ACCO Brands Annual Report 2013

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 ___________________________________________________________Form 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the Fiscal Year Ended December 31, 2013¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 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)Four Corporate DriveLake Zurich, Illinois 60047(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, 2013, the aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $551.9million. As of February 3, 2014, the registrant had outstanding 113,721,937 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 13, 2014 are incorporated by reference into Part III of this report. Cautionary Statement Regarding Forward-Looking StatementsCertain statements made in this Annual Report on Form 10-K are “forward-looking statements” within the meaning of Section 21E of theSecurities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking thesesafe harbor provisions. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies andexpectations of the Company, are generally identifiable by use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,”“forecast,” “project,” “plan,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherentlyuncertain. Because actual results may differ from those predicted by such forward-looking statements, you should not place undue reliance on suchforward-looking statements when deciding whether to buy, sell or hold the Company’s securities. Our forward-looking statements are made as of thedate hereof and we undertake no obligation to update these forward-looking statements in the future.The factors that could affect our results or cause plans, actions and results to differ materially from current expectations are detailed in thisreport, including under “Part I, Item 1. Business,” “Part I, Item 1A. Risk Factors” and the financial statement line item discussions set forth in “Part II,Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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 its website itsAnnual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuantto Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the Securitiesand Exchange Commission. We also make available the following documents on our Internet website: the Audit Committee Charter; the CompensationCommittee Charter; the Corporate Governance and Nominating Committee Charter; the Finance and Planning Committee Charter; the Executive CommitteeCharter; our Corporate Governance Principles; and our Code of Business Conduct and Ethics. The Company’s Code of Business Conduct and Ethicsapplies to all of our directors, officers (including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer) and employees. Youmay obtain a copy of any of the foregoing documents, free of charge, if you submit a written request to ACCO Brands Corporation, Four Corporate Drive,Lake Zurich, IL. 60047, Attn: Investor Relations.TABLE OF CONTENTS PART I ITEM 1.Business1ITEM 1A.Risk Factors6ITEM 1B.Unresolved Staff Comments13ITEM 2.Properties14ITEM 3.Legal Proceedings14ITEM 4.Mine Safety Disclosures15PART II ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities16ITEM 6.Selected Financial Data18ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations19ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk38ITEM 8.Financial Statements and Supplementary Data40ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure91ITEM 9A.Controls and Procedures91ITEM 9B.Other Information92PART III ITEM 10.Directors, Executive Officers and Corporate Governance93ITEM 11.Executive Compensation93ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters93ITEM 13.Certain Relationships and Related Transactions, and Director Independence94ITEM 14.Principal Accountant Fees and Services94PART IV ITEM 15.Exhibits and Financial Statement Schedules95 Signatures100PART IITEM 1. BUSINESSAs used in this Annual Report on Form 10-K for the fiscal year ended December 31, 2013, the terms "ACCO Brands," "ACCO", the "Company," "we" "us," and "our" refer to ACCOBrands Corporation, a Delaware corporation incorporated in 2005, and its consolidated domestic and international subsidiaries.OverviewACCO Brands is a leading global manufacturer and marketer of office, school and calendar products and select computer and electronic accessories.Approximately 80% of our net sales come from brands that occupy the number one or number two positions in the select markets in which we compete. Wesell our products to consumers and commercial end-users primarily through resellers, including traditional office resellers, wholesalers, retailers and e-tailers.We design, develop, manufacture and market a wide variety of traditional and computer-related office products, school supplies and paper-based calendarproducts. