 Accounts payable 127.1 110.3 Accrued compensation 24.2 23.9 Accrued customer program liabilities 66.8 72.8 Accrued interest 20.2 22.0 Other current liabilities 66.5 84.1 Liabilities of discontinued operations 1.1 14.6 Total current liabilities 306.1 327.9 Long-term debt 668.8 727.4 Deferred income taxes 85.6 81.2 Pension and post retirement benefit obligations 106.1 74.9 Other non-current liabilities 12.0 12.7 Liabilities of discontinued operations — 5.3 Total liabilities 1,178.6 1,229.4 Stockholders’ deficit: Preferred stock, $0.01 par value, 25,000,000 shares authorized; none issued and outstanding — — Common stock, $0.01 par value, 200,000,000 shares authorized; 55,659,753 and 55,080,463shares issued and 55,475,735 and 54,922,783 outstanding, respectively 0.6 0.6 Treasury stock, 184,018 and 157,680 shares, respectively (1.7) (1.5) Paid-in capital 1,407.4 1,401.1 Accumulated other comprehensive loss (131.0) (86.1) Accumulated deficit (1,337.2) (1,393.9) Total stockholders’ deficit (61.9) (79.8) Total liabilities and stockholders’ deficit $1,116.7 $1,149.6 See notes to consolidated financial statements. 44Table of ContentsACCO Brands Corporation and SubsidiariesConsolidated Statements of Operations Year Ended December 31, (in millions of dollars, except per share data) 2011 2010 2009 Net sales $1,318.4 $1,284.6 $1,233.3 Cost of products sold 903.7 887.5 868.7 Gross profit 414.7 397.1 364.6 Operating costs and expenses: Advertising, selling, general and administrative expenses 293.9 281.2 263.0 Amortization of intangibles 6.3 6.7 7.1 Restructuring (income) charges (0.7) (0.5) 17.4 Intangible asset impairment charges — — 1.7 Total operating costs and expenses 299.5 287.4 289.2 Operating income 115.2 109.7 75.4 Non-operating expense: Interest expense, net 77.2 78.3 67.0 Equity in earnings of joint ventures (8.5) (8.3) (4.4) Other expense, net 3.6 1.2 5.4 Income from continuing operations before income taxes 42.9 38.5 7.4 Income tax expense 24.3 30.7 126.0 Income (loss) from continuing operations 18.6 7.8 (118.6) Income (loss) from discontinued operations, net of income taxes 38.1 4.6 (7.5) Net income (loss) $56.7 $12.4 $(126.1) Per share: Basic earnings (loss) per share: Income (loss) from continuing operations $0.34 $0.14 $(2.18) Income (loss) from discontinued operations 0.69 0.08 (0.14) Basic earnings (loss) per share $1.03 $0.23 $(2.32) Diluted earnings (loss) per share: Income (loss) from continuing operations $0.32 $0.14 $(2.18) Income (loss) from discontinued operations 0.66 0.08 (0.14) Diluted earnings (loss) per share $0.98 $0.22 $(2.32) Weighted average number of shares outstanding: Basic 55.2 54.8 54.5 Diluted 57.6 57.2 54.5 See notes to consolidated financial statements. 45Table of ContentsACCO Brands Corporation and SubsidiariesConsolidated Statements of Comprehensive Income (Loss) Year Ended December 31, (in millions of dollars) 2011 2010 2009 Net income (loss) $56.7 $12.4 $ (126.1) Other comprehensive income (loss), before tax: Unrealized gains (losses) on derivative financial instruments: Losses arising during the period (0.3) (3.1) (4.4) Less: reclassification adjustment for losses included in net income (loss) 4.9 1.8 0.3 Foreign currency translation: Foreign currency translation adjustments (8.9) 11.0 26.7 Less: reclassification adjustment for sale of GBC-Fordigraph Pty Ltd included in net income (loss) (6.1) — — Pension and other postretirement plans: Actuarial gain (loss) arising during the period (46.3) 4.4 (9.7) Other 0.9 3.0 (5.5) Less: amortization of actuarial loss and prior service cost included in net income (loss) 7.8 7.0 4.1 Other comprehensive income (loss), before tax (48.0) 24.1 11.5 Income tax (expense) benefit related to items of other comprehensive income (loss) 3.1 (3.2) (1.0) Comprehensive income (loss) $11.8 $33.3 $(115.6) See notes to consolidated financial statements. 46Table of ContentsACCO Brands Corporation and SubsidiariesConsolidated Statements of Cash Flows Year Ended December 31, (in millions of dollars) 2011 2010 2009 Operating activities Net income (loss) $56.7 $12.4 $(126.1) Deferred income tax provision 3.9 12.3 112.7 (Gain) loss on sale of assets (40.4) (1.5) 0.8 Depreciation 26.5 29.6 32.1 Intangible impairment charges and other non-cash charges 0.1 0.7 6.3 Amortization of debt issuance costs and bond discount 8.2 6.3 6.5 Amortization of intangibles 6.4 6.9 7.2 Stock based compensation 6.3 4.2 3.0 Loss on debt repurchase 2.9 — 4.0 Changes in balance sheet items: Accounts receivable 0.6 (18.5) 41.5 Inventories 5.4 (9.8) 78.7 Other assets 0.2 (5.1) 10.2 Accounts payable 16.8 14.8 (54.9) Accrued expenses and other liabilities (27.8) (2.2) (37.5) Accrued taxes (1.1) 7.7 (8.8) Equity in earnings of joint ventures, net of dividends received (2.9) (2.9) (4.2) Net cash provided by operating activities 61.8 54.9 71.5 Investing activities Additions to property, plant and equipment (13.5) (12.6) (10.3) Assets acquired (1.4) (1.1) (3.4) Proceeds (payments) from sale of discontinued operations 53.5 (3.7) 9.2 Proceeds from the disposition of assets 1.4 2.5 0.6 Net cash provided (used) by investing activities 40.0 (14.9) (3.9) Financing activities Proceeds from long-term borrowings 0.1 1.5 469.3 Repayments of long-term debt (63.0) (0.2) (397.9) Borrowings (repayments) of short-term debt, net — (0.5) (54.2) Payment of Euro debt hedge — — (40.8) Cost of debt issuance — (0.8) (20.6) Exercise of stock options and other (0.2) (0.1) (0.3) Net cash used by financing activities (63.1) (0.1) (44.5) Effect of foreign exchange rate changes on cash (0.7) (0.3) 2.4 Net increase in cash and cash equivalents 38.0 39.6 25.5 Cash and cash equivalents Beginning of year 83.2 43.6 18.1 End of period $121.2 $83.2 $43.6 Cash paid during the year for: Interest $71.9 $70.6 $54.4 Income taxes $27.7 $13.9 $19.7 See notes to consolidated financial statements. 47Table of ContentsACCO Brands Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity (Deficit) (in millions of dollars) CommonStock Paid-inCapital AccumulatedOtherComprehensiveIncome (Loss) TreasuryStock AccumulatedDeficit Total Balance at December 31, 2008 $0.6 $1,394.8 $(117.5) $(1.1) $(1,280.2) $(3.4) Net loss — — — — (126.1) (126.1) Loss on derivative financial instruments, net of tax — — (3.3) — — (3.3) Translation impact, net of tax — — 26.7 — — 26.7 Pension and postretirement adjustment, net of tax — — (12.9) — — (12.9) Stock-based compensation activity — 3.0 — (0.3) — 2.7 Other (0.1) (0.8) — — — (0.9) Balance at December 31, 2009 0.5 1,397.0 (107.0) (1.4) (1,406.3) (117.2) Net income — — — — 12.4 12.4 Loss on derivative financial instruments, net of tax — — (0.5) — — (0.5) Translation impact, net of tax — — 11.0 — — 11.0 Pension and postretirement adjustment, net of tax — — 10.4 — — 10.4 Stock-based compensation activity 0.1 4.2 — (0.1) — 4.2 Other — (0.1) — — — (0.1) Balance at December 31, 2010 0.6 1,401.1 (86.1) (1.5) (1,393.9) (79.8) Net income — — — — 56.7 56.7 Income on derivative financial instruments, net of tax — — 3.7 — — 3.7 Translation impact, net of tax — — (15.0) — — (15.0) Pension and postretirement adjustment, net of tax — — (33.6) — — (33.6) Stock-based compensation activity — 6.3 — (0.2) — 6.1 Balance at December 31, 2011 $0.6 $1,407.4 $(131.0) $(1.7) $(1,337.2) $(61.9) Shares of Capital Stock CommonStock TreasuryStock NetShares Shares at December 31, 2008 54,382,762 (47,256) 54,335,506 Stock issuances—stock based compensation 336,534 (99,849) 236,685 Shares at December 31, 2009 54,719,296 (147,105) 54,572,191 Stock issuances—stock based compensation 361,167 (10,575) 350,592 Shares at December 31, 2010 55,080,463 (157,680) 54,922,783 Stock issuances—stock based compensation 579,290 (26,338) 552,952 Shares at December 31, 2011 55,659,753 (184,018) 55,475,735 See notes to consolidated financial statements. 48Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements1. Basis of PresentationThe management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the consolidated financialstatements and notes contained in this annual report.The consolidated financial statements include the accounts of ACCO Brands Corporation and its domestic and international subsidiaries. Intercompanyaccounts and transactions have been eliminated in consolidation. Our investments in companies that are between 20% and 50% owned are accounted for usingthe equity method of accounting. ACCO Brands has equity investments in the following joint ventures: Pelikan-Artline Pty Ltd (“Pelikan-Artline”) — 50%ownership; and Neschen GBC Graphic Films, LCC (“Neschen”) — 50% ownership. The Company’s share of earnings from equity investments is includedon the line entitled “Equity in earnings of joint ventures” in the consolidated statements of operations. Companies in which our investment exceeds 50% havebeen consolidated.The Company’s former GBC-Fordigraph Pty Ltd (“GBC-Fordigraph Business”) and commercial print finishing businesses are reported indiscontinued operations in the consolidated financial statements and related notes for all periods presented in the consolidated financial statements. For furtherinformation on the Company’s discontinued operations see Note 18, Discontinued Operations.On November 17, 2011, the Company announced the signing of a definitive agreement to merge MeadWestvaco Corporation’s Consumer and OfficeProducts business (“Mead C&OP Business”) into the Company in a transaction that was valued at approximately $860 million at the time the transactionwas announced. The Mead C&OP Business is a leading manufacturer and marketer of school supplies, office products, and planning and organizing tools –including the Mead, Five Star, Trapper Keeper, AT-A-GLANCE, Cambridge, Day Runner, Hilroy, Tilibra and Grafons brands in the U.S., Canadaand Brazil. Upon completion of the transaction, MeadWestvaco shareholders will own 50.5% of the combined company. The transaction is subject toapproval by the Company’s shareholders and the satisfaction of customary closing conditions and regulatory approvals, including a ruling from the U.S.Internal Revenue Service on the tax-free nature of the transaction for MeadWestvaco. The transaction is expected to be completed in the first half of 2012. TheCompany will be the accounting acquirer in the merger and will apply purchase accounting to the assets and liabilities acquired upon consummation of themerger. In connection with this transaction, for the year ended December 31, 2011, the Company has incurred expenses of $5.6 million, which are reported inadvertising, selling, general and administrative expenses.2. Significant Accounting PoliciesNature of BusinessACCO Brands is primarily involved in the manufacturing, marketing and distribution of office products —including traditional and computer-relatedoffice products, supplies, binding and laminating equipment and related consumable supplies, personal computer accessory products, paper-based timemanagement products and presentation aids and products— selling primarily to large resellers. The Company’s subsidiaries operate principally in the U.S,Australia, the U.K. and Canada.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financialstatements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 49®®®®®®Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Cash and Cash EquivalentsHighly liquid investments with an original maturity of three months or less are included in cash and cash equivalents.Allowances for Doubtful Accounts, Discounts and ReturnsTrade receivables are recorded at the stated amount, less allowances for discounts, doubtful accounts and returns. The allowance for doubtful accountsrepresents estimated uncollectible receivables associated with potential customer defaults on contractual obligations, usually due to customers’ potentialinsolvency. The allowances include amounts for certain customers where a risk of default has been specifically identified. In addition, the allowances includesa provision for customer defaults on a general formula basis when it is determined the risk of some default is probable and estimable, but cannot yet beassociated with specific customers. The assessment of the likelihood of customer defaults is based on various factors, including the length of time thereceivables are past due, historical experience and existing economic conditions.The allowance for sales returns represents estimated uncollectible receivables associated with the potential return of products previously sold tocustomers, and is recorded at the time that the sales are recognized. The allowance includes a general provision for product returns based on historical trends.In addition, the allowance includes a reserve for currently authorized customer returns that are considered to be abnormal in comparison to the historical basis.InventoriesInventories are priced at the lower of cost (principally first-in, first-out with minor amounts at average) or market. A reserve is established to adjust thecost of inventory to its net realizable value. Inventory reserves are recorded for obsolete or slow-moving inventory based on assumptions about future demandand marketability of products, the impact of new product introductions and specific identification of items, such as product discontinuance orengineering/material changes. These estimates could vary significantly, either favorably or unfavorably, from actual requirements if future economicconditions, customer inventory levels or competitive conditions differ from expectations.Property, Plant and EquipmentProperty, plant and equipment are carried at cost. Depreciation is provided, principally on a straight-line basis, over the estimated useful lives of theassets. Gains or losses resulting from dispositions are included in operating income. Betterments and renewals, that improve and extend the life of an asset arecapitalized; maintenance and repair costs are expensed. Purchased computer software is capitalized and amortized over the software’s useful life. The followingtable shows estimated useful lives of property, plant and equipment: Buildings 40 to 50 yearsLeasehold improvements Lesser of lease term or the life of the assetMachinery, equipment and furniture 3 to 10 yearsLong-Lived AssetsWe test long-lived assets for impairment whenever events or changes in circumstances indicate that the assets’ carrying amount is not recoverable fromits undiscounted cash flows. When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventualdisposition of the 50Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) asset or asset group to the carrying amount of a long-lived asset or asset group. The cash flows are based on our best estimate at the time of future cash flow,derived from the most recent business projections. If this comparison indicates that there is impairment, the amount of the impairment is typically calculatedusing discounted expected future cash flows. The discount rate applied to these cash flows is based on our weighted average cost of capital, computed byselecting market rates at the valuation dates for debt and equity that are reflective of the risks associated with an investment in the Company’s industry asestimated by using comparable publicly traded companies.Intangible AssetsIntangible assets are comprised primarily of indefinite-lived intangible assets acquired and purchased intangible assets arising from the application ofpurchase accounting. Indefinite-lived intangible assets are not amortized, but are evaluated annually to determine whether the indefinite useful life isappropriate. Indefinite-lived intangibles are tested for impairment on an annual basis and written down where impaired. Certain of the Company’s trade nameshave been assigned an indefinite life as these trade names are currently anticipated to contribute cash flows to the Company indefinitely.We review indefinite-lived intangibles for impairment annually, and whenever market or business events indicate there may be a potential impact on aparticular intangible. We consider the implications of both external factors (e.g., market growth, pricing, competition, and technology) and internal factors(e.g., product costs, margins, support expenses, capital investment) and their potential impact on cash flows for each business in both the near and long term,as well as their impact on any identifiable intangible asset associated with the business. Based on recent business results, consideration of significant externaland internal factors, and the resulting business projections, indefinite lived intangible assets are reviewed to determine whether they are likely to remainindefinite lived, or whether a finite life is more appropriate. Finite lived intangibles are amortized over 15, 23 or 30 years.GoodwillGoodwill has been recorded on the Company’s balance sheet and represents the excess of the cost of the acquisitions when compared to the fair value ofthe net assets acquired. The Company tests goodwill for impairment at least annually, normally in the second quarter and on an interim basis if an event orcircumstance indicates that it is more likely than not that an impairment loss has been incurred. Recoverability of goodwill is evaluated using a two-stepprocess. In the first step, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unit exceeds the carrying value of thenet assets assigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carrying value of the net assets assigned toa reporting unit exceeds the fair value of a reporting unit, the second step of the impairment test is performed in order to determine the implied fair value of areporting unit’s goodwill. Determining the implied fair value of goodwill requires valuation of a reporting unit’s tangible and intangible assets and liabilities ina manner similar to the allocation of purchase price in a business combination. If the carrying value of a reporting unit’s goodwill exceeds its implied fairvalue, goodwill is deemed impaired and is written down to the extent of the difference. Similar to the review for impairment of other long-lived assets, theresulting fair value determination is significantly impacted by estimates of future sales for the Company’s products, capital needs, economic trends and otherfactors.Employee Benefit PlansThe Company and its subsidiaries provide a range of benefits to their employees and retired employees, including pension, postretirement, post-employment and health care benefits. The Company records annual 51Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) amounts relating to these plans based on calculations, which include various actuarial assumptions, including discount rates, assumed rates of return on planassets, compensation increases, turnover rates and health care cost trend rates. The Company reviews its actuarial assumptions on an annual basis andmakes modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. The effect of the modifications are generallyrecorded and amortized over future periods.Income TaxesDeferred tax liabilities or assets are established for temporary differences between financial and tax reporting bases and are subsequently adjusted toreflect changes in tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is recorded to reduce deferred tax assets to anamount that is more likely than not to be realized. Facts and circumstances may change that cause the Company to revise the conclusions on its ability torealize certain net operating losses and other deferred tax attributes.The amount of income taxes that we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome ofany uncertain tax position is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. We believe that we haveadequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorableadjustments to our estimated tax liabilities in the period the assessments are revised or resolved.Revenue RecognitionWe recognize revenue from product sales when earned, net of applicable provisions for discounts, return and allowances. We consider revenue to berealized or realizable and earned when all of the following criteria are met: title and risk of loss have passed to the customer, persuasive evidence of anarrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. We also provide for our estimate ofpotential bad debt at the time of revenue recognition.Cost of Products SoldCost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in themanufacturing and distribution process, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials andpackaging used in the production processes.Advertising, Selling, General and Administrative ExpensesAdvertising, selling, general and administrative 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 outsidethe manufacturing and distribution functions (e.g., finance, human resources, information technology, etc.).Customer Program CostsCustomer program costs include, but are not limited to, sales rebates which are generally tied to achievement of certain sales volume levels, in-storepromotional allowances, shared media and customer catalog allowances and other cooperative advertising arrangements, and freight allowance programs. TheCompany 52Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) generally recognizes customer program costs as a deduction to gross sales at the time that the associated revenue is recognized. Certain customer incentives thatdo not directly relate to future revenues are expensed when initiated.In addition, accrued customer program liabilities principally include, but are not limited to, sales volume rebates, promotional allowances, shared mediaand customer catalog allowances and other cooperative advertising arrangements, and freight allowances as discussed above.Shipping and HandlingThe Company reflects all amounts billed to customers for shipping and handling in net sales and the costs incurred from shipping and handlingproduct (including costs to ship and move product from the seller’s place of business to the buyer’s place of business, as well as costs to store, move andprepare products for shipment) in cost of products sold.Warranty ReservesThe Company offers its customers various warranty terms based on the type of product that is sold. Estimated future obligations related to productssold under these warranty terms are provided by charges to operations in the period in which the related revenue is recognized.Advertising CostsAdvertising costs amounted to $98.1 million, $92.9 million and $92.7 million for the years ended December 31, 2011, 2010 and 2009, respectively.These costs include, but are not limited to, cooperative advertising and promotional allowances as described in “Customer Program Costs” above, and areprincipally expensed as incurred.Research and DevelopmentResearch and development expenses, which amounted to $20.5 million, $24.0 million and $18.6 million for the years ended December 31, 2011, 2010and 2009, respectively, are classified as general and administrative expenses and are charged to expense as incurred.Stock-Based CompensationOur primary types of share-based compensation consist of stock options, stock-settled appreciation rights, restricted stock unit awards, andperformance stock unit awards. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized asexpense over the requisite service period. Where awards are made with non-substantive vesting periods (for example, where a portion of the award vests uponretirement eligibility), we estimate and recognize expense based on the period from the grant date to the date on which the employee is retirement eligible.Foreign Currency TranslationForeign currency balance sheet accounts are translated into U.S. dollars at the rates of exchange at the balance sheet date. Income and expenses aretranslated at the average rates of exchange in effect during the period. The related translation adjustments are made directly to a separate component ofaccumulated other 53Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) comprehensive income (loss) in stockholders’ equity. Some transactions are made in currencies different from an entity’s functional currency. Gains andlosses on these foreign currency transactions are included in income as they occur.Derivative Financial InstrumentsThe Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. If the derivativeis designated as a fair value hedge and is effective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk arerecognized in earnings in the same period. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of thederivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item affects earnings. Ineffective portions ofchanges in the fair value of cash flow hedges are recognized in earnings.Certain forecasted transactions, assets and liabilities are exposed to foreign currency risk. The Company continually monitors its foreign currencyexposures in order to maximize the overall effectiveness of its foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro andPound sterling.Recent Accounting PronouncementsIn June 2011 the Financial Accounting Standards Board (“FASB”) issued an update, Accounting Standards Update (“ASU”) No. 2011-5, to existingstandards on comprehensive income (Accounting Standards Codification (“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 iseffective for annual and interim periods ending beginning after December 15, 2011, and early adoption is permitted. In December 2011 the FASB issued anupdate to ASU No. 2011-5, ASU No. 2011-12, which was issued to defer the effective date for amendments to the reclassifications of items out ofaccumulated other comprehensive income in ASU No. 2011-05. The Company has adopted these new standards as of December 2011. The Company hasprovided the required disclosure in its Consolidated Statements of Comprehensive Income.In September 2011, the FASB issued an update, ASU No. 2011-08, to existing standards on intangibles – goodwill and other ASC Topic 350. ASUNo. 2011-08 was issued to simplify the testing of goodwill for impairment by allowing an optional qualitative factors test to determine whether it is more likelythan not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-stepgoodwill impairment test already included in ASC Topic 350. ASU No. 2011-08 is effective for annual and interim goodwill tests performed for fiscal yearsbeginning after December 15, 2011. The Company will adopt the standard in 2012, and it will not have a significant impact on its consolidated financialstatements or results of operations.In December 2011 the FASB issued an update, ASU No. 2011-11 to existing standards regarding the disclosures involving the offsetting of assets andliabilities relating to financial instruments. ASU No. 2011-11 was issued to improve disclosures regarding offsetting and related arrangements to enable usersof financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-011 is effective for annual and interim periodsbeginning on or after January 1, 2013. The Company is currently assessing the impact on its current disclosures. 54Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) 3. Long-term Debt and Short-term BorrowingsNotes payable and long-term debt consisted of the following at December 31, 2011 and 2010: (in millions of dollars) 2011 2010 Senior Secured Notes, due March 2015, net of discount(1) (fixed interest rate of 10.625%) $420.9 $454.3 U.S. Dollar Senior Subordinated Notes, due August 2015 (fixed interest rate of 7.625%) 246.3 271.3 Other borrowings 1.8 2.0 Total debt 669.0 727.6 Less: current portion (0.2) (0.2) Total long-term debt $668.8 $727.4 (1)Represents unamortized original issue discount of $4.2 million and $5.7 million, as of December 31, 2011 and 2010, respectively, which is amortizablethrough March 15, 2015.During 2011, the Company repurchased $34.9 million of its Senior Secured Notes and $25.0 million of its Senior Subordinated Notes. The Companypaid a $3.0 million premium on the repurchase of the Company’s Senior Secured Notes, which is included in other expense, net in the ConsolidatedStatements of Operations.Senior Secured NotesOn September 30, 2009, the Company issued an aggregate principal amount of $460.0 million of Senior Secured Notes with semi-annual interestpayments payable March 15 and September 15 of each year. The Senior Secured Notes were issued at 98.5% of par value, equating to an effective yield tomaturity of approximately 11%. The proceeds from the sale of the Senior Secured Notes were $453.1 million, after deducting an original issue discount of$6.9 million. The Senior Secured Notes were offered and sold in a private placement to qualified institutional buyers in the U.S. pursuant to Rule 144A underthe Securities Act of 1933, as amended (the “Securities Act”) and to non-U.S. persons outside the U.S under Regulation S under the Securities Act. In May,2010 the Company completed an exchange offer for the Senior Secured Notes sold in the private placement for new Senior Secured Notes that have beenregistered under the Securities Act of 1933. The new notes have terms that are substantially identical to the old notes.The indenture governing the Senior Secured Notes does not contain financial performance covenants. However, that indenture does contain covenantslimiting, among other things, the ability to incur additional debt, create liens, pay dividends on capital stock or repurchase capital stock or indebtedness,make certain investments, enter into certain types of transactions with affiliates, restrict or limit dividend or other payments by our restricted subsidiaries tothe Company or other restricted subsidiaries, use assets as security in other transactions, sell certain assets or enter into consolidations with or into othercompanies.Guarantees and SecurityThe Senior Secured Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by all of our existing and future domesticsubsidiaries, with certain exceptions. The Senior Secured Notes and the related guarantees will rank equally in right of payment with all existing and futuresenior debt and will rank senior in right of payment to all existing and future subordinated debt.The Senior Secured Notes and the guarantees are secured on a first-priority basis by a lien on substantially all of the Company’s and the guarantors’present and future assets (other than accounts receivable, inventory, 55Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) deposit accounts and certain other assets) and up to 65% of the present and future equity interests of certain of the Company’s and the guarantors directlyowned foreign subsidiaries, in each case subject to certain exceptions and customary permitted liens. The Senior Secured Notes and the guarantees also aresecured on a second-priority basis by a lien on the assets that secure the Company’s and the guarantors’ obligations under the ABL Facility, includingaccounts receivable, inventory, and other assets excluded as first-lien assets under the Senior Secured Notes.Redemption OptionsThe Company may redeem the Senior Secured Notes, in whole or in part, at any time on or after (i) September 15, 2012, at a redemption price equal to105.3% of the principal amount of the Senior Secured Notes redeemed, (ii) September 15, 2013, at a redemption price equal to 102.7% of the principal amountof the Senior Secured Notes redeemed, or (iii) September 15, 2014, at a redemption price equal to 100% of the principal amount of the Senior Secured Notesredeemed, in each case plus accrued and unpaid interest, including any additional interest. At any time on or before September 15, 2012, the Company mayredeem up to 35% of the aggregate principal amount of the Senior Secured Notes with the net proceeds of qualified equity offerings at a redemption price of110.6% plus accrued and unpaid interest, including any additional interest. At any time the Company may also repurchase the Senior Secured Notes throughopen market or privately negotiated repurchases.Requirements to Offer to RepurchaseIf the Company experiences certain change of control events, the Company must offer to repurchase the Senior Secured Notes at a repurchase price equalto 101% of the principal amount of the Senior Secured Notes repurchased plus accrued and unpaid interest to the repurchase date. If the Company or itssubsidiaries sell assets under specified circumstances, the Company must offer to repurchase the Senior Secured Notes at a repurchase price equal to 100% ofthe principal amount of the Senior Secured Notes being repurchased, plus accrued and unpaid interest to the repurchase date.Asset-Based Revolving Credit Facility (ABL Facility)On September 30, 2009, the Company, and certain domestic and foreign subsidiaries (collectively, the “Borrowers”) entered into a four-year seniorsecured asset-based revolving credit facility maturing in September 2013 with Deutsche Bank AG, as administrative agent, a co-collateral agent and a lender,and five other lenders, providing for revolving credit financing of up to $175.0 million, including a $40.0 million sub-limit for letters of credit and, subject tocertain conditions, an optional $50.0 million additional credit capacity using an accordion feature. Amounts borrowed under the ABL Facility by theCompany and its domestic subsidiaries are guaranteed by each of the Company’s domestic subsidiaries that guarantee the Senior Secured Notes, and amountsborrowed under the ABL Facility by the Company’s foreign subsidiaries are guaranteed by each of the Company, its domestic subsidiaries that guarantee theSenior Secured Notes and certain foreign subsidiaries.The Borrowers’ ability to borrow under the ABL Facility is limited to a borrowing base equal to 85% of eligible accounts receivable plus up to the lesserof (1) 65% of the lower of cost or fair market value of eligible inventory and (2) 85% of the net orderly liquidation value of eligible inventory, and is subject toother conditions, limitations and reserve requirements.Interest rates under the ABL Facility are based on the London Interbank Offered Rate (LIBOR). Pricing is subject to quarterly adjustment based on theaverage availability under the ABL Facility during the prior quarter. The range of borrowing costs under the pricing grid is LIBOR plus 3.75% to LIBOR plus4.25% with a LIBOR rate floor of 1.50%. The Company is required to pay a quarterly commitment fee on the unused portion of the ABL facility ranging from0.5% to 1.0%. 56Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Borrowings under the ABL Facility are secured on a first priority basis by all accounts receivable, inventory and cash of the Company and itssubsidiaries organized in the U.S. and certain foreign subsidiaries, and on a second priority basis by property and equipment of the Company and itssubsidiaries organized in the U.S. and the other assets that secure the Senior Secured Notes on a first priority basis.The ABL Facility contains customary terms and conditions, including among other things, limitations on liens and indebtedness, asset sales,repurchase of Senior Subordinated Notes, and intercompany transactions. A springing fixed charge financial covenant would be triggered if the excessavailability under the ABL Facility falls below $20.0 million or 15% of total commitments. The ABL Facility also contains bank account restrictions thatapply in the event that the Company’s excess availability fails to meet certain thresholds. As of December 31, 2011, the amount available for borrowings underthe Company’s ABL Facility was $165.5 million (allowing for $9.5 million of letters of credit outstanding on that date). There were no borrowingsoutstanding under the Company’s ABL Facility as of December 31, 2011.Senior Subordinated NotesThe indenture governing the Senior Subordinated Notes does not contain financial performance covenants. However, that indenture does containcovenants limiting, among other things, the Company’s and its subsidiaries ability to, incur additional debt, pay dividends on capital stock or repurchasecapital stock or indebtedness, make certain investments, enter into certain types of transactions with affiliates, make dividend or other payments by ourrestricted subsidiaries to ACCO Brands, use assets as security in other transactions, sell certain assets or enter into consolidations with or into othercompanies.Compliance with Loan CovenantsAs of and for the year ended December 31, 2011, the Company was in compliance with all applicable loan covenants.The Company’s ABL Facility would not be affected by a change in its credit rating.4. Pension and Other Retiree BenefitsThe Company has a number of pension plans, principally in the U.K. and the U.S. The plans provide for payment of retirement benefits, mainlycommencing between the ages of 60 and 65, and also for payment of certain disability and severance benefits. After meeting certain qualifications, anemployee acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length ofservice and earnings. Cash contributions to the plans are made as necessary to ensure legal funding requirements are satisfied.The Company provides postretirement health care and life insurance benefits to certain employees and retirees in the U.S. and certain employee groupsoutside of the U.S. These benefit plans have been frozen to new participants. Many employees and retirees outside of the U.S. are covered by governmenthealth care programs.On January 20, 2009, the Company’s Board of Directors approved plan amendments to temporarily freeze the Company’s U.S. pension and non-qualified supplemental retirement plans effective March 7, 2009. No additional benefits will accrue under these plans after that date until further action by theBoard of Directors. As a result, the Company recognized a curtailment gain of $1.0 million in operating income during 2009. 57Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The following table sets forth the Company’s defined benefit pension plans and other postretirement benefit plans funded status and the amountsrecognized in the Company’s consolidated balance sheets: Pension Benefits Postretirement U.S. International (in millions of dollars) 2011 2010 2011 2010 2011 2010 Change in projected benefit obligation (PBO) Projected benefit obligation at beginning of year $162.5 $154.4 $268.3 $271.1 $13.3 $13.4 Service cost — — 2.1 2.3 0.2 0.2 Interest cost 8.6 8.9 14.7 14.6 0.6 0.7 Actuarial loss 9.5 7.5 14.2 5.1 — — Participants’ contributions — — 0.9 1.0 0.2 0.2 Benefits paid (8.7) (8.3) (13.0) (11.2) (0.9) (1.0) Curtailment gain — — (0.6) — — — Foreign exchange rate changes — — (2.0) (12.0) — (0.2) Other items — — — (2.6) — — Projected benefit obligation at end of year 171.9 162.5 284.6 268.3 13.4 13.3 Change in plan assets Fair value of plan assets at beginning of year 124.8 107.9 242.3 234.5 — — Actual return on plan assets (3.2) 18.0 7.0 24.3 — — Employer contributions 6.2 7.2 6.6 6.5 0.7 0.8 Participants’ contributions — — 0.9 1.0 0.2 0.2 Benefits paid (8.7) (8.3) (13.0) (11.2) (0.9) (1.0) Foreign exchange rate changes — — (1.1) (10.2) — — Other — — — (2.6) — — Fair value of plan assets at end of year 119.1 124.8 242.7 242.3 — — Funded status (Fair value of plan assets less PBO) $(52.8) $(37.7) $(41.9) $(26.0) $(13.4) $(13.3) Amounts recognized in the consolidated balance sheet consist of: Other current liabilities $0.2 $0.2 $0.6 $0.6 $1.2 $1.3 Accrued benefit liability 52.6 37.5 41.3 25.4 12.2 12.0 Components of accumulated other comprehensive income, net of tax: Unrecognized prior service cost (benefit) — — 0.4 0.5 — (0.1) Unrecognized actuarial (gain) loss 56.1 36.9 62.2 48.4 (2.6) (3.2) All plans have projected benefit obligations in excess of plan assets.Of the amounts included within accumulated other comprehensive income, the Company expects to recognize the following pre-tax amounts ascomponents of net periodic benefit cost during 2012: Pension Benefits Postretirement (in millions of dollars) U.S. International Prior service cost $— $0.2 $— Actuarial (gain) loss 6.2 5.4 (0.5) $6.2 $5.6 $(0.5) 58Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The accumulated benefit obligation for all defined benefit pension plans was $443.6 million and $428.8 million at December 31, 2011 and 2010,respectively.The following table sets out information for pension plans with an accumulated benefit obligation in excess of plan assets: U.S. International (in millions of dollars) 2011 2010 2011 2010 Projected benefit obligation $171.9 $162.5 $272.8 $62.1 Accumulated benefit obligation 171.9 162.5 260.2 60.3 Fair value of plan assets 119.1 124.8 230.9 46.0 The following table sets out the components of net periodic benefit cost: Pension Benefits Postretirement U.S. International (in millions of dollars) 2011 2010 2009 201 1 2010 2009 2011 2010 2009 Service cost $— $— $1.3 $2.1 $2.3 $2.4 $0.2 $0.2 $0.1 Interest cost 8.6 8.9 9.1 14.7 14.6 13.7 0.6 0.7 0.8 Expected return on plan assets (10.7) (10.4) (10.7) (16.0) (15.1) (12.8) — — — Amortization of prior service cost — — — 0.2 0.1 0.2 — — — Amortization of net loss (gain) 4.3 3.0 1.2 3.9 4.8 3.4 (0.6) (0.9) (0.9) Curtailment — — (1.0) (0.2) — (0.5) — — — Net periodic benefit cost $2.2 $1.5 $(0.1) $4.7 $6.7 $6.4 $0.2 $— $— Other changes in plan assets and benefit obligations that were recognized in other comprehensive income during the years ended December 31, 2011,2010 and 2009, respectively, were as follows: Pension Benefits Postretirement U.S. International (in millions of dollars) 2011 2010 2009 2011 2010 2009 2011 2010 2009 Current year actuarial (gain)/loss $23.5 $(0.2) $(16.1) $22.8 $(4.2) $26.1 $— $— $(0.3) Amortization of actuarial gain (loss) (4.3) (3.0) (1.2) (3.9) (4.8) (3.6) 0.6 0.9 1.0 Amortization of prior service cost — — — (0.2) (0.1) (0.3) — — — Curtailment gain — — 0.2 — — — — — — Exchange rate adjustment — — — (1.0) (3.2) 5.8 — 0.1 (0.4) Total recognized in other comprehensive income $19.2 $(3.2) $(17.1) $17.7 $(12.3) $28.0 $0.6 $1.0 $0.3 Total recognized in net periodic benefit cost and othercomprehensive income $21.4 $(1.7) $(17.2) $22.4 $(5.6) $34.4 $0.8 $1.0 $0.3 59Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) AssumptionsWeighted average assumptions used to determine benefit obligations for years ended December 31, 2011, 2010 and 2009 were: Pension Benefits Postretirement U.S. International 2011 2010 2009 2011 2010 2009 2011 2010 2009 Discount rate 5.0% 5.5% 5.9% 4.7% 5.4% 5.8% 4.5% 5.0% 5.9% Rate of compensation increase N/A N/A N/A 3.6% 4.4% 4.5% — — — Weighted average assumptions used to determine net cost for years ended December 31, 2011, 2010 and 2009 were: Pension Benefits Postretirement U.S. International 2011 2010 2009 2011 2010 2009 2011 2010 2009 Discount rate 5.5% 5.9% 6.5% 5.4% 5.8% 6.5% 5.0% 5.9% 6.5% Expected long-term rate of return 8.2% 8.2% 8.2% 6.4% 6.8% 6.3% — — — Rate of compensation increase N/A N/A 4.0% 4.4% 4.5% 3.6% — — — Weighted average health care cost trend rates used to determine postretirement benefit obligations and net cost at December 31, 2011, 2010 and 2009were: Postretirement Benefits 2011 2010 2009 Health care cost trend rate assumed for next year 7% 8% 7% Rate that the cost trend rate is assumed to decline (the ultimate trend rate) 5% 5% 5% Year that the rate reaches the ultimate trend rate 2020 2020 2020 Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one-percentage-point change inassumed health care cost trend rates would have the following effects: 1-Percentage- 1-Percentage- (in millions of dollars) Point Increase Point Decrease Effect on total of service and interest cost $0.2 $(0.2) Effect on postretirement benefit obligation 1.3 (1.1) Plan AssetsThe investment strategy for the Company is to optimize investment returns through a diversified portfolio of investments, taking into considerationunderlying plan liabilities and asset volatility. Each plan has a different target asset allocation, which is reviewed periodically and is based on the underlyingliability structure. The target asset allocation for our U.S. plan is 65% in equity securities, 20% in fixed income securities and 15% in alternate assets. Thetarget asset allocation for non-U.S. plans is set by the local plan trustees. 60Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The Company’s pension plan weighted average asset allocations at December 31, 2011 and 2010 were as follows: 2011 2010 U.S. International U.S. International Asset category Equity securities 63% 48% 68% 48% Fixed income 32 42 32 42 Real estate — 4 — 4 Other (1) 5 6 — 6 Total 100% 100% 100% 100% (1)Insurance contracts, multi-strategy hedge funds and cash and cash equivalents for certain of our plans.U.S. Pension Plan AssetsFair value measurements of our U.S. pension plan assets by asset category at December 31, 2011 are as follows: (in millions of dollars) Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2011 Common stocks $6.9 $— $— $6.9 Mutual funds 68.3 — — 68.3 Government debt securities — 10.9 — 10.9 Corporate debt securities — 8.0 — 8.0 Asset-backed securities — 7.8 — 7.8 Multi-strategy hedge funds — 5.4 — 5.4 Government mortgage-backed securities — 4.0 — 4.0 Common collective trust funds, collateralized mortgage obligations, mortgagebacked securities, and other fixed income securities — 7.8 — 7.8 Total $75.2 $43.9 $— $119.1 61Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Fair value measurements of our U.S. pension plan assets by asset category at December 31, 2010 are as follows: (in millions of dollars) Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2010 Common stocks $6.4 $— $— $6.4 Mutual funds 78.5 — — 78.5 Common collective trust funds — 11.5 — 11.5 Government debt securities — 7.5 — 7.5 Corporate debt securities — 7.4 — 7.4 Collateralized mortgage obligations — 5.0 — 5.0 Asset-backed securities, mortgage backed securities, and other fixed incomesecurities — 8.5 — 8.5 Total $84.9 $39.9 $— $124.8 Mutual funds and common stocks: The fair values of mutual fund and common stock fund investments are determined by obtaining quoted prices onnationally recognized securities exchanges (level 1 inputs).Debt securities: Fixed income securities, such as corporate and government bonds, collateralized mortgage obligations, asset-backed securities, andother debt securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, includingmarket interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable (level 2 inputs).Multi-strategy hedge funds: The fair values of participation units held in multi-strategy hedge funds are based on their net asset values, as reported bythe managers of the funds and are based on the daily closing prices of the underlying investments (level 2 inputs).Common collective trusts: The fair values of participation units held in common collective trusts are based on their net asset values, as reported by themanagers of the common collective trusts and as supported by the unit prices of actual purchase and sale transactions occurring as of or close to the financialstatement date (level 2 inputs).International Pension Plans AssetsFair value measurements of our international pension plans assets by asset category at December 31, 2011 are as follows: (in millions of dollars) Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2011 Cash and cash equivalents $3.2 $— $— $3.2 Equity securities 116.6 — — 116.6 Government debt securities — 9.0 — 9.0 Corporate debt securities — 82.6 — 82.6 Other debt securities — 9.7 — 9.7 Real estate — 10.0 — 10.0 Insurance contracts — 9.7 — 9.7 Multi-strategy hedge funds — 1.9 — 1.9 Total $119.8 $122.9 $— $242.7 62Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Fair value measurements of our international pension plans assets by asset category at December 31, 2010 are as follows: (in millions of dollars) Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2010 Cash and cash equivalents $4.8 $— $— $4.8 Equity securities 116.8 — — 116.8 Government debt securities — 19.0 — 19.0 Corporate debt securities — 74.5 — 74.5 Other debt securities — 8.7 — 8.7 Real estate — 9.7 — 9.7 Insurance contracts — 8.8 — 8.8 Total $121.6 $120.7 $— $242.3 Equity securities: The fair values of equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (level 1inputs).Debt securities: Fixed income securities, such as corporate and government bonds and other debt securities consisting of index linked securities. Thesedebt securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, including marketinterest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable (level 2 inputs).Real estate: Real estate consists of managed real estate investment trust securities (level 2 inputs).Insurance contracts: Valued at contributions made, plus earnings, less participant withdrawals and administrative expenses, which approximate fairvalue (level 2 inputs).Multi-strategy hedge funds: The fair values of participation units held in multi-strategy hedge funds are based on their net asset values, as reported bythe managers of the funds and are based on the daily closing prices of the underlying investments (level 2 inputs).Cash ContributionsThe Company expects to contribute $16.3 million to its pension plans in 2012.The Company sponsors a number of defined contribution plans. Contributions are determined under various formulas. Costs related to such plansamounted to $6.6 million, $6.1 million and $3.6 million in 2011, 2010 and 2009, respectively. In January 2009, the Company’s Board of Directorsapproved amendments to the Company’s U.S. 401(k) plan to suspend employer matching contributions for all participants effective February 21, 2009. TheCompany reinstated its employer matching contributions for all 401(k) plan participants in October, 2009. This action resulted in pre-tax savings ofapproximately $3.2 million during 2009. 63Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The following table presents estimated future benefit payments for the next ten fiscal years: Pension Postretirement (in millions of dollars) Benefits Benefits 2012 $20.3 $1.2 2013 $20.9 $1.3 2014 $21.5 $1.2 2015 $22.1 $1.1 2016 $23.1 $1.1 Years 2017 — 2021 $127.9 $4.6 5. Stock-Based CompensationThe Company has two share-based compensation plans under which a total of 5,265,000 shares may be issued under awards to key employees andnon-employee directors.The following table summarizes the impact of all stock-based compensation on the Company’s consolidated statements of operations for the years endedDecember 31, 2011, 2010 and 2009. (in millions of dollars) 2011 2010 2009 Advertising, selling, general and administrative expense $6.3 $4.2 $2.8 Restructuring charges — — 0.2 Operating income $6.3 $4.2 $3.0 There was no capitalization of stock based compensation expense.Stock-based compensation by award type (including stock options, stock-settled appreciation rights (“SSARs”), restricted stock units (“RSUs”) andperformance stock units (“PSUs”)) for the years ended December 31, 2011, 2010 and 2009 are as follows: (in millions of dollars) 2011 2010 2009 Stock option compensation expense $0.6 $0.4 $0.8 SSAR compensation expense 0.2 0.2 0.2 RSU compensation expense 3.0 2.8 1.8 PSU compensation expense 2.5 0.8 0.2 Total stock-based compensation $6.3 $4.2 $3.0 Stock Options and SSAR AwardsThe exercise price of each stock option and SSAR equals or exceeds the market price of the Company’s stock on the date of grant. Options/SSARs cangenerally be exercised over a maximum term of up to seven years. Stock options/SSARs outstanding as of December 31, 2011 generally vest ratably over threeyears. During 2009, the Company granted only SSAR awards. There were no SSAR or option awards issued during 2010. During 2011, the 64Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Company granted only option awards. The fair value of each option/SSAR grant is estimated on the date of grant using the Black-Scholes option-pricingmodel using the weighted average assumptions as outlined in the following table: Year Ended December 31, 2011 2009 Weighted average expected lives 4.5 years 4.5 years Weighted average risk-free interest rate 1.65% 2.1% Weighted average expected volatility 50.7% 41.5% Expected dividend yield 0.0% 0.0% Weighted average grant date fair value $3.85 $0.24 The Company has utilized historical volatility for a pool of peer companies for a period of time that is comparable to the expected life of the option/SSARto determine volatility assumptions. The risk-free interest rate assumption is based upon the average daily closing rates during the quarter for U.S. treasurynotes that have a life which approximates the expected life of the option/SSAR. The dividend yield assumption is based on the Company’s expectation ofdividend payouts. The expected life of employee stock options/SSARs represents the weighted-average period the stock options/SSARs are expected to remainoutstanding. The weighted average expected lives reflect the application of the simplified method.A summary of the changes in stock options/SSARs outstanding under the Company’s stock compensation plans during the year ended December 31,2011 is presented below: NumberOutstanding WeightedAverageExercisePrice Weighted AverageRemainingContractual Term AggregateIntrinsicValue Outstanding at December 31, 2010 6,292,920 $11.56 Granted 645,800 $8.90 Exercised (533,729) $1.04 Lapsed (296,535) $11.05 Outstanding at December 31, 2011 6,108,456 $12.23 2.8 years $16.2 million Exercisable shares at December 31, 2011 4,686,445 $14.57 2.4 years $8.9 million Options/SSARs vested or expected to vest 5,988,270 $12.40 2.7 years $15.5 million The Company received cash of $0.1 million from the exercise of stock options for the year ended December 31, 2011 for which the aggregate intrinsicvalue of options exercised was $0.0 million. No stock options were exercised in 2010 and 2009. The aggregate intrinsic value of SSARs exercised during theyears ended December 31, 2011, and 2010 totaled $3.0 million and $2.1 million, respectively. No SSARs were exercised in 2009. The fair value of optionsand SSARs vested during the years ended December 31, 2011, 2010 and 2009 was $0.6 million, $1.1 million and $1.7 million, respectively. As ofDecember 31, 2011, the Company had unrecognized compensation expense related to stock options and SSARs of $1.9 million and $0.1 million,respectively. The unrecognized compensation expense related to stock options and SSARs will be recognized over a weighted-average period of 2.8 years and0.6 years, respectively.Stock Unit AwardsThe ACCO Brands Corporation 2011 Amended and Restated Incentive Plan provides for stock based awards in the form of RSUs, PSUs, incentiveand non-qualified stock options, and stock appreciation rights, any of which may be granted alone or with other types of awards and dividend equivalents.RSUs vest over a pre-determined period of time, generally three to four years from the date of grant. PSUs also vest over a 65Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) pre-determined period of time, minimally three years, but are further subject to the achievement of certain business performance criteria in future periods.Based upon the level of achieved performance, the number of shares actually awarded can vary from 0% to 150% of the original grant.There were 1,242,672 RSUs outstanding at December 31, 2011. All outstanding RSUs as of December 31, 2011 vest within four years of the date ofgrant. Also outstanding at December 31, 2011 were 1,153,520 PSUs. All outstanding PSUs as of December 31, 2011 vest at the end of their respectiveperformance periods subject to achievement of the performance targets associated with such awards. Upon vesting, all of the remaining PSU awards will beconverted into the right to receive one share of common stock of the Company for each unit that vests. The cost of these awards is determined using the fairvalue of the shares on the date of grant, and compensation expense is recognized over the period during which the employees provide the requisite service to theCompany. The Company generally recognizes compensation expense for its PSU awards ratably over the performance period based on management’sjudgment of the likelihood that performance measures will be attained. The Company generally recognizes compensation expense for its RSU awards ratablyover the service period. A summary of the changes in the stock unit awards outstanding under the Company’s equity compensation plans during 2011 ispresented below: StockUnits WeightedAverageGrantDate FairValue Unvested at December 31, 2010 1,136,158 $14.41 Granted 1,624,316 $8.73 Vested (131,329) $18.73 Forfeited and cancelled (237,785) $8.15 Unvested at December 31, 2011 2,391,360 $8.80 The weighted-average grant date fair value of our stock unit awards was $8.73, $7.06, and $7.58 for the years ended December 31, 2011, 2010, and2009, respectively. The fair value of stock unit awards that vested during the years ended December 31, 2011, 2010 and 2009 was $2.5 million, $1.3 millionand $4.5 million, respectively. As of December 31, 2011, the Company had unrecognized compensation expense related to RSUs and PSUs of $4.9 millionand $5.4 million, respectively. The unrecognized compensation expense related to RSUs and PSUs will be recognized over a weighted-average period of 3.0years and 1.7 years, respectively. The Company will satisfy the requirement for delivering the common shares for stock-based plans by issuing new shares.6. InventoriesInventories are stated at the lower of cost or market value. The components of inventories were as follows: December 31, (in millions of dollars) 2011 2010 Raw materials $23.9 $28.3 Work in process 3.6 4.5 Finished goods 170.2 173.1 Total inventories $197.7 $205.9 66Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) 7. Property, Plant and EquipmentProperty, plant and equipment, net consisted of: December 31, (in millions of dollars) 2011 2010 Land and improvements $13.6 $13.7 Buildings and improvements to leaseholds 115.5 116.6 Machinery and equipment 321.7 333.1 Construction in progress 12.5 10.7 463.3 474.1 Less: accumulated depreciation (316.1) (310.9) Net property, plant and equipment (1) $147.2 $163.2 (1)Net property, plant and equipment as of December 31, 2011 and 2010 contained $17.0 million and $25.6 million of computer software assets, whichare classified within machinery and equipment. Amortization of software costs was $9.5 million, $10.1 million and $9.7 million for the years endedDecember 31, 2011, 2010 and 2009, respectively.8. Goodwill and Identifiable Intangible AssetsGoodwillChanges in the net carrying amount of goodwill by segment were as follows: (in millions of dollars) ACCOBrandsAmericas ACCOBrandsInternational ComputerProductsGroup Total Balance at December 31, 2009 $89.0 $40.8 $6.8 $136.6 Translation 1.2 (0.9) — 0.3 Balance at December 31, 2010 90.2 39.9 6.8 136.9 Translation (1.6) (0.3) — (1.9) Balance at December 31, 2011 $88.6 $39.6 $6.8 $135.0 Goodwill $219.5 $123.8 $6.8 $350.1 Accumulated impairment losses (130.9) (84.2) — (215.1) Balance at December 31, 2011 $88.6 $39.6 $6.8 $135.0 The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. The Companyhas determined that its reporting units are its ACCO Brands Americas, ACCO Brands International and Computer Products Group segments based on itsorganizational structure and the financial information that is provided to and reviewed by management. The Company tests goodwill for impairment annuallyand whenever events or circumstances make it more likely than not that an impairment may have occurred. Goodwill is tested for impairment using a two-stepprocess. In the first step, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unit exceeds the carrying value of thenet assets assigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carrying value of the net assets assigned toa reporting unit exceeds the fair value of a 67Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) reporting unit, the second step of the impairment test is performed in order to determine the implied fair value of a reporting unit’s goodwill. Determining theimplied fair value of goodwill requires valuation of a reporting unit’s tangible and intangible assets and liabilities in a manner similar to the allocation ofpurchase price in a business combination. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, goodwill is deemed impaired and iswritten down to the extent of the difference. Based upon our most recent annual impairment test completed during 2011, the fair value of goodwill of each ofour reporting units was substantially in excess of its related carrying value.Given the current economic environment and the uncertainties regarding the impact on our business, there can be no assurance that our estimates andassumptions made for purposes of our impairment testing in 2011 will prove to be accurate predictions of the future. If our assumptions regarding forecastedrevenue or margin growth rates are not achieved, we may be required to record additional impairment charges in future periods, whether in connection with ournext annual impairment testing in the second quarter of 2012 or prior to that, if any such change constitutes a triggering event outside of the quarter from whenthe annual impairment test is performed. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whethersuch charge would be material.Identifiable IntangiblesThe gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2011 and December 31, 2010 areas follows: As of December 31, 2011 As of December 31, 2010 (in millions of dollars) GrossCarryingAmounts AccumulatedAmortization NetBookValue GrossCarryingAmounts AccumulatedAmortization NetBookValue Indefinite-lived intangible assets: Trade names $138.2 $(44.5)(1) $93.7 $138.5 $(44.5)(1) $94.0 Amortizable intangible assets: Trade names 58.0 (27.8) 30.2 58.2 (25.3) 32.9 Customer and contractual relationships 26.1 (21.5) 4.6 26.3 (19.5) 6.8 Patents/proprietary technology 10.4 (8.5) 1.9 10.4 (7.1) 3.3 Subtotal 94.5 (57.8) 36.7 94.9 (51.9) 43.0 Total identifiable intangibles $232.7 $(102.3) $130.4 $233.4 $(96.4) $137.0 (1)Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time future amortizationceased.The Company’s intangible amortization was $6.3 million, $6.7 million and $7.1 million for the years ended December 31, 2011, 2010 and 2009,respectively.Estimated amortization expense for amortizable intangible assets for the next five years is as follows: (in millions of dollars) 2012 2013 2014 2015 2016 Estimated amortization expense $5.0 $3.9 $3.4 $3.1 $2.8 68Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) 2009As of the end of the second quarter of 2009, in connection with its annual goodwill impairment test, the Company tested its other indefinite-livedintangibles, consisting of its indefinite-lived trade names. The Company estimated the fair value of its trade names by performing discounted cash flowanalyses based on the relief-from-royalty approach. This approach treats the trade name as if it were licensed by the Company rather than owned, andcalculates its value based on the discounted cash flow of the projected license payments. A key assumption in our fair value estimate is the discount rateutilized. We selected a discount rate of 17.0 percent. The analysis resulted in an impairment charge of $1.7 million, of which $0.9 million was recorded in theACCO Brands Americas segment and $0.8 million was recorded in the ACCO Brands International segment.As discussed further in Note 10, Income Taxes, during 2009, the Company recorded a $108.1 million non-cash charge to establish a valuationallowance on the Company’s U.S. deferred tax assets. In connection with this non-cash charge, the Company reviewed certain of its long-lived tangible andamortizable intangible assets and determined that the forecasted undiscounted cash flows related to these asset groups were in excess of their carrying valuesand, therefore, these assets were not impaired.9. Restructuring and Other ChargesRestructuringThe Company had initiated significant restructuring actions associated with the merger of ACCO Brands Corporation and General Binding Corporationthat resulted in the closure or consolidation of facilities that were engaged in manufacturing and distributing the Company’s products, primarily in NorthAmerica and Europe, or which resulted in a reduction in overall employee headcount. The Company’s restructuring actions are now complete and no newinitiatives were expensed in the years ended December 31, 2011 or 2010. During the year ended December 31, 2009, the Company recorded pre-taxrestructuring and asset impairment charges of $17.4 million. Employee termination costs and termination of lease agreements include the release of reserves nolonger required.A summary of the activity in the restructuring accounts and a reconciliation of the liability for, and as of, the year ended December 31, 2011 is asfollows: (in millions of dollars) Balance atDecember 31, 2010 Provision(Income) CashExpenditures Non-cashItems/Currency Change Balance atDecember 31, 2011 Rationalization of operations Employee termination costs $2.2 $(0.6) $(1.4) $0.1 $0.3 Termination of lease agreements 3.0 (0.5) (1.9) 0.1 0.7 Sub-total 5.2 (1.1) (3.3) 0.2 1.0 Asset impairments/net loss on disposal ofassets resulting from restructuringactivities — 0.4 (0.1) (0.1) 0.2 Total restructuring liability $5.2 $(0.7) $(3.4) $0.1 $1.2 Management expects the $0.3 million employee termination costs balance to be substantially paid within the next six months. Cash payments associatedwith lease termination costs of $0.7 million are expected to continue until the last lease terminates in 2013. 69Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) A summary of the activity in the restructuring accounts and a reconciliation of the liability for, and as of, the year ended December 31, 2010 is asfollows: (in millions of dollars) Balance atDecember 31,2009 Provision(Income) CashExpenditures Non-cashItems/CurrencyChange Balance atDecember 31,2010 Rationalization of operations Employee termination costs $8.0 $(1.5) $(3.9) $(0.4) $2.2 Termination of lease agreements 4.4 0.2 (1.5) (0.1) 3.0 Sub-total 12.4 (1.3) (5.4) (0.5) 5.2 Asset impairments/net loss on disposal of assets resulting fromrestructuring activities — 0.8 — (0.8) — Total restructuring liability $12.4 $(0.5) $(5.4) $(1.3) $5.2 A summary of the activity in the restructuring accounts and a reconciliation of the liability for, and as of, the year ended December 31, 2009 is asfollows: (in millions of dollars) Balance atDecember 31, 2008 Provision CashExpenditures Non-cashItems/Currency Change Balance atDecember 31, 2009 Rationalization of operations Employee termination costs $21.8 $11.9 $(26.4) $0.7 $8.0 Termination of lease agreements 3.1 3.3 (2.3) 0.3 4.4 Other — 0.3 (0.1) (0.2) — Sub-total 24.9 15.5 (28.8) 0.8 12.4 Asset impairments/net loss on disposal ofassets resulting from restructuringactivities — 1.9 — (1.9) — Total restructuring liability $24.9 $17.4 $(28.8) $(1.1) $12.4 (1)Includes $0.2 million of stock-based compensation expense related to terminated employees.In addition to the restructuring described above, in the first quarter of 2011 the Company initiated plans to rationalize its European operations. Theassociated costs primarily relate to employee terminations, which were accounted for as regular business expenses and were largely offset by associatedsavings realized during the remainder of the 2011 year. These costs totaled $4.5 million during the year ended December 31, 2011 and are included withinadvertising, 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 year ended December 31, 2011 is asfollows: (in millions of dollars) Balance atDecember 31, 2010 Provision CashExpenditures Non-cashItems/Currency Change Balance atDecember 31, 2011 Employee termination costs/liability $— $4.5 $(4.2) $0.1 $0.4 70(1)Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Management expects the $0.4 million of employee termination costs to be substantially paid within the next three months.Other ChargesIn addition to the recognition of restructuring costs, the Company also recognized other charges, incremental to the cost of its underlying restructuringactions that do not qualify as restructuring. These charges include redundant warehousing or storage costs during the transition to a new distribution center,equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of exited facilities, certain costs associated with theCompany’s debt refinancing and employee retention incentives. The Company did not incur any other charges, as described above, during the years endedDecember 31, 2011 or 2010. Within cost of products sold on the Consolidated Statements of Operations for the year ended December 31, 2009, these chargestotaled $3.4 million. Within advertising, selling, general and administrative expenses on the Consolidated Statements of Operations for the year endedDecember 31, 2009, these charges totaled $1.2 million.10. Income TaxesThe components of income (loss) before income taxes from continuing operations are as follows: 2011 2010 2009 (in millions of dollars) Domestic operations $(48.6) $(38.5) $(38.6) Foreign operations 91.5 77.0 46.0 Total $42.9 $38.5 $7.4 The reconciliation of income taxes computed at the U.S. federal statutory income tax rate to the Company’s effective income tax rate for continuingoperations is as follows: (in millions of dollars) 2011 2010 2009 Income tax at US statutory rate $15.0 $13.5 $2.5 State, local and other tax net of federal benefit (1.3) (0.8) (1.0) U.S. effect of foreign dividends and earnings 11.6 4.9 23.6 Unrealized foreign currency gain on intercompany debt 0.9 8.6 1.0 Foreign income taxed at a lower effective rate (7.7) (6.7) (5.5) Increase in valuation allowance 5.4 15.7 109.9 Correction of deferred tax error at foreign subsidiary — (2.8) — Change in prior year tax estimates 1.0 (1.3) (1.6) Miscellaneous (0.6) (0.4) (2.9) Income taxes as reported $24.3 $30.7 $126.0 For 2011, the Company recorded income tax expense from continuing operations of $24.3 million on income before taxes of $42.9 million. Thiscompares to income tax expense from continuing operations of $30.7 million on income before taxes of $38.5 million for 2010. Included in the results for 2010is 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 errorincreased net income by $2.8 million through an increase in deferred tax assets and a corresponding reduction in income tax expense. The Companydetermined that the impact of the error was not significant to any current or prior individual period, and accordingly a restatement of prior period amounts wasnot determined to be necessary. 71Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The high effective rates for 2011 and 2010 are due to an increase in the valuation allowance of $5.4 million, including $2.8 million reversal of avaluation reserve in the U.K., and $15.7 million, respectively, because no tax benefit is being provided on losses incurred in the U.S. and certain foreignjurisdictions where valuation allowances are recorded against certain tax benefits. Also contributing to the high effective tax rate for 2010 is an $8.6 millionexpense recorded to reflect the income tax impact of foreign currency fluctuations on an intercompany debt obligation, partially offset by the benefit of the $2.8million out-of-period adjustment recorded in the second quarter.During 2009, the Company established a valuation allowance against its domestic deferred tax assets to reduce them to the value more likely than not tobe realized with a corresponding non-cash charge of $108.1 million to the provision for income taxes.The effective tax rates for discontinued operations were 13.4% and 29.6% in 2011 and 2010, respectively. The lower rate in 2011 reflects the benefit ofthe goodwill tax basis and prior year capital loss carry-forwards that reduced the taxable gain on the sale of the GBC–Fordigraph Business in Australia.The U.S. federal statute of limitations remains open for the years 2008 and forward. Foreign and U.S. state jurisdictions have statutes of limitationsgenerally ranging from 3 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2006 forward) and theU.K. (2008 forward). The Company is currently under examination in the U.S. and in certain foreign jurisdictions.The components of the income tax expense from continuing operations are as follows: (in millions of dollars) 2011 2010 2009 Current expense (benefit) Federal $0.3 $0.6 $(0.6) Foreign 19.8 18.1 13.9 Total current income tax expense 20.1 18.7 13.3 Deferred expense (benefit) Federal and other 4.9 4.8 111.6 Foreign (0.7) 7.2 1.1 Total deferred income tax expense 4.2 12.0 112.7 Total income tax expense $24.3 $30.7 $126.0 72Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The components of deferred tax assets (liabilities) are as follows: (in millions of dollars) 2011 2010 Deferred tax assets Compensation and benefits $14.7 $10.0 Pension 34.2 25.1 Inventory 5.4 5.6 Other reserves 7.2 7.7 Accounts receivable 3.7 4.3 Capital loss carryforwards 10.3 10.3 Foreign tax credit carryforwards 20.5 20.5 Net operating loss carryforwards 129.3 128.2 Depreciation — 0.4 Miscellaneous 3.3 2.3 Gross deferred income tax assets 228.6 214.4 Valuation allowance (204,3) (193.2) Net deferred tax assets 24.3 21.2 Deferred tax liabilities Depreciation (2.0) — Identifiable intangibles (73.0) (69.8) Unrealized foreign currency gain on intercompany debt (10.6) (9.6) Miscellaneous — (3.3) Gross deferred tax liabilities (85.6) (82.7) Net deferred tax liabilities $(61.3) $(61.5) Deferred income taxes are not provided on certain undistributed earnings of foreign subsidiaries that are expected to be permanently reinvested in thosecompanies, aggregating to approximately $517 million at December 31, 2011 and $495 million at December 31, 2010. If these amounts were distributed to theU.S., in the form of a dividend or otherwise, the Company would be subject to additional U.S. income taxes. Determination of the amount of unrecognizeddeferred income tax liabilities on these earnings is not practicable.At December 31, 2011, $390.7 million of net operating loss carryforwards and $29.4 million of capital loss carryforwards are available to reducefuture taxable income of domestic and international companies. These loss carryforwards expire in the years 2012 through 2030 or have an unlimited carryoverperiod.The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income taxes in its results of operations. As ofDecember 31, 2011, the Company had $0.4 million accrued for interest and penalties.