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of our consumers and commercialend-users. We compete through a balance of product innovation, category management, a low-cost operating model and an efficient supply chain. We sell ourproducts primarily to markets located in the United States, Northern Europe, Canada, Australia, Brazil and Mexico. The majority of our revenue isconcentrated in geographies where demand for our product categories is in mature stages, but we see opportunities to grow sales through share gains, channelpenetration and new products. We expect to derive growth in faster growing emerging geographies where demand in the product categories in which we competeis strong, such as in Latin America and parts of Asia and Eastern Europe. Key drivers of demand for office and school products have included trends inwhite collar employment levels, education enrollment levels, gross domestic product (GDP), growth in the number of small businesses and home offices, aswell as consumer usage trends for our product categories.We believe our leading product positions provide the scale to enable us to invest in product innovation and drive 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 innovations to consumer products. We plan to grow via a strategy of organic growth supplemented by acquisitions that can leverage our existingbusiness.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. We currently manufacture approximately half of our products and source the remaining half of our products,primarily from Asia.On May 1, 2012, we completed the merger ("Merger") of the Mead Consumer and Office Products Business (“Mead C&OP”) with a wholly-ownedsubsidiary of the Company. Accordingly, the results of Mead C&OP are included in our consolidated financial statements from the date of the Merger.For further information on the Merger with Mead C&OP see "Note 3. Acquisitions" to the consolidated financial statements contained in Item 8 of thisreport.Reportable SegmentsACCO Brands is organized into three business segments: ACCO Brands North America, ACCO Brands International and Computer Products Group.Our three business segments are described below.ACCO Brands North America and ACCO Brands InternationalACCO Brands North America and ACCO Brands International manufacture, source and sell traditional office products, school supplies and calendarproducts. ACCO Brands North America comprises the U.S. and Canada, and ACCO Brands International comprises the rest of the world, principallyEurope, Latin America, Australia, and Asia-Pacific.Our office, school and calendar product lines use name brands such as AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy, Marbig, Mead®,NOBO, Quartet®, Rexel, Swingline®, Tilibra, Wilson Jones® and many others. Products and brands are not confined to one channel or product category andare sold based on end-user preference in each geographic location.1The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards,are used by businesses. Most of these end-users purchase their products from our customers, which include commercial contract stationers, massmerchandisers, retail superstores, wholesalers, resellers, e-tailers, club stores and dealers. We also supply some of our products directly to large commercialand industrial end-users and provide business machine maintenance and certain repair services.Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily throughtraditional and online retail, mass merchandisers, grocery, drug and office superstore channels. We also supply private label products within the schoolproducts sector.Our calendar products are sold throughout all channels where we sell office or school products, as well as direct to consumers.Computer Products GroupOur Computer Products Group designs, sources, distributes, markets and sells accessories for laptop and desktop computers and tablets andsmartphones. These accessories primarily include security products, tablet covers and keypads, smartphone accessories, power adapters, input devices suchas mice, laptop computer carrying cases, hubs, docking stations and ergonomic devices. We sell these products mostly under the Kensington®, Microsaver®and ClickSafe® brand names, with the majority of our revenue coming from the U.S. and Western Europe. Our computer products are manufactured bythird-party suppliers, principally in Asia, and are distributed from our regional facilities. Our computer products are sold primarily to consumer electronicsretailers, information technology value-added resellers, original equipment manufacturers and office products retailers.For further information on our business segments see "Note 16. Information on Business Segments" to the consolidated financial statements containedin Item 8 of this report.Customers/CompetitionOur sales are generated principally in North America, Europe, Latin America and Australia. For the year ended December 31, 2013, these marketsrepresented 54%, 14%, 13% and 7% of net sales, respectively. Our top ten customers accounted for 51% of net sales for the year ended December 31, 2013.Sales to Staples, our largest customer, amounted to approximately 13% of consolidated net sales for each of the years ended 2013, 2012 and 2011. Sales forOffice Depot, our second largest customer, amounted to approximately 11% of consolidated net sales for the year ended 2011. Sales to no other customersexceeded 10% of consolidated sales for any of the last three years. Giving effect to the recently completed merger between Office Depot and OfficeMax, as if themerger and the sale of its joint venture, Office Depot de Mexico, had both occurred on January 1, 2013, our sales to the combined companies and theirsubsidiaries would have represented approximately 13% of our 2013 sales.The customer base to which we sell our products is primarily made up of large global and regional resellers of our products. Mass and retail channelsprimarily sell to individual consumers but also to small businesses. Office superstores primarily sell to commercial customers but also to individualconsumers and small businesses at their retail stores. As a result, there is no clear correlation between product, consumer or distribution channel. We also sellto commercial contract stationers, wholesalers, distributors, e-tailers, and independent dealers. Over half of our product sales by our customers are to businessend-users, who generally seek premium products that have added value or ease-of-use features and a reputation for reliability, performance and professionalappearance. Some of our binding and laminating equipment products are sold directly to high-volume end-users and commercial reprographic centers. We alsosell calendar products direct to consumers.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 product suppliers they use. This results in pricing pressures, the need for strongerend-user brands, broader product penetration within categories, the ongoing introduction of innovative new products and continuing improvements incustomer service. See also "Item 1A. Risk Factors - Challenges related to the highly competitive business segments in which we operate could have anegative effect on our ongoing operations, revenues, results, cash flows or financial position" and "The market for products sold by our ComputerProducts Group is rapidly changing and highly competitive."Competitors of our ACCO Brands North America and ACCO Brands International segments include 3M, Blue Sky, Carolina Pad, CCL Industries,Dominion Blueline, Esselte, Fellowes, Franklin Covey, Hamelin, House of Doolittle, Newell Rubbermaid,2RR Donnelley, Smead, Spiral Binding, Tops Products and numerous private label suppliers and importers. Competitors of the Computer Products Groupinclude Belkin, Fellowes, Logitech, Targus and Zagg.Certain financial information for each of our business segments and geographic regions is incorporated by reference to "Note 16. Information onBusiness Segments" to the 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. Our new products are developed from our own consumer understanding, our ownresearch and development or through partnership initiatives with inventors and vendors. Costs related to consumer research and product research when paiddirectly by ACCO Brands are included in marketing costs and research and development expenses, respectively. Research and development expensesamounted to $22.5 million, $20.8 million and $20.5 million for the years ended December 31, 2013, 2012 and 2011, respectively. As a percentage of sales,research and development expenses were 1.3%, 1.2%, 1.6% for the years ended December 31, 2013, 2012 and 2011, respectively.Our product line strategy includes the divestiture of businesses and rationalization of product offerings that do not meet our long-term strategic goals andobjectives, including financial objectives. We consistently review our businesses and product offerings, assess their strategic fit and seek opportunities todivest nonstrategic 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; the importance of the business to key customers; the business's relationship with existing product lines; the impact of the business tothe market; and the business's actual and potential impact on our operating performance. As a result of this review process, during 2013 we exited certainunprofitable business in the amount of approximately $26.0 million in the North American market and we exited certain unprofitable business in theEuropean market of approximately $3.6 million and $32 million in 2013 and 2012, respectively.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. The raw materials costs we incur are subject to price increases that could adversely affect our profitability. Based on experience, we believe thatadequate quantities of these materials will be available in the foreseeable future. A portion of the products we sell are sourced from China and other Far Easterncountries and are also affected by fluctuations in the prices of these raw materials. In addition a significant portion of the products we source and sell in ourinternational markets are paid for in U.S. dollars. Thus, movements of their local currency to the U.S. dollar have the same impacts as raw material pricechanges and we adjust our pricing in these markets to reflect these currency changes. See also "Item 1A. Risk Factors - The raw materials and labor costswe incur are subject to price increases that could adversely affect our profitability."