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (in millions of dollars) 2011 2010 Balance at January 1 $5.7 $6.0 Additions for tax positions of prior years 0.1 0.2 Settlements (0.3) (0.5) Balance at December 31 $5.5 $5.7 73Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) As of December 31, 2011 the amount of unrecognized tax benefits decreased to $5.5 million, of which $1.5 million would affect the Company’seffective tax rate, if recognized. The Company expects the amount of unrecognized tax benefits to change within the next twelve months, but these changes arenot expected to have a significant impact on the Company’s results of operations or financial position. None of the positions included in the unrecognized taxbenefit relate to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.11. Earnings per ShareTotal outstanding shares as of December 31, 2011 and 2010 were 55.5 million and 54.9 million, respectively. The calculation of basic earnings percommon share is based on the weighted average number of common shares outstanding in the year, or period, over which they were outstanding. TheCompany’s calculation of diluted earnings per common share assumes that any common shares outstanding were increased by shares that would be issuedupon 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 purchasedby the Company with the related proceeds, including compensation expense measured but not yet recognized, net of tax. (in millions) 2011 2010 2009 Weighted average number of common shares outstanding — basic 55.2 54.8 54.5 Employee stock options 0.1 0.1 — Stock-settled stock appreciation rights 1.7 2.1 1.7 Restricted stock units 0.6 0.2 0.1 Adjusted weighted-average shares and assumed conversions — diluted 57.6 57.2 56.3 Awards of shares representing approximately 4.3 million, 4.1 million and 4.3 million as of December 31, 2011, 2010 and 2009, respectively, ofpotentially dilutive shares of common stock were outstanding and are not included in the computation of dilutive earnings per share as their effect would havebeen anti-dilutive because their exercise prices were higher than the average market price during the period.12. Derivative Financial InstrumentsThe Company is exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. The Company entersinto financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financialinstruments are major financial institutions. The Company continually monitors its foreign currency exposures in order to maximize the overall effectivenessof its foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar and Pound sterling. TheCompany is subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performanceby counterparties to financial instrument contracts. Management continues to monitor the status of the Company’s counterparties and will take action, asappropriate, to further manage its counterparty credit risk. There are no credit contingency features in our derivative financial instruments.On the date in which the Company enters into a derivative, the derivative is designated as a hedge of the identified exposure. The Company measures theeffectiveness of its hedging relationships both at hedge inception and on an ongoing basis. 74Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Forward Currency ContractsThe Company enters into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominatedinventory purchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe, Australia, Canada, Mexicoand Japan.Forward currency contracts used to hedge foreign denominated inventory purchases are designated as a cash flow hedge. Unrealized gains and losses onthese contracts for inventory purchases are deferred in other comprehensive income until the contracts are settled and the underlying hedged transactions arerecognized, at which time the deferred gains or losses will be reported in the “Cost of products sold” line in the consolidated statements of operations. As ofDecember 31, 2011 and December 31, 2010, the Company had cash flow designated foreign exchange contracts outstanding with a U.S. dollar equivalentnotional value of $71.9 million and $92.9 million, respectively.Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on thesederivative instruments are recognized within other expense, net in the consolidated statements of operations and are largely offset by the changes in the fairvalue of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, and do not extend beyond2012. As of December 31, 2011 and 2010, the Company had undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional valueof $75.6 million and $92.7 million, respectively.The following table summarizes the fair value of the Company’s derivative financial instruments as of December 31, 2011 and 2010, respectively. Fair Value of Derivative Instruments Derivative Assets Derivative Liabilities (in millions of dollars) Balance SheetLocation Dec. 31,2011 Dec. 31,2010 Balance SheetLocation Dec. 31,2011 Dec. 31,2010 Derivatives designated as hedging instruments: Foreign exchange contracts Other currentassets $3.0 $0.7 Other currentliabilities $0.2 $2.4 Derivatives not designated as hedging instruments: Foreign exchange contracts Other currentassets 0.8 1.4 Other currentliabilities 1.2 0.8 Total derivatives $3.8 $2.1 $1.4 $3.2 75Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The following table summarizes the pre-tax effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations forthe years ended December 31, 2011 and 2010, respectively. The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the ConsolidatedStatements of Operations for the Years Ended December 31, 2011 and 2010 Amount of(Gain) LossRecognized inOCI (EffectivePortion) Location of(Gain) LossReclassified fromOCI to Income Amount of(Gain)LossReclassifiedfromAOCI toIncome(EffectivePortion) Location of (Gain) LossRecognized in Income Amount of(Gain)LossRecognizedin Income(IneffectivePortion) (in millions of dollars) 2011 2010 2011 2010 2011 2010 Cash flow hedges: Foreign exchange contracts 0.3 $3.1 Cost of products sold $4.4 $0.8 Cost of products sold $— $— Total $0.3 $3.1 $4.4 $0.8 $— $— (in millions of dollars) The Effect of DerivativesNot Designated as Hedging Instrumentson the Consolidated Statements of Operations Location of (Gain) LossRecognized inIncome onDerivatives Amount of(Gain) LossRecognizedin IncomeYear EndedDec. 31, 2011 2100 Foreign exchange contracts Other (income) expense $0.9 $(1.8) 13. Fair Value of Financial InstrumentsThe authoritative guidance for fair value measurements requires disclosure that establishes a framework for measuring fair value and expandsdisclosure 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 anorderly transaction between market participants at the measurement date (exit price). The guidance classifies the inputs used to measure fair value into thefollowing hierarchy: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 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 liabilityLevel 3 Unobservable inputs for the asset or liabilityThe Company utilizes the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on thelowest level of input that is significant to the fair value measurement. 76Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) 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’sfinancial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2011 and 2010, respectively: December 31,2011 December 31,2010 Assets: Forward currency contracts $3.8 $2.1 Liabilities: Forward currency contracts $1.4 $3.2 The Company’s forward currency contracts are included in Other Current Assets or Other Current Liabilities and mature within 12 months. Theforward foreign currency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by the banks or foreigncurrency 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 dueprincipally to their short maturities. The carrying amount of total debt was $669.0 million and $727.6 million and the estimated fair value of total debt was$727.2 million and $794.5 million at December 31, 2011 and 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.14. Accumulated Other Comprehensive Income (Loss)Comprehensive income is defined as net income (loss) and other changes in stockholders’ equity from transactions and other events from sources otherthan stockholders. The components of, and changes in, accumulated other comprehensive income (loss) were: (in millions of dollars) DerivativeFinancialInstruments ForeignCurrencyAdjustments UnrecognizedPension and OtherPostretirementBenefit Costs AccumulatedOtherComprehensiveIncome (Loss) Balance at December 31, 2009 $(1.0) $(13.1) $(92.9) $(107.0) Changed during the year (net of taxes of $(3.2)) (0.5) 11.0 10.4 20.9 Balance at December 31, 2010 (1.5) (2.1) (82.5) (86.1) Changed during the year (net of taxes of $3.1) 3.7 (15.0) (33.6) (44.9) Balance at December 31, 2011 $2.2 $(17.1) $(116.1) $(131.0) 15. Information on Business SegmentsThe Company’s business segments are aligned along geographic markets. The Company’s three business segments consist of ACCO Brands Americas,ACCO Brands International and Computer Products Group.ACCO Brands Americas and ACCO Brands InternationalThese two segments manufacture, source and sell traditional office products and supplies and document finishing solutions. ACCO Brands Americascomprises the North, Central and South American markets and ACCO Brands International comprises the rest of the world, principally Europe, Australiaand Asia-Pacific. 77Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Examples of our traditional office products and supplies are staplers, staples, punches, ring binders, trimmers, sheet protectors, hanging file folders,clips and fasteners, data binders, dry-erase boards, dry-erase markers, easels, bulletin boards, overhead projectors, transparencies, laser pointers andscreens. These products are sold under leading brands including Quartet, Rexel, Swingline, Wilson Jones, Marbig, NOBO, ACCO, Derwent andEastlight. Examples of our document finishing solutions are binding, lamination and punching equipment, binding and lamination supplies, report covers,archival report covers and shredders. These products are sold primarily under the GBC brand. We also provide machine maintenance and repair servicessold under the GBC brand. Included in the ACCO Brands Americas segment are personal organization tools, including time management products, primarilysold 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 thatthe 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 tobusiness end-users, which generally seek premium office products that have added value or ease of use features and a reputation for reliability, performanceand professional appearance. Some of our document finishing products are sold directly to high volume end-users and commercial reprographic centers andindirectly to lower-volume consumers worldwide. Approximately two-thirds of the Day-Timer business is sold through the direct channel, which marketsproduct through periodic sales catalogs and ships product directly to our end-user customers. The remainder of the business sells to large resellers andcommercial dealers.Computer Products GroupThe Computer Product Group designs, distributes, markets and sells accessories for laptop and desktop computers and smart phones and tablets.These accessories primarily include security locks, power adapters, input devices such as mice and keyboards, laptop computer carrying cases, hubs anddocking stations, ergonomic devices and technology accessories for smart phones and tablets. The Computer Products Group sells mostly under theKensington, Microsaver and ClickSafe brand names, with the majority of its revenue coming from the U.S. and Western Europe.All of our computer products are manufactured to our specifications by third-party suppliers, principally in Asia, and are stored and distributed fromour regional facilities. Our computer products are sold primarily to consumer electronics retailers, information technology value-added resellers, originalequipment manufacturers and office products retailers.Financial information by reportable segment is set forth below.Net sales by business segment for the years ended December 31, 2011, 2010 and 2009 are as follows: (in millions of dollars) 2011 2010 2009 ACCO Brands Americas $684.9 $688.3 $671.5 ACCO Brands International 443.2 419.3 398.8 Computer Products Group 190.3 177.0 163.0 Net sales $1,318.4 $1,284.6 $1,233.3 78®®®®®®®®Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Operating income by business segment for the years ended December 31, 2011, 2010 and 2009 are as follows (a): (in millions of dollars) 2011 2010 2009 ACCO Brands Americas (b) $50.7 $56.3 $38.6 ACCO Brands International (b) 45.6 31.5 23.0 Computer Products Group 47.1 43.0 31.7 Segment operating income 143.4 130.8 93.3 Corporate (28.2) (21.1) (17.9) Operating income 115.2 109.7 75.4 Interest expense 77.2 78.3 67.0 Equity in earnings of joint ventures (8.5) (8.3) (4.4) Other expense, net 3.6 1.2 5.4 Income from continuing operations before income taxes $42.9 $38.5 $7.4 (a)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, generaland administrative expenses; iv) less amortization of intangibles; and v) less restructuring, and intangible asset impairment charges. (b)The table below summarizes the intangible asset impairment charges during 2009. For further information of the impairment charges see Note 8,Goodwill and Identifiable Intangible Assets. (in millions of dollars) 2009 Segment: ACCO Brands Americas $0.9 ACCO Brands International 0.8 Computer Products Group — Total Continuing Operations $1.7 Segment assets:The following table presents the measure of segment assets used by the Company’s chief operating decision maker. December 31, 2011 2010 (in millions of dollars) ACCO Brands Americas (c) $304.8 $320.3 ACCO Brands International (c) 250.3 269.2 Computer Products Group (c) 85.5 82.7 Total segment assets 640.6 672.2 Assets of discontinued operations — 33.1 Unallocated assets 468.9 437.3 Corporate (c) 7.2 7.0 Total assets $1,116.7 $1,149.6 79Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) (c)Represents total assets, excluding: goodwill and identifiable intangibles resulting from business acquisitions, intercompany balances, cash, deferredtaxes, prepaid pension assets, prepaid debt issuance costs and joint ventures accounted for on an equity basis.As a supplement to the presentation of segment assets presented above, the table below presents segment assets, including the allocation of identifiableintangible assets and goodwill resulting from business combinations (d). December 31, (in millions of dollars) 2011 2010 ACCO Brands Americas (d) $476.7 $497.6 ACCO Brands International (d) 328.9 350.3 Computer Products Group (d) 100.4 98.3 Total segment assets 906.0 946.2 Assets of discontinued operations — 33.1 Unallocated assets 203.5 163.3 Corporate (d) 7.2 7.0 Total assets $1,116.7 $1,149.6 (d)Represents total assets, excluding: intercompany balances, cash, deferred taxes, prepaid pension assets, prepaid debt issuance costs and joint venturesaccounted for on an equity basis.Property, plant and equipment, net by geographic region are as follows: (in millions of dollars) 2011 2010 U.S. $76.2 $86.6 U.K. 23.8 24.2 Australia 17.5 18.3 Portugal 5.5 6.8 Other countries 24.2 27.3 Property, plant and equipment $147.2 $163.2 Net sales by geographic region are as follows (e): (in millions of dollars) 2011 2010 2009 U.S. $621.3 $633.0 $619.6 Australia 143.0 137.0 120.1 U.K. 115.6 107.3 105.7 Canada 105.2 97.8 87.6 Other countries 333.3 309.5 300.3 Net sales $1,318.4 $1,284.6 $1,233.3 (e)Net sales are attributed to geographic areas based on the location of the selling company. 80Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Major CustomersSales to the Company’s five largest customers totaled $508.2 million, $496.4 million and $466.4 million in the years ended December 31, 2011, 2010and 2009, respectively. Our sales to Staples, Inc. were $175.9 million (13%), $166.8 million (13%) and $159.8 (13%) in the years ended December 31,2011, 2010 and 2009, respectively. Our sales to Office Depot Inc. were $138.9 million (11%), $141.0 (11%) and $137.0 (11%) in the years endedDecember 31, 2011, 2010 and 2009, respectively. Sales to no other customer exceeded 10% of annual sales.A significant percentage of the Company’s sales is to customers engaged in the office products resale industry. Concentration of credit risk with respectto trade accounts receivable is partially mitigated because a large number of geographically diverse customers make up each operating companies’ domesticand international customer base, thus spreading the credit risk. At December 31, 2011, 2010 and 2009, the Company’s top five trade account receivablestotaled $116.0 million, $118.9 million and $107.3 million, respectively.16. Joint Venture InvestmentsSummarized below is aggregated financial information for the Company’s joint ventures, Pelikan-Artline Pty Ltd and Neschen GBC Graphics Films,LLC, which are accounted for under the equity method. Accordingly, the Company has recorded its proportionate share of earnings or losses on the lineentitled “Equity in earnings of joint ventures” in the consolidated statements of operations. The Company’s share of the net assets of the joint ventures areincluded within “Other non-current assets” in the Condensed Consolidated Balance Sheets. Year Ended December 31, (in millions of dollars) 2011 2010 2009 Net sales $165.6 $151.8 $134.9 Gross profit 94.6 85.8 71.6 Operating income 24.3 23.0 13.4 Net income 16.9 16.3 8.8 December 31, 2011 2010 Current assets $94.3 $89.6 Non-current assets 37.1 37.9 Current liabilities 40.0 37.6 Non-current liabilities 16.7 23.8 17. Commitments and ContingenciesPending LitigationThe Company and its subsidiaries are defendants in various claims and legal proceedings associated with their business and operations. It is notpossible to predict the outcome of the pending actions, but management believes that there are meritorious defenses to these actions and that these actions ifadjudicated or settled in a manner adverse to the Company, would not have a material adverse effect upon the results of operations, cash flows or financialcondition of the Company. 81Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Lease Commitments (in millions of dollars) 2012 $19.7 2013 13.3 2014 9.6 2015 7.7 2016 6.5 Remainder 6.8 Total minimum rental payments $63.6 Total rental expense reported in the Company’s statement of operations for all non-cancelable operating leases (reduced by minor amounts fromsubleases) amounted to $22.0 million, $23.2 million and $24.7 million for the years ended December 31, 2011, 2010 and 2009, respectively.Unconditional Purchase CommitmentsFuture minimum payments under unconditional purchase commitments, primarily for inventory purchase commitments at December 31, 2011 are asfollows: (in millions of dollars) 2012 $26.0 2013 0.3 2014 0.2 2015 0.2 2016 0.2 Thereafter — $26.9 EnvironmentalThe Company is subject to laws and regulations relating to the protection of the environment. While it is not possible to quantify with certainty thepotential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that the Company’s subsidiaries mayundertake in the future, in the opinion of management, compliance with the present environmental protection laws, before taking into account any estimatedrecoveries from third parties, will not have a material adverse effect upon the results of operations, cash flows or financial condition of the Company.18. Discontinued OperationsIn June of 2011, and with effect from May 31, 2011, the Company sold its GBC-Fordigraph Business to The Neopost Group. The Australia-basedbusiness was formerly part of the ACCO Brands International segment and is included in the financial statements as discontinued operations. The GBC-Fordigraph Business represented $45.9 million in annual net sales for the year ended December 31, 2010. The Company has received final proceeds of $52.9million inclusive of working capital adjustments and selling costs. In connection with this transaction, in 2011, the Company recorded a gain on sale of$41.9 million ($36.8 million after- tax).Also included in discontinued operations are the results of the Company’s commercial print finishing business, which was sold during the secondquarter of 2009. The sale resulted in a loss recorded in the year ended 82Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) December 31, 2009 of $0.8 million. During the years ended December 31, 2011 and 2010, the Company recorded expenses of $0.4 million and $0.1 million,respectively, primarily related to litigation costs associated with the wind-down of the discontinued operations.The operating results and financial position of discontinued operations are as follows: (in millions of dollars, except per share data) 2011 2010 2009 Operating Results: Net sales $19.9 $45.9 $68.6 Income (loss) from operations before income taxes 2.5 6.6 (4.3) Gain (loss) on sale before income tax 41.5 (0.1) (0.8) Provision for income taxes 5.9 1.9 2.4 Income (loss) from discontinued operations $38.1 $4.6 $(7.5) Per share: Basic income (loss) from discontinued operations $0.69 $0.08 $(0.14) Diluted income (loss) from discontinued operations $0.66 $0.08 $(0.14) (1)During the fourth quarter of 2010, the Company completed the sale of a property formerly occupied by its commercial print finishing business,resulting in a gain on sale of $1.7 million. During 2009, the Company recorded an impairment charge of $3.3 million ($1.8 million after-tax) to reflect achange in the estimate of fair value less the cost to dispose of its commercial print finishing business. (in millions of dollars) December 31,2011 December 31,2010 Financial Position: Current assets $— $23.7 Long-term assets — 9.4 Total assets $— $33.1 Current liabilities (2) $1.1 $14.6 Long-term liabilities — 5.3 Total liabilities $1.1 $19.9 (2)Liabilities remaining as of December 31, 2011 consist only of litigation accruals. 83(1)Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) 19. Quarterly Financial Information (Unaudited)The following is an analysis of certain items in the consolidated statements of operations by quarter for 2011 and 2010: (in millions of dollars, except per share data) 1 Quarter 2 Quarter 3 Quarter 4 Quarter 2011 Net sales $298.4 $330.2 $339.1 $350.7 Gross profit 89.2 105.5 107.1 112.9 Operating income 13.3 30.6 35.4 35.9 Income (loss) from continuing operations (9.0) 6.3 11.9 9.4 Income (loss) from discontinued operations 0.9 37.4 (0.2) — Net income (loss) $(8.1) $43.7 $11.7 $9.4 Basic earnings per common share: Income (loss) from continuing operations $(0.16) $0.11 $0.22 $0.17 Income (loss) from discontinued operations 0.02 0.68 — — Net income (loss) (0.15) 0.79 0.21 0.17 Diluted earnings per common share: Income (loss) from continuing operations $(0.16) $0.11 $0.21 $0.16 Income (loss) from discontinued operations 0.02 0.64 — — Net income (loss) (0.15) 0.75 0.20 0.16 2010 Net sales $300.5 $305.2 $319.4 $359.5 Gross profit 91.0 94.5 97.8 113.8 Operating income 20.5 25.0 30.0 34.2 Income (loss) from continuing operations (5.2) 4.3 4.4 4.3 Income from discontinued operations 0.5 0.6 1.0 2.5 Net income (loss) $(4.7) $4.9 $5.4 $6.8 Basic earnings per common share: Income (loss) from continuing operations $(0.10) $0.08 $0.08 $0.08 Income from discontinued operations 0.01 0.01 0.02 0.05 Net income (loss) (0.09) 0.09 0.10 0.12 Diluted earnings per common share: Income (loss) from continuing operations $(0.10) $0.08 $0.08 $0.07 Income from discontinued operations 0.01 0.01 0.02 0.04 Net income (loss) (0.09) 0.09 0.09 0.12 20. Condensed Consolidated Financial InformationThe Company’s 100% owned domestic subsidiaries are required to jointly and severally, fully and unconditionally guarantee the notes issued in 2005.For further information on the guarantee see Note 3, Long-term Debt and Short-term Borrowings. Rather than filing separate financial statements for eachguarantor subsidiary with the Securities and Exchange Commission, the Company has elected to present the following consolidating financial statements,which detail the results of operations for the years ended December 31, 2011, 2010 and 2009, cash flows for the years ended December 31, 2011, 2010 and2009 and financial position as of December 31, 2011 and 2010 of the Company and its guarantor and non-guarantor subsidiaries (in each case carryinginvestments under the equity method), and the eliminations necessary to arrive at the reported amounts included in the consolidated financial statements of theCompany. 84stndrdthTable of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Condensed Consolidating Balance Sheets December 31, 2011 (in millions of dollars) Parent Guarantors Non-Guarantors Eliminations Consolidated Assets Current assets: Cash and cash equivalents $62.0 $(1.2) $60.4 $— $121.2 Accounts receivable, net — 90.6 178.9 — 269.5 Inventories — 97.5 100.2 — 197.7 Receivables from affiliates 19.7 0.8 41.2 (61.7) — Deferred income taxes 2.4 — 5.2 — 7.6 Other current assets 5.5 9.3 12.1 — 26.9 Total current assets 89.6 197.0 398.0 (61.7) 622.9 Property, plant and equipment, net 0.6 75.6 71.0 — 147.2 Deferred income taxes 1.0 — 15.7 — 16.7 Goodwill — 70.5 64.5 — 135.0 Identifiable intangibles, net 57.8 50.3 22.3 — 130.4 Other non-current assets 13.7 5.2 45.6 — 64.5 Investment in, long term receivable from affiliates 727.8 722.0 200.0 (1,649.8) — Total assets $890.5 $1,120.6 $817.1 $(1,711.5) $1,116.7 Liabilities and Stockholders’ (Deficit) Equity Current liabilities: Current portion of long-term debt $0.1 $0.1 $— $— $0.2 Accounts payable — 52.6 74.5 — 127.1 Accrued compensation 1.7 9.6 12.9 — 24.2 Accrued customer programs liabilities — 23.4 43.4 — 66.8 Accrued interest 20.2 — — — 20.2 Other current liabilities 3.3 21.2 42.0 — 66.5 Payables to affiliates 9.0 223.3 262.1 (494.4) — Liabilities of discontinued operations — 0.1 1.0 — 1.1 Total current liabilities 34.3 330.3 435.9 (494.4) 306.1 Long-term debt 668.5 0.3 — — 668.8 Long-term notes payable to affiliates 178.2 16.4 — (194.6) — Deferred income taxes 64.1 — 21.5 — 85.6 Pension and post retirement benefit obligations 5.1 54.7 46.3 — 106.1 Other non-current liabilities 2.2 4.8 5.0 — 12.0 Total liabilities 952.4 406.5 508.7 (689.0) 1,178.6 Stockholder’s (deficit) equity: Common stock 0.6 562.0 75.3 (637.3) 0.6 Treasury stock (1.7) — — — (1.7) Paid-in capital 1,407.4 696.4 341.9 (1,038.3) 1,407.4 Accumulated other comprehensive loss (131.0) (65.8) (29.8) 95.6 (131.0) Accumulated deficit (1,337.2) (478.5) (79.0) 557.5 (1,337.2) Total stockholders’ (deficit) equity (61.9) 714.1 308.4 (1,022.5) (61.9) Total liabilities and stockholders’ (deficit) equity $890.5 $1,120.6 $817.1 $(1,711.5) $1,116.7 85Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) 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 non-current 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 other 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 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 86Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Consolidating Statement of Operations Year Ended December 31, 2011 (in millions of dollars) Parent Guarantors Non-Guarantors Eliminations Consolidated Unaffiliated sales $— $621.3 $697.1 $— $1,318.4 Affiliated sales — 18.9 5.9 (24.8) — Net sales — 640.2 703.0 (24.8) 1,318.4 Cost of products sold — 460.8 467.7 (24.8) 903.7 Gross profit — 179.4 235.3 — 414.7 Advertising, selling, general and administrative expenses 30.4 137.4 126.1 — 293.9 Amortization of intangibles 0.1 3.5 2.7 — 6.3 Restructuring income — — (0.7) — (0.7) Operating income (loss) (30.5) 38.5 107.2 — 115.2 Interest expense (income) from affiliates (1.1) — 1.1 — — Interest expense, net 67.4 9.8 — — 77.2 Equity in (earnings) losses of joint ventures — 0.5 (9.0) — (8.5) Other expense (income), net 3.1 (22.8) 23.3 — 3.6 Income (loss) before taxes and earnings of wholly owned subsidiaries (99.9) 51.0 91.8 — 42.9 Income tax expense 6.0 — 18.3 — 24.3 Income (loss) from continuing operations (105.9) 51.0 73.5 — 18.6 Income (loss) from discontinued operations, net of income taxes — (0.4) 38.5 — 38.1 Income (loss) before earnings of wholly owned subsidiaries (105.9) 50.6 112.0 — 56.7 Earnings of wholly owned subsidiaries 162.6 103.3 — (265.9) — Net income $56.7 $153.9 $112.0 $(265.9) $56.7 87Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Consolidating Statement of Operations Year Ended December 31, 2010 (in millions of dollars) Parent Guarantors Non- Guarantors Eliminations Consolidated Unaffiliated sales $— $632.9 $651.7 $— $1,284.6 Affiliated sales — 18.5 5.2 (23.7) — Net sales — 651.4 656.9 (23.7) 1,284.6 Cost of products sold — 463.2 448.0 (23.7) 887.5 Gross profit — 188.2 208.9 — 397.1 Advertising, selling, general and administrative expenses 22.8 141.9 116.5 — 281.2 Amortization of intangibles 0.1 3.8 2.8 — 6.7 Restructuring income — (0.4) (0.1) — (0.5) Operating income (loss) (22.9) 42.9 89.7 — 109.7 Interest (income) expense from affiliates (1.2) — 1.2 — — Interest expense, net 67.5 10.2 0.6 — 78.3 Equity in (earnings) losses of joint ventures — 0.3 (8.6) — (8.3) Other (income) expense, net (0.2) (18.1) 19.5 — 1.2 Income (loss) from continuing operations before income taxes andearnings of wholly owned subsidiaries (89.0) 50.5 77.0 — 38.5 Income tax expense (benefit) 6.5 (0.4) 24.6 — 30.7 Income (loss) from continuing operations (95.5) 50.9 52.4 — 7.8 Income from discontinued operations, net of income taxes — 0.6 4.0 — 4.6 Income (loss) before earnings of wholly owned subsidiaries (95.5) 51.5 56.4 — 12.4 Earnings of wholly owned subsidiaries 107.9 47.8 — (155.7) — Net income $12.4 $99.3 $56.4 $(155.7) $12.4 88Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Consolidated Statement of Operations Year Ended December 31, 2009 (in millions of dollars) Parent Guarantors Non-Guarantors Eliminations Consolidated Unaffiliated sales $— $619.6 $613.7 $— $1,233.3 Affiliated sales — 22.7 3.4 (26.1) — Net sales — 642.3 617.1 (26.1) 1,233.3 Cost of products sold — 473.7 421.1 (26.1) 868.7 Gross profit — 168.6 196.0 — 364.6 Advertising, selling, general and administrative expenses 18.6 131.3 113.1 — 263.0 Amortization of intangibles 0.1 4.1 2.9 — 7.1 Restructuring charges 0.1 3.7 13.6 — 17.4 Intangible asset impairment charges — 0.8 0.9 — 1.7 Operating income (loss) (18.8) 28.7 65.5 — 75.4 Interest (income) expense from affiliates (0.1) (0.5) 0.6 — — Interest expense, net 53.3 7.2 6.5 — 67.0 Equity in (earnings) losses of joint ventures — 0.2 (4.6) — (4.4) Other (income) expense, net 4.0 (16.0) 17.4 — 5.4 Income (loss) from continuing operations before income taxes andearnings (losses) of wholly owned subsidiaries (76.0) 37.8 45.6 — 7.4 Income tax expense (benefit) 110.5 (2.4) 17.9 — 126.0 Income (loss) from continuing operations (186.5) 40.2 27.7 — (118.6) Income (loss) from discontinued operations, net of income taxes — (15.1) 7.6 — (7.5) Income (loss) before earnings (losses) of wholly owned subsidiaries (186.5) 25.1 35.3 — (126.1) Earnings (losses) of wholly owned subsidiaries 60.4 (13.3) — (47.1) — Net income (loss) $(126.1) $11.8 $35.3 $(47.1) $(126.1) 89Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2011 (in millions of dollars) Parent Guarantors Non-Guarantors Consolidated Net cash provided (used) by operating activities $(95.5) $66.6 $90.7 $61.8 Investing activities: Additions to property, plant and equipment — (6.6) (6.9) (13.5) Assets acquired — (0.6) (0.8) (1.4) Proceeds from the sale of discontinued operations — 0.4 53.1 53.5 Proceeds from the disposition of assets — — 1.4 1.4 Net cash provided (used) by investing activities. — (6.8) 46.8 40.0 Financing activities: Intercompany financing 111.9 (97.0) (14.9) — Net dividends 69.2 36.5 (105.7) — Proceeds from long-term borrowings — — 0.1 0.1 Repayments of long-term debt (62.9) (0.1) — (63.0) Exercise of stock options and other (0.2) — — (0.2) Net cash provided (used) by financing activities. 118.0 (60.6) (120.5) (63.1) Effect of foreign exchange rate changes on cash — — (0.7) (0.7) Net increase (decrease) in cash and cash equivalents 22.5 (0.8) 16.3 38.0 Cash and cash equivalents: Beginning of the period 39.5 (0.4) 44.1 83.2 End of the period $62.0 $(1.2) $60.4 $121.2 90Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2010 (in millions of dollars) Parent Guarantors Non- Guarantors Consolidated Net cash provided (used) by operating activities: $(87.6) $60.5 $82.0 $54.9 Investing activities: Additions to property, plant and equipment — (5.3) (7.3) (12.6) Assets acquired — (1.1) — (1.1) Proceeds (payments) from sale of discontinued operations — (4.1) 0.4 (3.7) Proceeds from the disposition of assets — 1.7 0.8 2.5 Net cash used by investing activities — (8.8) (6.1) (14.9) Financing activities: Intercompany financing 110.9 (81.9) (29.0) — Net dividends 1.4 31.4 (32.8) — Proceeds from long-term borrowings 1.5 — — 1.5 Repayments of long-term debt — (0.1) (0.1) (0.2) Repayments of short-term debt — — (0.5) (0.5) Cost of debt issuance (0.8) — — (0.8) Exercise of stock options and other (0.1) — — (0.1) Net cash provided (used) by financing activities 112.9 (50.6) (62.4) (0.1) Effect of foreign exchange rate changes on cash — — (0.3) (0.3) Net increase in cash and cash equivalents 25.3 1.1 13.2 39.6 Cash and cash equivalents: Beginning of the period 14.2 (1.5) 30.9 43.6 End of the period $39.5 $(0.4) $44.1 $83.2 91Table of ContentsACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2009 (in millions of dollars) Parent Guarantors Non- Guarantors Consolidated Net cash provided (used) by operating activities: $(58.1) $94.6 $35.0 $71.5 Investing activities: Additions to property, plant and equipment (0.4) (3.9) (6.0) (10.3) Assets acquired (1.9) (0.9) (0.6) (3.4) Proceeds from sale of discontinued operations — 2.1 7.1 9.2 Proceeds from the disposition of assets — — 0.6 0.6 Net cash provided (used) by investing activities (2.3) (2.7) 1.1 (3.9) Financing activities: Intercompany financing (17.6) (111.5) 129.1 — Net dividends 3.2 18.9 (22.1) — Proceeds from long-term borrowings 463.1 — 6.2 469.3 Repayments of long-term debt (270.1) — (127.8) (397.9) Repayments of short-term debt (46.0) — (8.2) (54.2) Payment of Euro debt hedge (40.8) — — (40.8) Cost of debt issuance (17.4) — (3.2) (20.6) Exercise of stock options and other (0.3) — — (0.3) Net cash provided (used) by financing activities 74.1 (92.6) (26.0) (44.5) Effect of foreign exchange rate changes on cash — — 2.4 2.4 Net increase (decrease) in cash and cash equivalents 13.7 (0.7) 12.5 25.5 Cash and cash equivalents: Beginning of the period 0.5 (0.8) 18.4 18.1 End of the period $14.2 $(1.5) $30.9 $43.6 92Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot applicable. ITEM 9A.CONTROLS AND PROCEDURESAs of the end of the period covered by this Annual Report on Form 10-K, the Company carried out an evaluation, under the supervision and with theparticipation of the Company’s Disclosure Committee and the Company’s management, including the Chief Executive Officer and the Chief Financial Officer,of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officerand the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.The report called for by Item 308(a) of Regulation S-K is incorporated herein by reference to the Report of Management on Internal Control OverFinancial Reporting included in Part II, Item 8 of this report.The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the Report of Independent Registered PublicAccounting Firm, included in Part II, Item 8 of this report.There has been no change in our internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.ITEM 9B. OTHER INFORMATIONNot applicable.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEInformation required under this Item is contained in the Company’s 2012 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2012 and is incorporated herein by reference.Code of Business ConductThe Company has adopted a code of business conduct as required by the listing standards of the New York Stock Exchange and rules of the Securitiesand Exchange Commission. This code applies to all of the Company’s directors, officers and employees. The code of business conduct is published andavailable at the Investor Relations Section of the Company’s internet website at www.accobrands.com. The Company will post on its website any amendmentsto, or waivers from, our code of business conduct applicable to any of its directors or executive officers. The foregoing information will be available in print toany shareholder who requests such information from ACCO Brands Corporation, 300 Tower Parkway, Lincolnshire, IL 60069, Attn: Office of the GeneralCounsel.As required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, the Company’s Chief Executive Officer certified to theNYSE within 30 days after the Company’s 2011 Annual Meeting of Stockholders that he was not aware of any violation by the Company of the NYSECorporate Governance Listing Standards.ITEM 11. EXECUTIVE COMPENSATIONInformation required under this Item is contained in the Company’s 2012 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2012 and is incorporated herein by reference. 93Table of ContentsITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSEquity Compensation Plan InformationThe following table gives information, as of December 31, 2011, about our common stock that may be issued upon the exercise of options, stock-settledappreciation rights (“SSARs”) and other equity awards under all compensation plans under which equity securities are reserved for issuance. Plan category Number ofsecurities to beIssued uponexercise ofoutstandingoptions, warrantsand rights(a) Weighted-averageexercise price ofoutstandingoptions, warrantsand rights(b) Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected incolumn (a))(c) Equity compensation plans approved by security holders(1) 6,108,456 $12.23 2,432,992(2) Equity compensation plans not approved by security holders — — — Total 6,108,456 $12.23 2,432,992(2) (1)This number includes 4,268,142 common shares that were subject to issuance upon the exercise of stock options/SSARs granted under the 2011Amended and Restated Incentive Plan (the “Restated Plan”), and 1,840,314 common shares that were subject to issuance upon the exercise of stockoptions/SSARs pursuant to the Company’s 2005 Assumed Option and Restricted Stock Unit Plan. The weighted-average exercise price in column (b) ofthe table reflects all such options/SSARs. (2)These are shares available for grant as of December 31, 2011 under the Restated Plan pursuant to which the compensation committee of the Board ofDirectors may make various stock-based awards including grants of stock options, stock-settled appreciation rights, restricted stock, restricted stockunits and performance share units. In addition to these shares, the following shares may become available for grant under the Restated Plan and, to theextent such shares have become available as of December 31, 2011, they are included in the table as available for grant: shares covered by outstandingawards under the Plan that were forfeited or otherwise terminated.Other information required under this Item is contained in the Company’s 2012 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2012, and is incorporated herein by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEInformation required under this Item is contained in the Company’s 2012 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2012 and is incorporated herein by reference.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation required under this Item is contained in the Company’s 2012 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission Prior to April 30, 2012 and is incorporated herein by reference. 94Table of ContentsPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESThe following Exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission, as indicated in thedescription of each. We agree to furnish to the Commission upon request a copy of any instrument with respect to long-term debt not filed herewith as to whichthe total amount of securities authorized there under does not exceed 10 percent of our total assets on a consolidated basis. (a)Financial Statements, Financial Statement Schedules and Exhibits 1.All Financial StatementsThe following consolidated financial statements of the Company and its subsidiaries are filed as part of this report under Item 8—Financial Statementsand Supplementary Data, as part of this Report on Form 10-K: Page Reports of Independent Registered Public Accounting Firm 42 Management’s Report on Internal Control Over Financial Reporting 43 Consolidated Balance Sheets as of December 31, 2011 and 2010 44 Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 45 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2011, 2010 and 2009 46 Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009 47 Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2011, 2010 and 2009 48 Notes to Consolidated Financial Statements 49 2.Financial Statement Schedule: Schedule II—Valuation and Qualifying Accounts and Reserves, for each of the years ended December 31, 2011, 2010 and 2009.The separate consolidated financial statements of Pelikan-Artline Pty Ltd, the Company’s 50 percent owned joint venture as of September 30, 2011 and2010 and for each of the years in the three-year period ended September 30, 2011 required to be included in this report pursuant to Rule 3-09 of Regulation S-X, are filed as Exhibit 99.1. 3.Exhibits:See Index to Exhibits on page 96 of this report. 95Table of ContentsEXHIBIT INDEX Number Description of Exhibit 2.1 Agreement and Plan of Merger, dated November 17, 2011, by and among MeadWestvaco Corporation, Monaco SpinCo Inc., ACCOBrands Corporation and Augusta Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed by the Registrant onNovember 22, 2011 (File No. 001-08454)) 2.2 Share Sale Agreement dated May 25, 2011 entered into by and between GBC Australia Pty Ltd, ACCO Brands Corporation, NeopostHolding Pty Ltd and NEOPOST S.A. (incorporated by reference to Exhibit 2.1 to Form 10-Q filed by the Registrant on July 27, 2011(File No. 001-08454)) 3.1 Restated Certificate of Incorporation of ACCO Brands Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed by theRegistrant on May 19, 2008 (File No. 001-08454)) 3.2 Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Registrant’sCurrent Report on Form 8-K filed August 17, 2005) 3.3 By-laws of ACCO Brands Corporation as amended through December 19, 2008 (incorporated by reference to Exhibit 3.1 to the Form 8-Kfiled by the Registrant on December 24, 2008 (File No. 001-08454)) 4.1 Rights Agreement, dated as of August 16, 2005, between ACCO Brands Corporation and Wells Fargo Bank, National Association, asrights agent (incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Registrant on August 17, 2005 (File No. 001-08454)) 4.2 Indenture, dated as of August 5, 2005, between ACCO Financial, Inc. and Wachovia Bank, National Association, as Trustee(incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005(File No. 001-08454)) 4.3 Supplemental Indenture, dated as of August 17, 2005, among ACCO Brands Corporation, the Guarantors signatory thereto andWachovia Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) 4.4 Registration Rights Agreement, dated as of August 5, 2005, among ACCO Finance I, Inc., Citigroup Global Markets Inc., Goldman,Sachs & Co., Harris Nesbitt Corp., ABN AMRO Incorporated, NatCity Investments, Inc. and Piper Jaffray & Co. (incorporated byreference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) 4.5 Joinder Agreement, dated as of August 17, 2005, among ACCO Brands Corporation, the Guarantors signatory thereto and CitigroupGlobal Markets Inc. and Goldman, Sachs & Co., as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.2 tothe Registrant’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) 4.6 Indenture, dated as of September 30, 2009, among ACCO Brands Corporation, the guarantors named therein and U.S. Bank NationalAssociation, as trustee (incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Registrant on October 6, 2009 (File No. 001-08454)) 4.7 Registration Rights Agreement, dated as of September 30, 2009, among ACCO Brands Corporation, the guarantors named therein andCredit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Banc of America Securities LLC, BMO Capital Markets Corp.,SunTrust Robinson Humphrey, Inc., Barclays Capital Inc., CJS Securities, Inc. and Barrington Research Associates, Inc. (incorporatedby reference to Exhibit 4.2 to Form 8-K filed by the Registrant on October 6, 2009 (File No. 001-08454)) 4.8 Intercreditor Agreement, dated as of September 30, 2009 among ACCO Brands Corporation, the other grantors from time to time partythereto, Deutsche Bank AG New York Branch, as collateral agent under the Syndicated Facility Agreement—ABL Revolving Facility,and U.S. Bank National Association, as collateral trustee under the Senior Secured Notes Indenture (incorporated by reference to Exhibit4.3 to Form 8-K filed by the Registrant on October 6, 2009 (File No. 001-08454)) 96Table of ContentsNumber Description of Exhibit 4.9 Collateral Trust Agreement, dated as of September 30, 2009 among ACCO Brands Corporation, as issuer, the guarantors from time to timeparty thereto, U.S. Bank National Association, as trustee under the indenture, the other secured debt representatives from time to time partythereto and U.S. Bank National Association, as collateral trustee (incorporated by reference to Exhibit 4.4 to Form 8-K filed by the Registranton October 6, 2009 (File No. 001-08454)) 4.10 Pledge Agreement among ACCO Brands Corporation, certain other subsidiaries of ACCO Brands Corporation from time to time partythereto and U.S. Bank National Association, as collateral trustee, dated as of September 30, 2009 (incorporated by reference to Exhibit 4.5 toForm 8-K filed by the Registrant on October 6, 2009 (File No. 001-08454)) 4.11 Security Agreement among ACCO Brands Corporation, certain other subsidiaries of ACCO Brands Corporation from time to time partythereto and U.S. Bank National Association, as collateral trustee, dated as of September 30, 2009 (incorporated by reference to Exhibit 4.6 toForm 8-K filed by the Registrant on October 6, 2009 (File No. 001-08454)) 10.1 ACCO Brands Corporation 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report onForm 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) 10.2 ACCO Brands Corporation 2005 Assumed Option and Restricted Stock Unit Plan, together with Sub-Plan A thereto (incorporated byreference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 3,2005 and filed August 8, 2005 (File No. 001-08454)) 10.3 ACCO Brands Corporation Annual Executive Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the Registrant’sCurrent Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) 10.4 Tax Allocation Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. (incorporated byreference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001-08454)) 10.5 Tax Allocation Agreement, dated as of August 16, 2005, between General Binding Corporation and Lane Industries, Inc. (incorporated byreference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001-08454)) 10.6 Employee Matters Agreement, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation and GeneralBinding Corporation (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946)) 10.7 Executive Severance/Change in Control Agreement, dated as of August 26, 2000, by and between Steven Rubin and GBC (incorporated byreference to Exhibit 10.15 to General Binding Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (FileNo. 