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 capital investment and working capital requirements. Our strategy is to manufacture those products that would incur arelatively high freight and/or duty expense or have high service needs and source those products that have a high proportion of direct labor cost. Low-costsourcing primarily comes from China, but we also source from other Far Eastern countries and Eastern Europe.SeasonalityHistorically, our business has increased volume in the third and fourth quarters of the calendar year. Two principal factors contribute to this seasonality:(1) the office products industry, its customers and ACCO Brands specifically are major suppliers of products related to the "back-to-school" season, whichoccurs principally from June through September for our North American business and from November through January for our Australian and Brazilianbusinesses; and (2) our offering includes several products which lend themselves to calendar year-end purchase timing, including AT-A-GLANCE® and Day-Timer® planners, paper organization and storage products (including bindery) and Kensington computer accessories, which have higher sales in the fourth-quarter driven by traditionally strong fourth-quarter sales of personal computers, tablets and smartphones. As a result, we3historically have generated, and expect to continue to generate, most of our earnings in the second half of the year and much of our cash flow in the first, thirdand fourth quarters as receivables are collected. See also "Item 1A. Risk Factors - Our business is subject to risks associated with seasonality, which couldadversely affect our cash flow, results of operations, and financial condition."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. Many of ACCO Brands' trademarks are only important in particular geographicmarkets or regions. Our principal registered trademarks are: ACCO®, AT-A-GLANCE®, ClickSafe®, Day-Timer®, Five Star®, GBC®, Hilroy, Kensington®,Marbig, Mead®, MicroSaver® NOBO, Quartet®, Rexel, Swingline®, Tilibra, and Wilson Jones®.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 also "Item 1A. Risk Factors - Weare subject to global environmental regulation and environmental risks as well as product content and product safety laws and regulations".EmployeesAs of December 31, 2013, we had approximately 5,470 full-time and part-time employees. There have been no strikes or material labor disputes at anyof our facilities during the past five years. We consider our employee relations to be good.Discontinued OperationsAs of May 31, 2011, we disposed of the GBC Fordigraph Pty Ltd (“GBC Fordigraph”) business. The Australia-based business was formerly part ofthe ACCO Brands International segment and the results of operations are included in the financial statements as a discontinued operation for all periodspresented. In 2011, we received net proceeds of $52.9 million and recorded a gain on the sale of $41.9 million ($36.8 million after-tax).For further information on discontinued operations see "Note 19. Discontinued Operations" to the consolidated financial statements contained in Item 8of this report.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 ofoperations, see "Item 1A. Risk Factors."4Executive Officers of the CompanyThe following sets forth certain information with regard to our executive officers as of February 22, 2014 (ages are as of December 31, 2013).Mark C. Anderson, age 51•2007 - present, Senior Vice President, Corporate Development•Joined the Company in 2007Boris Elisman, age 51•2013 - present, President and Chief Executive Officer•2010 - 2013, President and Chief Operating Officer•2008 - 2010, President, ACCO Brands Americas•2008 - 2008, President, Global Office Products Group•2004 - 2008, President, Computer Products Group•Joined the Company in 2004Neal V. Fenwick, age 52•2005 - present, Executive Vice President and Chief Financial Officer•1999 - 2005, Vice President Finance and Administration, ACCOWorld•1994 - 1999 Vice President Finance, ACCO Europe•Joined the Company in 1984Christopher M. Franey, age 57•2010 - present, Executive Vice President; President, ComputerProducts Group•2010 - 2013, Executive Vice President; President, ACCO BrandsInternational and President, Computer Products Group•2008 - 2010, President, Computer Products Group•Joined the Company in 2008Ralph P. Hargrow, age 61•2013 - present, Senior Vice President and Chief People Officer•2005 - 2013, Global Chief People Officer, Molson Coors BrewingCompany•Joined the Company in August 2013Robert J. Keller, age 60•2013 - present, Executive Chairman•2008 - 2013, Chairman and Chief Executive Officer•2004 - 2008, President and Chief Executive Officer, APACCustomer Services, Inc.•Joined the Company in 2008 Gregory J. McCormack, age 50•October 2013 - present, Senior Vice President, Global Products•2012 - 2013, Senior Vice President, Operations, ACCO BrandsEmerging Markets•2010 - 2012, Senior Vice President, Operations - ACCO BrandsInternational•2008 - 2010, Senior Vice President, Operations, Americas•Joined the Company in 1996Neil A. McLachlan, age 57•2012 - present, Executive Vice President; President, International•1999 - 2012, President, Consumer and Office Products Group,MeadWestvaco Corporation•Joined the Company in 2012Thomas P. O'Neill, Jr, age 60•2008 - present, Senior Vice President, Finance and Accounting•2005 - 2008, Vice President, Finance and Accounting•Joined the Company in 2005Pamela R. Schneider, age 54•2012 - present, Senior Vice President, General Counsel andSecretary•2010 - 2012, General Counsel, Accertify, Inc.