001-08454)) 10.8 Letter Agreement, dated as of September 5, 2003, between ACCO World Corporation and Neal Fenwick (incorporated by reference toExhibit 10.6 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946)) 10.9 Letter Agreement, dated November 8, 2000, as revised in January 2001, between ACCO World Corporation and Neal Fenwick (incorporatedby reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946)) 10.10 Letter Agreement, dated September 8, 1999, between ACCO World Corporation and Neal Fenwick (incorporated by reference toExhibit 10.8 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946)) 97Table of ContentsNumber Description of Exhibit 10.11 Amended and Restated ACCO Brands Corporation 2005 Incentive Plan (incorporated by reference to Annex A of the Registrant’s definitiveproxy statement filed April 4, 2006 (File No. 001-08454)) 10.12 Amendment to the Amended and Restated ACCO Brands Corporation 2005 Incentive Plan (incorporated by reference to Exhibit 10.1 to Form8-K filed by the Registrant on May 19, 2008 (File No. 001-08454)) 10.13 ACCO Brands Corporation Executive Severance Plan (effective December 1, 2007) (incorporated by reference to Exhibit 10.1 to Form 8-Kfiled by the Registrant on November 29, 2007 (File No. 001-08454)) 10.14 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.31 to Form10-K filed by the Registrant on February 29, 2008 (File No. 001-08454)) 10.15 Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference toExhibit 10.1 to Form 8-K filed by the Registrant on January 22, 2009 (File No. 001-08454)) 10.16 Retirement Agreement for David D. Campbell effective as of May 1, 2008 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed bythe Registrant on May 7, 2008 (File No. 001-08454)) 10.17 Retirement Agreement for Neal V. Fenwick effective as of May 1, 2008 (incorporated by reference to Exhibit 10.4 to Form 10-Q filed by theRegistrant on May 7, 2008 (File No. 001-08454)) 10.18 Letter Agreement dated November 4, 2008, between ACCO Brands Corporation and Robert J. Keller (incorporated by reference to Exhibit10.1 to Form 8-K filed by the Registrant on November 5, 2008 (File No. 001-08454)) 10.19 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on December 24, 2008 (FileNo. 001-08454)) 10.20 Form of Stock-settled Stock Appreciation Rights Agreement under the ACCO Brands Corporation Amended and Restated 2005 Long-TermIncentive Plan, as amended (incorporated by reference to Exhibit 10.46 to Form 10-K filed by the Registrant on March 2, 2009 (File No. 001-08454)) 10.21 Letter agreement, dated October 11, 2007, from ACCO Brands Corporation to David A. Kaput (incorporated by reference to Exhibit 10.1 toForm 8-K filed by the Registrant on March 3, 2009 (File No. 001-08454)) 10.22 Syndicated Facility Agreement-ABL Revolving Facility, dated as of September 30, 2009, among ACCO Brands Corporation, certain directand indirect subsidiaries of ACCO Brands Corporation party thereto, Deutsche Bank AG New York Branch, as administrative agent for thesecured parties and in such capacity, a co-collateral agent, Bank of America, N.A., and General Electric Capital Corporation, as co-collateral agents, and the other agents and lenders named therein (incorporated by reference to Exhibit 10.1 to Form 8-K filed by theRegistrant on October 6, 2009 (File No. 001-08454)) 10.23 Amended and Restated ACCO Brands Deferred Compensation Plan for Non-Employee Directors, effective December 14, 2009 (incorporatedby reference to Exhibit 10.41 to Form 10-K filed by the Registrant on February 26, 2010 (File No. 001-089454)) 10.24 Letter agreement, dated November 4, 2008, from ACCO Brands Corporation to Christopher M. Franey (incorporated by reference to Exhibit10.42 to Form 10-K filed by the Registrant on February 26, 2010 (File No. 001-08454)) 10.25 Letter agreement, dated March 6, 2009, from ACCO Brands Corporation to Thomas H. Shortt (incorporated by reference to Exhibit 10.43 toForm 10-K filed by the Registrant on February 26, 2010 (File No, 001-08454)) 98Table of ContentsNumber Description of Exhibit 10.26 Form of 2010-2012 Cash Based Award Agreement under the ACCO Brands Corporation Amended and Restated 2005 Incentive Plan(incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Registrant on May 7, 2010 (File No. 001-08454)) 10.27 Form of 2010-2012 Performance Stock Unit Award Agreement under the ACCO Brands Corporation Amended and Restated Incentive Plan(incorporated by reference to Exhibit 10.2 to Form 10-Q filed by the Registrant on May 7, 2010 (File No. 001-08454)) 10.28 Description of changes to compensation arrangements for Messrs. Keller, Fenwick and Elisman (incorporated by reference to Item 5.02 ofRegistrant’s Form 8-K filed on December 12, 2009 (File No. 001-08454)) 10.29 Description of certain compensation arrangements with respect to the Registrant’s named executive officer’s (incorporated by reference toItem 5.02 of Registrant’s Form 8-K filed on March 1, 2010 (File No. 001-08454)) 10.30 Description of changes to compensation arrangements for Christopher M. Franey (incorporated by reference to Item 5.02 of Registrant’s Form8-K filed on September 21, 2010 (File No. 001-08454)) 10.31 Description of changes to compensation arrangements for Boris Elisman (incorporated by reference to Item 5.02 of Registrant’s Form 8-Kfiled on December 14, 2010 (File No. 001-08454)) 10.32 Amended and Restated 2005 Incentive Plan Restricted Stock Unit Award Agreement, effective as of February 24, 2011 between Robert J.Keller and ACCO Brands Corporation (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on February 15, 2011(File No. 001-08454)). 10.33 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO BrandsCorporation’s Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454)). 10.34 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)). 10.35 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)). 10.36 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)). 10.37 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)). 10.38 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 totime, 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. (incorporated by reference to Exhibit 4.1 to Form10-Q filed by the Registrant on July 27, 2011 (File No. 001-08454)) 10.39 Form of Stock-Settled Stock Appreciation Rights Award Agreement under the 2011 Amended and Restated ACCO Brands CorporationIncentive Plan (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Current Report on Form 8-K filed with the SEC onMay 20, 2011 (File No. 001-08454)). 99Table of ContentsNumber Description of Exhibit 10.40 Separation Agreement, dated November 17, 2011, by and between MeadWestvaco and Monaco SpinCo Inc. (incorporated by reference toExhibit 10.1 of Registrant’s Form 8-K filed on November 22, 2011 (File No. 001-08454)) 10.41 Employee Benefits Agreement, dated as of November 17, 2011, by and among MeadWestvaco Corporation, Monaco Spinco Inc. and ACCOBrands Corporation. (incorporated by reference to Exhibit 10.3 of Registrant’s Form S-4/A filed on February 13, 2012 (File No. 333-178869)). 10.42 Amendment to the February 24, 2011 Restricted Stock Unit Award Agreement, made and entered into as of December 7, 2011, betweenRobert J. Keller and ACCO Brands Corporation (incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed on December 12,2011 (File No. 001-08454)) 10.43 Second Amended and Restated Commitment Letter, dated January 13, 2012, by and among ACCO Brands Corporation, Barclays Capital,Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of Montreal and SunTrust Bank (incorporated byreference to Exhibit 10.5 of Registrant’s Form S-4/A filed on February 13, 2012 (File No. 333-178869)). 10.44 Second Amended and Restated Commitment Letter, dated January 13, 2012, by and among ACCO Brands Corporation, Barclays Capital,Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of Montreal and SunTrust Bank (incorporated byreference to Exhibit 10.6 of Registrant’s Form S-4/A filed on February 13, 2012 (File No. 333-178869)). 10.45 Second Amended and Restated Commitment Letter, dated January 13, 2012, by and among MeadWestvaco Corporation, ACCO BrandsCorporation, Barclays Capital, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of Montreal, SunTrustBank and SunTrust Robinson Humphrey, Inc. (incorporated by reference to Exhibit 10.7 of Registrant’s Form S-4/A filed on February 13,2012 (File No. 333-178869)). 16.1 Letter from PricewaterhouseCoopers LLP to the Securities and Exchange Commission dated May 21, 2009 (incorporated by reference toExhibit 16.1 to Form 8-K filed by the Registrant on May 22, 2009 (File No. 001-08454)) 21.1 Subsidiaries of the registrant* 23.1 Consent of KPMG LLP* 23.2 Consent of PKF* 24.1 Power of attorney* 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 Pelikan-Artline Pty Ltd Audited Financial Statements as of September 30, 2011* 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2011 formatted inXBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2011 and 2010, (ii) theConsolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009, (iii) the Consolidated Statements ofComprehensive Income (Loss) for the years ended December 31, 2011, 2010 and 2009 (iv) the Consolidated Statements of Cash Flows forthe years ended December 31, 2011, 2010 and 2009, (v) Consolidated Statements of Stockholders Equity (Deficit) for the years endedDecember 31, 2011, 2010 and 2009, and (vi) related notes to those financial statements tagged as blocks of text.+ 100Table of Contents Filed 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 Sections11 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, andshall 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 forthby specific reference in such filing. 101*Table of ContentsSIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized. REGISTRANT:ACCO BRANDS CORPORATIONBy: /s/ ROBERT J. KELLER Robert J. Keller Chairman of the Board and Chief ExecutiveOfficer (principal executive officer) By: /s/ NEAL V. FENWICK Neal V. Fenwick Executive Vice President and Chief FinancialOfficer (principal financial officer) By: /s/ THOMAS P. O’NEILL, JR. Thomas P. O’Neill, Jr. Senior Vice President, Finance and Accounting(principal accounting officer)February 23, 2012Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on its behalf by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated. Signature Title Date/s/ ROBERT J. KELLERRobert J. Keller Chairman of the Board andChief Executive Officer(principal executive officer) February 23, 2012/s/ NEAL V. FENWICKNeal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 23, 2012/s/ THOMAS P. O’NEILL, JR.Thomas P. O’Neill, Jr. Senior Vice President, Finance andAccounting (principal accountingofficer) February 23, 2012/s/ GEORGE V. BAYLY*George V. Bayly Director February 23, 2012/s/ KATHLEEN S. DVORAK*Kathleen S. Dvorak Director February 23, 2012 102Table of ContentsSignature Title Date/s/ G. THOMAS HARGROVE*G. Thomas Hargrove Director February 23, 2012/s/ ROBERT H. JENKINS*Robert H. Jenkins Director February 23, 2012/s/ THOMAS KROEGER*Thomas Kroeger Director February 23, 2012/s/ MICHAEL NORKUS*Michael Norkus Director February 23, 2012/s/ SHEILA G. TALTON*Sheila G. Talton Director February 23, 2012/s/ Norman H. Wesley*Norman H. Wesley Director February 23, 2012/s/ Neal V. Fenwick* Neal V. Fenwick asAttorney-in-Fact 103Table of ContentsACCO Brands CorporationVALUATION AND QUALIFYING ACCOUNTS AND RESERVESSCHEDULE IIAllowances for Doubtful AccountsChanges in the allowances for doubtful accounts were as follows: Year EndedDecember 31, (in millions of dollars) 2011 2010 2009 Balance at beginning of year $5.2 $6.9 $7.0 Additions charged to expense 1.4 3.3 3.9 Deductions—write offs (1.3) (5.3) (4.2) Foreign exchange changes (0.2) 0.3 0.2 Balance at end of year $5.1 $5.2 $6.9 Allowances for Sales Returns and DiscountsChanges in the allowances for sales returns and discounts were as follows: Year EndedDecember 31, (in millions of dollars) 2011 2010 2009 Balance at beginning of year $9.2 $9.8 $14.7 Additions charged to expense 41.6 31.8 40.8 Deductions—returns (43.1) (32.1) (46.7) Foreign exchange changes — (0.3) 1.0 Balance at end of year $7.7 $9.2 $9.8 Allowances for Cash DiscountsChanges in the allowances for cash discounts were as follows: Year EndedDecember 31, (in millions of dollars) 2010 2009 2008 Balance at beginning of year $1.2 $1.2 $1.1 Additions charged to expense 11.0 11.3 11.6 Deductions—discounts taken (11.0) (11.1) (11.7) Foreign exchange changes (0.1) (0.2) 0.2 Balance at end of year $1.1 $1.2 $1.2 104Table of ContentsACCO Brands CorporationVALUATION AND QUALIFYING ACCOUNTS AND RESERVESSCHEDULE II (Continued)Warranty ReservesChanges in the reserve for warranty claims were as follows: Year EndedDecember 31, (in millions of dollars) 2011 2010 2009 Balance at beginning of year $3.1 $2.8 $3.0 Provision for warranties issued 3.0 3.2 2.5 Settlements made (in cash or in kind) (3.4) (2.9) (2.7) Balance at end of year $2.7 $3.1 $2.8 Income Tax Valuation AllowanceChanges in the deferred tax valuation allowances were as follows: Year EndedDecember 31, (in millions of dollars) 2011 2010 2009 Balance at beginning of year $193.2 $188.9 $63.8 Additions charged to expense 5.4 15.7 123.1 Other 5.7 (11.4) 2.0 Balance at end of year $204.3 $193.2 $188.9 See accompanying report of independent registered public accounting firm. 105Exhibit 21.1SUBSIDIARIESACCO Brands Corporation, a Delaware corporation, had the domestic and international subsidiaries shown below as of December 31, 2011. Certaindomestic and international subsidiaries are not named because they were not significant in the aggregate. ACCO Brands Corporation has no parent. Name of Subsidiary Jurisdiction of OrganizationU.S. Subsidiaries: ACCO Brands USA LLC DelawareDay-Timers, Inc. DelawareGeneral Binding Corporation DelawareGBC International, Inc. NevadaACCO International Holdings, Inc. DelawareACCO Brands International, Inc. DelawareACCO Europe Finance Holdings, LLC DelawareACCO Europe International Holdings, LLC DelawareInternational Subsidiaries: ACCO Brands Canada Inc. CanadaACCO Mexicana S.A. de C.V. MexicoGBC Europe AB SwedenACCO Europe Finance LP EnglandACCO Brands Europe Holding LP EnglandACCO Nederland Holding B.V. NetherlandsACCO Brands Benelux B.V. NetherlandsACCO Deutschland Beteiligungsgesellschaft mbh GermanyACCO Brands Italia S.r.L. ItalyACCO Brands Europe Ltd. EnglandACCO Brands Australia Holding Pty Ltd. AustraliaACCO Brands Australia Pty. Ltd. AustraliaACCO Europe Ltd. EnglandACCO-Rexel Group Services Limited EnglandACCO Australia Pty. Limited AustraliaACCO Eastlight Limited EnglandACCO-Rexel Limited IrelandACCO UK Limited EnglandACCO Deutschland GmbH & Co. KG (Limited Partnership) GermanyNOBO Group Limited EnglandACCO Brands France FranceEXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-127626, 333-127631, 333-127750, 333-136662 333-153157, 333-157726, and 333-176247) of ACCO Brands Corporation of our report dated February 23, 2012, with respect to the consolidated balance sheetsof ACCO Brands Corporation and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensiveincome (loss), stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2011, the related financialstatement schedule, and the effectiveness of internal control over financial reporting, which report is included in the December 31, 2011 annual report onForm 10-K of ACCO Brands Corporation./s/ KPMG LLPChicago, IllinoisFebruary 23, 2012EXHIBIT 23.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the inclusion of our audit report dated December 21, 2012 relating to our audit of the Financial Statements of Pelikan Artline Joint Venturefor the year ended September 30, 2011, which is included in this Form 10-K of ACCO Brands Corporation./s/ PKFSydney, AustraliaFebruary 20, 2012Exhibit 24.1LIMITED POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert J. Keller,Neal V. Fenwick, and Thomas P. O’Neill, Jr. and each of them, as his or her true and lawful attorneys-in-fact and agents, with power to act with or withoutthe others and with full power of substitution and re-substitution, to do any and all acts and things and to execute any and all instruments which saidattorneys and agents and each of them may deem necessary or desirable to enable the registrant to comply with the U.S. Securities and Exchange Act of 1934,as amended, and any rules, regulations and requirements of the U.S. Securities and Exchange Commission thereunder in connection with the registrant’sAnnual Report on Form 10-K for the fiscal year ended December 31, 2011 (the “Annual Report”), including specifically, but without limiting the generality ofthe foregoing, power and authority to sign the name of the registrant and the name of the undersigned, individually and in his or her capacity as a director orofficer of the registrant, to the Annual Report as filed with the United States Securities and Exchange Commission, to any and all amendments thereto, and toany and all instruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and confirms all that saidattorneys and agents and each of them shall so or cause to be done by virtue hereof. Signature Title Date/s/ Robert J. KellerRobert J. Keller Chairman of the Board and ChiefExecutive Officer (principalexecutive officer) February 23, 2012/s/ Neal V. FenwickNeal V. Fenwick Executive Vice President and ChiefFinancial Officer (principalfinancial officer) February 23, 2012/s/ Thomas P. O’Neill, JrThomas P. O’Neill, Jr. Senior Vice President, Finance andAccounting (principal accountingofficer) February 23, 2012/s/ George V. BaylyGeorge V. Bayly Director February 23, 2012/s/ Kathleen S. DvorakKathleen S. Dvorak Director February 23, 2012/s/ G. Thomas HargroveG. Thomas Hargrove Director February 23, 2012/s/ Robert H. JenkinsRobert H. Jenkins Director February 23, 2012/s/ Thomas KroegerThomas Kroeger Director February 23, 2012/s/ Michael NorkusMichael Norkus Director February 23, 2012/s/ Sheila G. TaltonSheila G. Talton Director February 23, 2012/s/ Norman H. WesleyNorman H. Wesley Director February 23, 2012Exhibit 31.1CERTIFICATIONSI, Robert J. Keller, certify that: 1.I have reviewed this annual report on Form 10-K of ACCO Brands Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and we have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. /s/ Robert J. KellerRobert J. KellerChairman of the Board andChief Executive OfficerDate: February 23, 2012Exhibit 31.2CERTIFICATIONSI, Neal V. Fenwick, certify that: 1.I have reviewed this annual report on Form 10-K of ACCO Brands Corporation; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and we have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. /s/ Neal V. FenwickNeal V. FenwickExecutive Vice President and Chief Financial OfficerDate: February 23, 2012Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,As adopted pursuant toSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of ACCO Brands Corporation on Form 10-K for the period ended December 31, 2011 as filed with the Securitiesand Exchange Commission on the date hereof, (the “Report”), I, Robert J. Keller, Chief Executive Officer of ACCO Brands Corporation, hereby certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ACCO BrandsCorporation. By: /s/ ROBERT J. KELLER Robert J. Keller Chairman of the Board and Chief Executive OfficerFebruary 23, 2012Exhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,As adopted pursuant toSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of ACCO Brands Corporation on Form 10-K for the period ended December 31, 2011 as filed with the Securitiesand Exchange Commission on the date hereof, (the “Report”), I, Neal V. Fenwick, Chief Financial Officer of ACCO Brands Corporation, hereby certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ACCO BrandsCorporation. By: /s/ NEAL V. FENWICK Neal V. Fenwick Executive Vice President and Chief Financial OfficerFebruary 23, 2012Exhibit 99.1Financial Statements of Pelikan Artline Joint Venture and Controlled EntitiesThe accompanying consolidated financial statements of Pelikan Artline Joint Venture and Controlled Entities, a 50% owned joint venture investment ofACCO Brands Corporation (“ACCO”), are being provided pursuant to Rule 3-09 of the Securities and Exchange Commission’s (“SEC”) Regulation S-X. These financial statements are audited as of September 30, 2011 and are prepared in accordance with accounting principles generally accepted rules inAustralia and as permitted by the SEC Regulations.PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesA.B.N. 51 084 958 556FINANCIAL REPORT - 30 SEPTEMBER 2011CONTENTS Independent Auditor’s Report 1 Directors’ Declaration 2 Statement of Comprehensive Income 3 Statement of Financial Position 4 Statement of Changes in Equity 5 Statement of Cash Flows 6 Notes to the Financial Statements 7  Report of Independent Registered Public Accounting FirmTo the members of Pelikan Artline Joint VentureWe have audited the accompanying financial statements of Pelikan Artline Joint Venture (the “parent entity”), which comprises the statement of financialposition as at September 30, 2011 and 2010, and the related statement of comprehensive income, statement of changes in equity and statement of cash flowsfor the years then ended for both the parent entity and the consolidated entity. The consolidated entity comprises the parent entity and the entities it controlled atthe year’s end or from time to time during the year. These financial statements are the responsibility of the parent entity’s management. Our responsibility is toexpress an opinion on these financial statements based on our audits.We conducted our audits in accordance with the auditing standards generally accepted in the United States of America. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We did not audit the parententity’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent entity’s internal controlover financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the parent entity and the consolidatedentity at September 30, 2011 and 2010, and the results of their operations and cash flows for the years then ended in conformity with accounting principlesgenerally accepted in Australia on the basis as described in note 1.The financial statements for 2009 (refer to note 32) are presented for comparative purposes only. The financial statements for 2009 have not been audited byus in accordance with auditing standards generally accepted in the United States of America. PKFSydney, Australia21 December 2011Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.auPKF | ABN 83 236 985 726Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | AustraliaThe PKF East Coast Practice is a member of the PKF International Limited network of legally independent member firms. The PKF East Coast Practice is alsoa member of the PKF Australia Limited national network of legally independent firms each trading as PKF. PKF East Coast Practice has offices in NSW,Victoria and Brisbane. PKF East Coast Practice does not accept responsibility or liability for the actions or inactions on the part of any other Individualmember firm or firms.Liability limited by a scheme approved under Professional Standards Legislation. 1PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesFINANCIAL REPORT - 30 SEPTEMBER 2011DIRECTORS’ DECLARATIONThe directors of Pelikan Artline Pty Limited, the agent for the joint venture, declare that: 1.The financial statements, which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity,statement of cash flows and notes to the financial statements: a)comply with Australian Accounting Standards; and b)give a true and fair view of the financial position as at 30 September 2011 and of the performance for the year ended on that date of thejoint venture and consolidated entity. 2.In the directors’ opinion there are reasonable grounds to believe that the joint venture will be able to pay its debts as and when they become due andpayable.This declaration is made in accordance with a resolution of the board of directors and is signed for and on behalf of the directors by: A.G. KaldorDirectorB.R. HaynesDirectorSydney, 21 December 2011 2PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent Note 2011$ 2010$ 2011$ 2010$ Revenue 2 127,910,566 131,308,301 131,452,716 135,727,057 127,910,566 131,308,301 131,452,716 135,727,057 Expenses Purchases, distribution & selling (85,681,067) (89,466,083) (77,792,675) (81,829,984) Marketing (14,312,918) (12,663,744) (14,302,797) (12,655,998) Administration, IT & other expenses (2,892,233) (2,163,752) (24,698,291) (25,058,679) Finance costs (1,466,274) (1,878,429) (3,089,588) (3,209,695) (104,352,492) (106,172,008) (119,883,351) (122,754,356) Profit before income tax 23,558,074 25,136,293 11,569,365 12,972,701 Income tax expense 1,5 (4,800,914) (4,922,678) — — Profit for the year 18,757,160 20,213,615 11,569,365 12,972,701 Other Comprehensive Income Available for sale financial assets 60,205 33,179 — — Other comprehensive income for the year, net of tax 60,205 33,179 — — Total comprehensive income for the year 18,817,365 20,246,794 11,569,365 12,972,701 Profit attributable to: Owners of the parent entity 16,791,642 18,181,165 11,569,365 12,972,701 Minority interest 1,965,518 2,032,450 — — 18,757,160 20,213,615 11,569,365 12,972,701 Total comprehensive income attributable to: Owners of the parent entity 16,839,910 18,207,766 11,569,365 12,972,701 Minority interest 1,977,455 2,039,028 — — 18,817,365 20,246,794 11,569,365 12,972,701 The above statement of comprehensive income should be read in conjunction with the accompanying notes 3PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF FINANCIAL POSITIONAS AT 30 SEPTEMBER 2011 Consolidated Parent Note 2011$ 2010$ 2011$ 2010$ ASSETS Current Assets Cash and cash equivalents 6 26,162,953 27,205,691 3,119,293 2,527,774 Trade and other receivables 7 36,779,458 36,205,486 36,331,187 35,807,318 Inventories 8 22,499,902 22,503,626 22,499,902 22,503,626 Prepayments 922,226 727,708 843,002 671,674 Total current assets 86,364,539 86,642,511 62,793,384 61,510,392 Non-Current Assets Receivables 9 — — 10,701,395 9,926,160 Financial assets 10 495,252 409,245 40,853,792 40,853,792 Property, plant and equipment 11 1,606,649 2,297,720 1,149,926 1,388,650 Deferred tax assets 12 683,237 897,520 n/a n/a Intangible assets 13 30,469,175 30,467,403 50,015 48,243 Total non-current assets 33,254,313 34,071,888 52,755,128 52,216,845 Total assets 119,618,852 120,714,399 115,548,512 113,727,237 LIABILITIES Current Liabilities Trade and other payables 14 27,781,809 30,371,498 34,176,061 34,682,832 Provisions 15 1,644,271 1,121,980 966,271 687,518 Short-term borrowings 16 4,000,000 4,000,000 4,000,000 4,000,000 Current tax liabilities 2,622,300 2,351,731 — — Total current liabilities 36,048,380 37,845,209 39,142,332 39,370,350 Non-Current Liabilities Trade and other payables 17 — — 31,541,045 23,935,547 Long-term borrowings 18 14,000,000 19,000,000 14,000,000 19,000,000 Deferred tax liabilities 19 233,199 171,492 n/a n/a Provisions 20 241,307 274,786 54,307 46,247 Total non-current liabilities 14,474,506 19,446,278 45,595,352 42,981,794 Total liabilities 50,522,886 57,291,487 84,737,684 82,352,144 Net assets 69,095,966 63,422,912 30,810,828 31,375,093 EQUITY Capital introduced 21 1,652,804 1,652,804 1,652,804 1,652,804 Reserves 22 167,693 119,425 — — Retained earnings 23 57,674,759 53,016,747 29,158,024 29,722,289 Outside equity interest 24 9,600,710 8,633,936 — — Total equity 69,095,966 63,422,912 30,810,828 31,375,093 The above statement of financial position should be read in conjunction with the accompanying notes 4PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent Note 2011$ 2010$ 2011$ 2010$ Total equity at the beginning of the financial year 63,422,912 54,037,158 31,375,093 28,255,808 Total comprehensive income attributable to: Owners of the parent entity 16,839,910 18,207,766 11,569,365 12,972,701 Minority interest 1,977,455 2,039,028 — — Distribution of profit during the year (12,133,630) (9,853,416) (12,133,630) (9,853,416) Dividends provided for or paid 4 (1,010,681) (1,007,624) — — 5,673,054 9,385,754 (564,265) 3,119,285 Total equity at the end of the financial year 69,095,966 63,422,912 30,810,828 31,375,093 The above statement of changes in equity should be read in conjunction with the accompanying notes 5PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 Note $ $ $ $ Cash Flows From Operating Activities Receipts from customers (inclusive of GST) 141,800,130 146,235,117 139,327,807 143,331,735 Payments to suppliers and employees (inclusive of GST) (120,255,564) (118,083,956) (132,361,625) (130,051,010) Dividend received 4,717 4,855 — — Interest received 1,320,482 745,012 949,942 1,239,016 Finance costs (1,466,274) (1,764,260) (2,682,366) (4,037,190) Income tax paid (4,235,297) (3,225,568) — — Net cash flows from operating activities 29 17,168,194 23,911,200 5,233,758 10,482,551 Cash Flows From Investing Activities Purchase of property, plant and equipment (130,575) (440,006) (130,575) (440,006) Proceeds from sale of property, plant and equipment 63,954 32,821 — 23,980 Loans to related party — — (775,235) (1,181,110) Net cash flows from investing activities (66,621) (407,185) (905,810) (1,597,136) Cash Flows From Financing Activities Repayment of borrowings (5,000,000) (4,000,000) (5,000,000) (4,000,000) Loans from (to) related parties (net) — — 13,397,201 (4,663,180) Profit distributions paid (12,133,630) (9,853,416) (12,133,630) (9,853,416) Dividends paid (1,010,681) (1,007,624) — — Net cash flows from financing activities (18,144,311) (14,861,040) (3,736,429) (18,516,596) Net increase (decrease) in cash and cash and cash equivalents (1,042,738) 8,642,975 591,519 (9,631,181) Cash and cash equivalents at the beginning of the year 27,205,691 18,562,716 2,527,774 12,158,955 Cash and cash equivalents at the end of the year 1, 6 26,162,953 27,205,691 3,119,293 2,527,774 The above statement of cash flows should be read in conjunction with the accompanying notes 6PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011NOTE 1 - SIGNIFICANT ACCOUNTING POLICIESThis financial report is a general purpose financial report prepared in order to satisfy Pelikan Artline Joint Venture’s (referred to in this report as the parententity) financial report preparation requirements under the Joint Venture Agreement dated 24 December 1998.The financial report covers Pelikan Artline Joint Venture as an individual parent entity and Pelikan Artline Joint Venture and controlled entities as aconsolidated entity.The financial report was authorised for issue by the directors of Pelikan Artline Pty Limited, the agent for the Joint Venture, on 21 December 2011.Basis of preparationThese general purpose financial statements have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure Requirements, otherauthoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Interpretations.Compliance with Australian Accounting Standards - Reduced Disclosure RequirementsThe financial statements of Pelikan Artline Joint Venture comply with Australian Accounting Standards -Reduced Disclosure Requirements as issued by theAustralian Accounting Standards Board (AASB).Early adoption of standardsThe parent and consolidated entities have elected to apply the following pronouncements to the annual reporting period beginning 1 October 2009: AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to Australian Accounting Standards arisingfrom Reduced Disclosure RequirementsHistorical cost conventionThe financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fairvalue of selected non-current assets, financial assets and financial liabilities.Principles of ConsolidationA controlled entity is any entity controlled by Pelikan Artline Joint Venture. Control exists where Pelikan Artline Joint Venture has the capacity to dominate thedecision-making in relation to the financial and operating policies of another entity so that the other entity operates with Pelikan Artline Joint Venture to achievethe objectives of Pelikan Artline Joint Venture.The financial statements of controlled entities are included from the date control commences to the date control ceases.Inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.Income TaxThe parent entity is not a legal entity subject to Australian or New Zealand income tax. Its income is taxable in the hands of the Joint Venture parties.The controlled entities are subject to Australian or New Zealand income tax and the tax balances disclosed in this report relate to these controlled entities. 7PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Tax (continued) The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or non-allowable items. It is calculated using taxrates that have been enacted or are substantively enacted by the statement of financial position date.Deferred tax is accounted for using the statement of financial position liability method in respect of temporary differences arising between the tax bases ofassets and liabilities and their carrying amounts in the financial statements.Deferred tax is calculated at the tax rates that are expected to apply to the year when the asset is realised or liability is settled. Deferred tax is credited in thestatement of comprehensive income except where it relates to items that may be credited direct to equity, in which case the deferred tax is adjusted directlyagainst equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductibletemporary differences can be utilised.The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxlegislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply withthe conditions of deductibility imposed by the law.Revenue RecognitionSale of goods revenueRevenue from the sale of goods is recognised upon the delivery of goods to customers.Interest revenueInterest revenue is recognised on an accruals basis taking into account the interest rates applicable to the financial assets.Dividend revenueDividend revenue is recognised when the right to receive a dividend has been established.Promotional ExpenditureAdvertising and promotional expenditure (primarily catalogue expenditure) is recognised when incurred. The expenditure is incurred when the entity enters intoa binding commitment with the service provider.Foreign Currency Transactions and BalancesThe functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. Theconsolidated financial statements are presented in Australian dollars, which is the parent entity’s presentation currency.Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currencymonetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at thedate of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income. Exchange difference arising on thetranslation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchangedifference is recognised in the statement of comprehensive income. 8PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash EquivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with originalmaturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value andbank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.Trade and Other Current ReceivablesTrade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment.Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision forimpairment is established when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original termsof receivables.The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at theeffective interest rate. The amount of the provision is recognised in the statement of comprehensive income.InventoriesInventories are measured at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method most appropriate to eachparticular class of inventory, with the majority being valued on a first in first out or average cost basis.Investments and Other Financial AssetsThe parent entity accounts for investments in subsidiaries at cost less impairment. The consolidated entity classifies its investments as available for salefinancial assets. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.Available for sale financial assets, comprising marketable equity securities, are non-derivatives that are either designated in this category or not classified inany of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the statementof financial position date.Purchases and sales of investments are recognised on trade date - the date on which the consolidated entity commits to purchase or sell the asset. Investmentsare initially recognised at fair value plus transaction costs for all financial assets. Financial assets are derecognised when the rights to receive cash flows fromthe financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.Available for sale financial assets are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of non monetarysecurities classified as available for sale are recognised in equity in the available for sale financial assets revaluation reserve. When securities classified asavailable for sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses frominvestment securities. 9PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments and Other Financial Assets (continued) The consolidated entity assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In thecase of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered indetermining whether the security is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss - measured as the differencebetween the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss - is removedfrom equity and recognised in the statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equityinstruments are not reversed through the statement of comprehensive income.Impairment of Financial AssetsFinancial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each statement of financial position date.Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financialasset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is thedifference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where thecarrying amount is reduced through the use of a provision account. When a trade receivable is uncollectible, it is written off against the provision account.Subsequent recoveries of amounts previously written off are credited against the provision account. Changes in the carrying amount of the provision accountare recognised in profit or loss.Property, Plant and EquipmentEach class of property, plant and equipment is carried at cost, less where applicable, any accumulated depreciation and impairment losses. Cost includesexpenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separateasset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the itemcan be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they areincurred.Plant and equipmentPlant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by the directors to ensure that it is notin excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be receivedfrom the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverableamounts.DepreciationThe depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, are depreciated on a straight line basisover their useful lives to the consolidated entity commencing from the time each asset is held ready for use. Leasehold improvements are depreciated over theshorter of either the unexpired period of the lease or the estimated useful lives of the improvements.The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset Depreciation Rate Plant and equipment 7.50% - 66.77% Motor vehicles 15.00% - 20.00% 10PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property, Plant and Equipment (continued) The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverableamount.Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These gains or losses are included in the statement ofcomprehensive income.LeasesLeases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred toentities in the consolidated entity are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the present value ofminimum lease payments, including any guaranteed residual values. Leased assets are depreciated on a straight line basis over their estimated useful liveswhere it is likely that the consolidated entity will obtain ownership of the asset over the term of the lease. Lease payments are allocated between the reduction ofthe lease liability and the lease interest expense for the year.Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the year in which they areincurred.IntangiblesIntangibles – Trademark LicencesTrademark licences are initially recognised at cost of acquisition. They have an indefinite useful life because they are subject to a written trademark agreementwhich does not limit the period over which they are expected to generate cash inflows. They are not subject to amortisation.Trademark licences are tested for impairment annually and are subsequently carried at cost less any accumulated impairment losses. An impairment loss isrecognised for the amount by which the trademark licence’s carrying amount exceeds its recoverable amount.GoodwillGoodwill and goodwill on consolidation are initially recorded as an intangible asset at the amount by which the purchase price for a business or for anownership interest in a controlled entity exceeds the fair value attributed to its net assets at the date of acquisition. Goodwill has an indefinite life on the basisthere is no foreseeable limit to the period over which the asset is expected to generate cash inflows. They are not subject to amortisation.Goodwill is tested annually for impairment and carried at a cost less accumulated impairment losses.Impairment of AssetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Other assets are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount bywhich the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value inuse. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generatingunits). 11PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Trade and Other PayablesThese amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of financial year which are unpaid. The amountsare unsecured and are usually paid within 30 days of recognition, with the exception of certain liabilities to employees that are usually paid within 12 monthsof the statement of financial position date.BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any differencebetween the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of theborrowings using the effective interest method. Fees paid on the establishment of the loan facilities are recognised in the statement of comprehensive incomewhen they are incurred.Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 monthsafter the statement of financial position date.Employee BenefitsWages and salaries, annual leave and sick leaveLiabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of thereporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paidwhen the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.Long service leaveThe liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to bemade in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience ofemployee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bondswith terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.Retirement Benefit ObligationsSuperannuation contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred.ProvisionsProvisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflowof economic benefits will result and that outflow can be reliably measured. Provisions recognised represent the best estimate of the amounts required to settle theobligation at the end of the reporting period. 12PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Goods and Services Tax (GST)Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the AustralianTaxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST recoverable from or payable to theAustralian Taxation Office is included with other receivables or payables in the statement of financial position.Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, orpayable to, the Australian Taxation Office, are presented as operating cash flow.Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the Australian Taxation Office.Financial InstrumentsInitial recognition and measurementFinancial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets,this is equivalent to the date that the economic entity commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted).Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’in which case transaction costs are expensed to the statement of comprehensive income immediately.Classification and subsequent measurementFinancial instruments are subsequently measured at fair value, amortised cost using the effective interest rate method or cost. Fair value represents the amountfor which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market areused to determine fair value. In other circumstances, valuation techniques are adopted.Amortised cost is calculated as: • the amount at which the financial asset or financial liability is measured at initial recognition; • less principal repayments; • plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated usingthe effective interest method; • less any reduction for impairment.The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discountsestimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannotbe reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions toexpected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in the statement ofcomprehensive income.The consolidated entity does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of AccountingStandards specifically applicable to financial instruments. 13PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial Instruments (continued) (i)Financial assets at fair value through profit or lossFinancial assets are classified at ‘fair value through profit or loss’ when they are held for trading for the purpose of short-term profit taking, derivativesnot held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a groupof financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investmentstrategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss. (ii)Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and aresubsequently measured at amortised cost.Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reportingperiod, which will be classified as non-current assets. (iii)Held-to-maturity investmentsHeld-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the consolidatedentity’s intention to hold these investments to maturity.They are subsequently measured at amortised cost.Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of thereporting period, which will be classified as current assets. If during the period the consolidated entity sold or reclassified more than an insignificantamount of the held-to-maturity investments before maturity, the entire category of held-to-maturity investments would be tainted and would bereclassified as available-for-sale. (iv)Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are either not capable of being classified into other categories of financial assetsdue to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixedmaturity nor fixed or determinable payments.Available-for-sale financial assets are included in non-current assets, except for those which are expected to be disposed of within 12 months after theend of the reporting period, which will be classified as current assets. (v)Financial liabilitiesNon-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.Fair valueFair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlistedsecurities, including recent arm’s length transactions, reference to similar instruments and option pricing models.ImpairmentAt the end of each reporting period, the consolidated entity assesses whether there is objective evidence that a financial instrument has been impaired. In thecase of available-for-sale financial instruments, a significant or prolonged decline in the value of the instrument is considered to determine whether animpairment has arisen. Impairment losses are recognised in the statement of comprehensive income. 14PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial Instruments (continued) DerecognitionFinancial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity nolonger has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the relatedobligations are discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another partyand the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in the statement of comprehensiveincome.ComparativesWhere required by Accounting Standards and/or for improved presentation purposes comparative figures have been adjusted to conform with changes inpresentation for the current year.Critical Accounting Estimates and AssumptionsThe directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information.Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within theconsolidated entity.Key Estimates – Impairment of Goodwill and Trademark LicencesThe consolidated entity tests annually whether goodwill and other intangible assets that have an indefinite useful life have suffered any impairment, inaccordance with the accounting policy stated in note 1.In assessing goodwill for impairment, sensitivity analysis was applied to key assumptions (being the growth and discount rates) used in value in usecalculations. As a result of this sensitivity analysis, there were no changes in key assumptions that were considered reasonably possible, which would causethe carrying amount of goodwill to exceed its recoverable amount and therefore no impairment has been recognised in respect of goodwill amounting to$28,492,523 or trademark licences amounting to $1,976,652 for the year ended 30 September 2011. 15PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 2 Revenue Revenue Sales net of discounts and rebates allowed 126,288,905 130,163,227 126,288,905 130,309,235 Other revenue Dividend received 4,717 4,855 4,086,923 4,074,561 Interest received 1,415,432 1,013,514 949,942 1,216,731 Other operating revenue 201,512 126,705 126,946 126,530 1,621,661 1,145,074 5,163,811 5,417,822 Total revenue 127,910,566 131,308,301 131,452,716 135,727,057 Note 3 Expenses Depreciation - property, plant & equipment 613,395 671,172 367,257 350,860 Bad and doubtful debts expense Bad debts 123,276 30,433 123,276 30,433 Provision for impairment (62,499) — (62,499) — Total bad and doubtful debts 60,777 30,433 60,777 30,433 Foreign currency translation losses 73,884 21,571 — 16,286 Loss on disposal of property, plant and equipment 144,297 63,090 2,042 6,862 Rental expenses relating to operating leases 4,667,381 5,559,663 3,161,293 3,033,062 Note 4 Dividends Fully franked dividends - franked at tax rate of 30% 1,010,681 1,007,624 — — Balance of franking account at year end adjusted for franking credits arisingfrom payment of provision for income tax, franking debits arising frompayment of dividends recognised as a liability at reporting date and frankingcredits arising from receipt of dividends recognised as receivable at reportingdate. 23,175,163 20,991,213 — — 16PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 5 - Income tax (a) The components of income tax expense comprise Current income tax 4,549,150 4,291,118 n/a n/a Deferred income tax - recoupment of (increase in) tax losses (12,723) 394,083 n/a n/a Deferred income tax - other items 262,016 229,553 n/a n/a Deferred income tax - changes in tax rates 1,860 10,971 n/a n/a Under (over) provision in respect of prior years 611 (3,047) n/a n/a Total income tax expense 4,800,914 4,922,678 n/a n/a Deferred income tax expense included in income tax expense Decrease (increase) in deferred tax assets (note 12) 213,388 532,804 n/a n/a Increase (decrease) in deferred tax liabilities (note 19) 35,905 90,832 n/a n/a 249,293 623,636 n/a n/a (b) Income tax reconciliation The prima facie tax on profit before income tax is reconciled to the income tax asfollows:- Prima facie tax payable on profit before income tax at 30% 7,067,422 7,540,888 n/a n/a Add (less) tax effect of:- Non allowable items (23,611) 43,317 n/a n/a Non assessable items 239 (680) n/a n/a Change in tax rates 1,860 10,971 n/a n/a Over (under) provision in respect of prior years — (3,047) n/a n/a Increase in tax losses not recognised (263) 671 n/a n/a Income tax not payable by parent entity - non taxable entity (2,244,733) (2,669,442) n/a n/a Income tax expense 4,800,914 4,922,678 n/a n/a The applicable weighted average effective tax rates are as follows: 20% 20% n/a n/a Tax effect relating to other comprehensive income: Deferred tax 25,802 14,220 n/a n/a Note 6 Current Assets - Cash and Cash Equivalents Cash at bank 3,263,833 3,302,852 2,168,604 146,491 Cash on deposit 22,899,120 23,902,839 950,689 2,381,283 26,162,953 27,205,691 3,119,293 2,527,774 Note 7 Current Assets - Trade and Other Receivables Trade receivables 35,510,561 35,265,481 35,510,562 35,265,481 Less provision for impairment (37,501) (100,000) (37,501) (100,000) 35,473,060 35,165,481 35,473,061 35,165,481 Current tax assets 47,093 91,953 — — Other receivables 1,259,305 948,052 858,126 641,837 36,779,458 36,205,486 36,331,187 35,807,318 17PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 8 Current Assets - Inventories Stock on hand (note 1) 22,499,902 22,503,626 22,499,902 22,503,626 Note 9 Non-Current Assets - Receivables Loan to controlled entity - unsecured — — 10,701,395 9,926,160 Note 10 Non-Current Assets - Financial Assets Other Financial Assets Unlisted investments Shares in subsidiary companies (at cost) — — 40,853,792 40,853,792 Shares in unlisted corporations (at fair value) 495,252 409,245 — — 495,252 409,245 40,853,792 40,853,792 Parent Entity - Shares in other controlled corporations On 29 April 2005 the joint venture acquired 80.17% of the share capital of GeoffPenney (Australia) Pty Limited, which is also the 100% holding company ofCustom Xstamper Australia Pty Limited and Pelikan Artline Limited. On 14 January 2009 the joint venture acquired 100% of the share capital of SpiraxHoldings Pty Limited, which is also the 100% holding company of SpiraxIndustries Pty Limited, Spirax Office Products Pty Limited, Spirax Holdings NZLimited and Spirax New Zealand Limited. Consolidated Entity - Shares in unlisted corporations Shares in other corporations represent an investment in Shachihata (Malaysia) Sdn.Bhd., a private company incorporated in Malaysia that manufactures certainproducts sold by the Consolidated Entity. The percentage owned is 2.38% and iscarried at fair value. 18PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 11 Non-Current Assets - Property, Plant and Equipment Plant and equipment (at cost) 10,177,139 11,557,469 2,767,337 2,811,757 Less accumulated depreciation (8,570,490) (9,259,749) (1,617,411) (1,423,107) Total property, plant and equipment 1,606,649 2,297,720 1,149,926 1,388,650 Movements in carrying amounts Plant andequipment Total Consolidated Entity $ $ At 1 October 2010 Cost 11,557,469 11,557,469 Accumulated depreciation and impairment (9,259,749) (9,259,749) Net carrying amount 2,297,720 2,297,720 Year ended 30 September 2011 Net carrying amount at 1 October 2010 2,297,720 2,297,720 Additions 151,638 151,638 Disposals (229,314) (229,314) Depreciation and amortisation charge (613,395) (613,395) Net carrying amount at 30 September 2011 1,606,649 1,606,649 At 30 September 2011 Cost 10,177,139 10,177,139 Accumulated depreciation and impairment (8,570,490) (8,570,490) Net carrying amount 1,606,649 1,606,649 Parent Entity Plant andequipment$ Total$ At 1 October 2010 Cost 2,811,757 2,811,757 Accumulated depreciation and impairment (1,423,107) (1,423,107) Net carrying amount 1,388,650 1,388,650 Year ended 30 September 2011 Net carrying amount at 1 October 2010 1,388,650 1,388,650 Additions 151,638 151,638 Disposals (23,105) (23,105) Depreciation and amortisation charge (367,257) (367,257) Net carrying amount at 30 September 2011 1,149,926 1,149,926 At 30 September 2011 Cost 2,767,337 2,767,337 Accumulated depreciation and impairment (1,617,411) (1,617,411) Net carrying amount 1,149,926 1,149,926 19PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 12 Non-Current Assets - Deferred Tax Assets Deferred tax assets 683,237 897,520 n/a n/a Deferred tax assets - movement Opening balance 897,520 1,446,465 n/a n/a Change in tax rates (1,912) (11,323) n/a n/a Unrealised currency gains and losses 1,022 (8,414) n/a n/a Provisions 60,600 (35,400) n/a n/a Accruals (8,989) (101,411) n/a n/a Property, plant and equipment (2,988) 1,686 n/a n/a Tax losses (262,016) (394,083) n/a n/a Closing balance 683,237 897,520 n/a n/a Deferred tax assets comprise Provisions 259,500 376,001 n/a n/a Accruals 396,662 259,503 n/a n/a Property, plant and equipment 27,075 — n/a n/a Tax losses — 262,016 n/a n/a 683,237 897,520 n/a n/a 20PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 13 Non-Current Assets - Intangible Assets Trademark licence (at cost) 1,976,652 1,976,652 — — Goodwill (at cost) 28,492,523 28,490,751 50,015 48,243 30,469,175 30,467,403 50,015 48,243 Movements in carrying amounts Trademarklicence Goodwill Total Consolidated Entity $ $ $ At 1 October 2010 Cost 1,976,652 28,490,751 30,467,403 Accumulated amortisation and impairment — — — Net carrying amount 1,976,652 28,490,751 30,467,403 Year ended 30 September 2011 Net carrying amount at 1 October 2010 1,976,652 28,490,751 30,467,403 Currency fluctuations — 1,772 1,772 Net carrying amount at 30 September 2011 1,976,652 28,492,523 30,469,175 At 30 September 2011 Cost 1,976,652 28,492,523 30,469,175 Accumulated amortisation and impairment — — — Net carrying amount 1,976,652 28,492,523 30,469,175 Trademarklicence Goodwill Total Parent Entity $ $ $ At 1 October 2010 Cost — 48,243 48,243 Accumulated amortisation and impairment — — — Net carrying amount — 48,243 48,243 Year ended 30 September 2011 Net carrying amount at 1 October 2010 — 48,243 48,243 Currency fluctuations — 1,772 1,772 Net carrying amount at 30 September 2011 — 50,015 50,015 At 30 September 2011 Cost — 50,015 50,015 Accumulated amortisation and impairment — — — Net carrying amount — 50,015 50,015 21PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 14 Current Liabilities - Trade and Other Payables Trade payables 11,230,530 15,088,224 11,510,273 15,488,730 Liabilities to employees 4,116,698 4,994,504 3,121,108 4,033,258 Other payables 12,434,581 10,288,770 12,059,162 9,787,328 Loans - unsecured — — 7,485,518 5,373,516 27,781,809 30,371,498 34,176,061 34,682,832 Note 15 Current Liabilities - Provisions Employee benefits - long service leave 1,644,271 1,121,980 966,271 687,518 Note 16 Current Liabilities - Short-term Borrowings Loans - Westpac (secured) 4,000,000 4,000,000 4,000,000 4,000,000 Note 17 Non-Current Liabilities - Trade and Other Payables Loans - unsecured — — 31,541,045 23,935,547 Note 18 Non-Current Liabilities - Long-term Borrowings Loans - Westpac (secured) 14,000,000 19,000,000 14,000,000 19,000,000 Note 19 Non-Current Liabilities - Deferred Tax Liabilities Deferred tax liabilities 233,199 171,492 n/a n/a Deferred tax liabilities - movement Opening balance 171,492 66,440 n/a n/a Receivables 28,485 91,069 n/a n/a Prepayments 7,420 (237) n/a n/a Revaluation of available for sale financial assets charged directly to othercomprehensive income 25,802 14,220 n/a n/a Closing balance 233,199 171,492 n/a n/a Deferred tax liabilities comprise Receivables 119,936 91,451 n/a n/a Prepayments 23,622 16,202 n/a n/a Revaluation of available for sale financial assets 89,641 63,839 n/a n/a 233,199 171,492 n/a n/a Note 20 Non-Current Liabilities - Provisions Employee benefits - long service leave 241,307 274,786 54,307 46,247 22PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 21 Joint Venture Equity Columbia Pelikan Pty Ltd Capital introduced 826,402 826,402 826,402 826,402 Share of joint venture profits - prior years 26,508,374 22,344,499 14,861,145 13,301,502 Share of joint venture profits - current year 8,395,821 9,090,583 5,784,683 6,486,351 Share of transfers to reserves - prior year 59,713 46,412 — — Share of transfers to reserves - current year 24,134 13,301 — — Distribution of profit (6,066,815) (4,926,708) (6,066,815) (4,926,708) Joint venture interest at the end of the financial year 29,747,628 27,394,488 15,405,414 15,687,547 ACCO Brands Australia Pty Ltd/GBC Fordigraph Pty Ltd* Capital introduced 826,402 826,402 826,402 826,402 Share of joint venture profits - prior years 26,508,374 22,344,499 14,861,145 13,301,502 Share of joint venture profits - current year 8,395,821 9,090,583 5,784,683 6,486,351 Share of transfers to reserves - prior year 59,713 46,412 — — Share of transfers to reserves - current year 24,134 13,301 — — Distribution of profit (6,066,815) (4,926,708) (6,066,815) (4,926,708) Joint venture interest at the end of the financial year 29,747,628 27,394,488 15,405,414 15,687,547 Total joint venture interests Capital introduced 1,652,804 1,652,804 1,652,804 1,652,804 Share of joint venture profits - prior years 53,016,747 44,688,998 29,722,289 26,603,004 Share of joint venture profits - current year 16,791,642 18,181,165 11,569,365 12,972,701 Share of transfers to reserves - prior year 119,425 92,824 — — Share of transfers to reserves - current year 48,268 26,601 — — Distribution of profit (12,133,630) (9,853,416) (12,133,630) (9,853,416) Joint venture interest at the end of the financial year 59,495,256 54,788,976 30,810,828 31,375,093 Outside equity interests in controlled entities (note 24) 9,600,710 8,633,936 — — Total equity as per the statement of financial position 69,095,966 63,422,912 30,810,828 31,375,093 * Under a Deed of Transfer and Novation dated 25 May 2011 ACCO Brands AustraliaPty Ltd replaced GBC Fordigraph Pty Ltd as a holder of GBC Fordigraph Pty Ltd’s50% interest in the Pelikan Artline Joint Venture and as a party to the Joint VentureAgreements. The parties also agreed that the Joint Venture and its business as evidenced in the JointVenture documents is a continuing partnership. Note 22 Reserves Available for sale financial assets revaluation reserve Opening balance 119,425 92,824 — — Movement during the year 48,268 26,601 — — Closing balance 167,693 119,425 — — The available for sale financial assets revaluation reserve records revaluations ofavailable for sale financial assets. 23PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 23 Retained Earnings Movements in retained earnings were as follows: Balance at the beginning of the year 53,016,747 44,688,998 29,722,289 26,603,004 Profit attributable to owners of the parent for the year 16,791,642 18,181,165 11,569,365 12,972,701 Distribution of profit during the year (12,133,630) (9,853,416) (12,133,630) (9,853,416) Dividends paid or provided (1,010,681) (1,007,624) — — Dividends attributable to outside equity interest 1,010,681 1,007,624 — — Balance at the end of the year 57,674,759 53,016,747 29,158,024 29,722,289 Distribution to joint venture partners Columbia Pelikan Pty Ltd 28,837,380 26,508,374 14,579,012 14,861,145 ACCO Brands Australia Pty Ltd/GBC Fordigraph Pty Ltd 28,837,380 26,508,374 14,579,012 14,861,145 57,674,759 53,016,747 29,158,024 29,722,289 Note 24 Outside Equity Interests in Controlled Entities Outside equity interest comprises: Share capital 141,562 141,562 — — Reserves 653,992 642,055 — — Retained earnings 8,805,156 7,850,319 — — 9,600,710 8,633,936 — — Note 25 Commitments (a) Operating lease commitments Aggregate amount contracted for but not capitalised in the financial statements andpayable: Not later than 1 year 3,356,674 2,843,651 2,440,583 1,225,858 Later than 1 year but not later than 5 years 4,719,072 3,332,209 4,499,295 2,226,954 Greater than 5 years 156,494 377,382 156,494 377,382 8,232,240 6,553,242 7,096,372 3,830,194 Operating lease commitments relate to: (i) Controlled entities lease property, equipment and motor vehicles under operating leasesexpiring from one to ten years. Leases generally provide controlled entities with a rightof renewal at which all terms are negotiated. Lease payments comprise a base amountplus an incremental contingent rental. Contingent rentals are based on eithermovements in the Consumer Price Index or operating criteria. 24PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 26 Assets Pledged as Security The parent entity has a bank overdraft, letter of credit, bill facilities and bankloan which are secured by a registered mortgage by Pelikan Artline Pty Limitedover all its assets and uncalled capital and over all the assets of the joint ventureand the consolidated entity. The overdraft was unused at 30 September 2011but an interest rate of 10.41% was chargeable on overdrawn balances. The carrying amounts of assets pledged as security for the registered mortgagedebenture are: Cash and cash equivalents assets 26,162,953 27,205,691 3,119,293 2,527,774 Trade and other receivables 36,779,458 36,205,486 36,331,187 35,807,318 Inventories 22,499,902 22,503,626 22,499,902 22,503,626 Prepayments 922,226 727,708 843,002 671,674 Receivables — — 10,701,395 9,926,160 Financial assets 495,252 409,245 40,853,792 40,853,792 Property, Plant & Equipment 1,606,649 2,297,720 1,149,926 1,388,650 Deferred tax assets 683,237 897,520 n/a n/a Intangible assets 30,469,175 30,467,403 50,015 48,243 Total assets 119,618,852 120,714,399 115,548,512 113,727,237 Note 27 Economic DependenceA significant portion of the consolidated entity’s trading products are supplied by Shachihata, Inc., Japan.Note 28 Events after Balance DateSince the end of the year cash distributions of $1,164,812 in total have been made to the joint venture parties.Apart from the matter referred to above, no matters or circumstances have arisen since the end of the year which significantly affected or maysignificantly affect the operations of the joint venture, the results of those operations or the state of affairs of the joint venture in future financialyears. 25PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 29 Cash Flow Information Reconciliation of profit after income tax to net cash inflow from operatingactivities: Profit after income tax 18,757,160 20,213,615 11,569,365 12,972,701 Adjustments for: Depreciation 613,395 671,172 367,257 350,860 Net loss on disposal of plant and equipment 144,297 63,090 2,042 6,862 Impairment provision - receivables (62,499) — (62,499) — Employee benefits - provision 488,812 (71,145) 286,813 46,854 Changes in assets and liabilities Decrease (increase) in trade and other receivables (556,333) (952,963) (461,370) (874,686) Decrease (increase) in current tax assets 44,860 — — — Decrease (increase) in inventories 3,724 (1,653,123) 3,724 (1,653,123) Decrease (increase) in prepayments (194,518) 44,389 (171,328) 42,986 Decrease (increase) in deferred tax assets 214,283 548,945 — — Increase (decrease) in trade and other payables (2,591,461) 3,807,102 (6,300,246) (409,903) Increase (decrease) in current tax liabilities 270,569 1,149,286 — — Increase (decrease) in deferred tax liabilities 35,905 90,832 — — Net cash flows from operating activities 17,168,194 23,911,200 5,233,758 10,482,551 26PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $ Note 30 Related Party Transactions Parent and controlled entities The consolidated entity consists of the parent entity, Pelikan Artline Joint Venture and itscontrolled entities Spirax Holdings Pty Limited, Spirax Industries Pty Limited,Spirax Office Products Pty Limited, Spirax Holdings NZ Limited, Spirax NewZealand Limited, Geoff Penney (Australia) Pty Limited, Custom Xstamper AustraliaPty Limited and Pelikan Artline Limited. Loans from related parties Aggregate amounts payable to related parties at reporting date:- Loans unsecured (current) - controlled entities 7,485,518 5,373,516 Loans unsecured (non-current) - controlled entities 31,541,045 23,935,548 39,026,563 29,309,064 Loans to related parties Aggregate amounts receivable from related parties at reporting date:- Loans unsecured (non-current) - controlled entities 10,701,395 9,926,160 10,701,395 9,926,160 Transactions with related parties Transactions between related parties are on normal commercial terms and conditions nomore favourable than those available to other parties unless otherwise stated. Transactions between the parent entity and its controlled entities during the yearconsisted of:- Payment of interest on the above loans (1,623,938) (1,445,435) Receipt of interest on the above loans 775,235 719,370 Receipt of dividends 4,086,923 4,074,561 Recovery of overheads (9,701,491) (10,081,537) Distribution fee (13,905,155) (15,070,348) Key management personnel compensation 3,975,948 2,869,670 3,975,948 2,869,670 Purchase of inventory from joint venture partner related parties (1,450,225) (2,051,014) Recovery of administration and accounting services provided to a joint venture partner 60,000 60,000 27PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Consolidated Parent 2011 2010 2011 2010 $ $ $ $Note 30 Related Party Transactions (continued) Guarantees provided to related parties Refer to note 26 for assets pledged as security by related parties Note 31 Financial Risk Management The consolidated entity’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, loansto and from subsidiaries and leases.The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financialstatements, are as follows: Financial assets Cash and cash equivalents (refer note 6) 26,162,953 27,205,691 3,119,293 2,527,774 Trade and other receivables (refer note 7) 36,779,458 36,205,486 47,032,582 45,733,478 Other financial assets (refer note 10) 495,252 409,245 40,853,792 40,853,792 63,437,663 63,820,422 91,005,667 89,115,044 Financial Liabilities Trade and other payables (refer note 14 & 17) 27,781,809 30,371,498 65,717,106 58,618,379 Other loans and borrowings (refer note 16 & 18) 18,000,000 23,000,000 18,000,000 23,000,000 45,781,809 53,371,498 83,717,106 81,618,379 28PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Note 32 Additional Information - UnauditedThe following additional financial data is in accordance with the books and records of the consolidated entity which have been subjected to the auditingprocedures applied by the auditors of the consolidated entity’s financial report for the year ended 30 September 2009.The audit of the financial report for the year ended 30 September 2009 did not cover all details of this additional financial data, which does not formpart of the financial report. Accordingly, the auditor of the company’s financial report does not express an audit opinion on such financial data and nowarranty of accuracy or reliability is given. (a) Statement of Comprehensive Income for the year ended 30 September 2009 Consolidated Parent 2009 2009 $ $ Revenue Revenue Sales net of discounts and rebates allowed 121,870,757 118,551,554 Other revenue Dividend received 5,796 3,726,387 Interest received 468,900 810,037 Other operating revenue 175,536 175,536 650,232 4,711,960 Total revenue 122,520,989 123,263,514 Expenses Purchases, distribution & selling (94,171,886) (83,834,592) Marketing (11,582,511) (11,419,743) Administration, IT & other expenses (866,735) (18,375,427) Finance costs (1,731,901) (3,731,221) (108,353,033) (117,360,983) Profit before income tax 14,167,956 5,902,531 Income tax expense (2,768,432) — Profit for the year 11,399,524 5,902,531 Other Comprehensive Income Available for sale financial assets 48 — Other comprehensive income for the year, net of tax 48 — Total comprehensive income for the year 11,399,572 5,902,531 Profit attributable to: Owners of the parent entity 9,976,669 5,902,531 Minority interest 1,422,855 — 11,399,524 5,902,531 Total comprehensive income attributable to: Owners of the parent entity 9,976,708 5,902,531 Minority interest 1,422,864 — 11,399,572 5,902,531 29PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2011 Note 32 Additional Information - Unaudited (continued) (b) Statement of Cash Flows for the year ended 30 September 2009 Consolidated Parent 2009 2009 $ $ Cash Flows From Operating Activities Receipts from customers (inclusive of GST) 138,177,055 123,011,940 Payments to suppliers and employees (inclusive of GST) (124,435,064) (126,021,019) Dividend received 5,796 3,732,183 Interest received 437,342 787,752 Finance costs (1,693,966) (3,002,454) Income tax paid (5,287,633) — Net cash flows from operating activities (note 32(c)) 7,203,530 (1,491,598) Cash Flows From Investing Activities Purchase of property, plant and equipment (219,861) (220,174) Proceeds from sale of property, plant and equipment 7,255 7,163 Purchase of subsidiary 19,245,050 (10,500,000) Loans to related party — (8,745,050) Net cash flows from investing activities 19,032,444 (19,458,061) Cash Flows From Financing Activities Proceeds from borrowings 21,000,000 21,000,000 Repayment of borrowings (4,000,000) (4,000,000) Loans from related parties (net) — 9,480,393 Profit distributions paid (10,245,054) (10,245,054) Dividends paid (921,522) — Net cash flows from financing activities 5,833,424 16,235,339 Net decrease in cash and cash and cash equivalents (6,420,702) (4,714,320) Cash and cash equivalents at the beginning of the year 24,983,418 16,873,275 Cash and cash equivalents at the end of the year 18,562,716 12,158,955 (c) Reconciliation of profit after income tax to net cash inflow from operating activities: Profit after income tax 11,399,524 5,902,531 Adjustments for: Depreciation 729,565 329,151 Net gain on disposal of plant and equipment 82,995 11,848 Impairment provision - receivables (253,212) (253,212) Employee benefits - provision 355,114 105,114 Changes in assets and liabilities Decrease in trade and other receivables (161,116) (8,584,824) Increase in inventories 4,036,879 (415,121) Increase in prepayments 456,498 372,980 Increase in deferred tax assets (1,112,359) — Increase in trade and other payables (6,923,516) 1,039,935 Increase in current tax liabilities (1,417,390) — Decrease in deferred tax liabilities 10,548 — Net cash flows from operating activities 7,203,530 (1,491,598) 30

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