•2008 - 2010, Executive Vice President, General Counsel andSecretary, Movie Gallery, Inc. (filed for Chapter 11 in February2010)•2005 - 2008, Senior Vice President, General Counsel and Secretary,APAC Customer Services, Inc.•Joined the Company in 2012Thomas W. Tedford, age 43•2010 - present, Executive Vice President; President, ACCO BrandsU.S. Office and Consumer Products•2010 - 2010, Chief Marketing and Product Development Officer•2007 - 2010, Group Vice President, APAC Customer Services, Inc.•Joined the Company in 20105ITEM 1A. RISK FACTORSThe factors that are discussed below, as well as the matters that are generally set forth in this Annual Report on Form 10-K and thedocuments incorporated by reference herein, could materially and adversely affect the Company’s business, results of operations and financialcondition.Our business depends on a limited number of large and sophisticated customers, and a substantial reduction in sales to one or more ofthese customers could significantly impact our operating results.A relatively limited number of customers account for a large percentage of our total net sales. Our top ten customers accounted for 51% of our sales forthe fiscal year ended December 31, 2013. Sales to Staples, our largest customer, during the same period amounted to approximately 13% of our 2013 sales.Giving effect to the recently completed merger between Office Depot and OfficeMax, as if the merger and the sale of its joint venture, Office Depot de Mexico,had both occurred on January 1, 2013, our sales to the combined companies and their subsidiaries would have represented approximately 13% of our 2013sales. No other customers accounted for more than 10% of our sales for the fiscal year ended December 31, 2013.Our large customers have the ability to obtain favorable terms, to directly source their own private label products and to create and support new andcompeting suppliers. The loss of, or a significant reduction in, business from one or more of our major customers could have a material adverse effect on ourbusiness, results of operations and financial condition.Our customers may further consolidate, which could adversely impact our sales and margins.Our customers have steadily consolidated over the last two decades. In the fourth quarter of 2013, two of our large customers, Office Depot andOfficeMax, completed their previously announced merger. Management currently expects the combined companies will take actions to harmonize pricing fromtheir suppliers, close retail outlets and rationalize their supply chain which will negatively impact our sales and margins and adversely affect our business andresults of operations. These adverse affects are expected to take several years to be fully realized. There can be no assurance that following consolidation theseand other large customers will continue to buy from us across different product segments or geographic regions, or at the same levels as prior to consolidation,which could negatively impact our financial results. Further, if the industry consolidation trend continues, it is likely to result in further pressures that couldreduce our margins and sales and have a material adverse affect on our business, results of operations and financial condition.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 or otherwise change product assortments; (2) decisions of current and potentialsuppliers of competing products on whether to take advantage of low entry barriers to expand their production or lower prices; and (3) the decisions of end-users of our products to expand their use of lower priced, substitute or alternative products and, in particular, to shift their use of time management andplanning products toward electronic and other substitutes. In addition, our competitive position depends on continued investment in innovation and productdevelopment, manufacturing and sourcing, quality standards, marketing and customer service and support. Our success will depend in part on our ability toanticipate and offer products that appeal to the changing needs and preferences of our customers and end-users in a market where many of our productcategories are affected by continuing improvements in technology and shortened product lifecycles and others are experiencing secular declines. We may nothave sufficient resources to make the investments that may be necessary to anticipate or react to the changing needs, and we may not identify, develop andmarket products successfully or otherwise be successful in maintaining our competitive position.Finally, our customers also operate in a very competitive environment. More recently, new outlets, including drug store chains and e-tailers havesurfaced as meaningful competitors to certain of the Company's large customers and the market share of the office products superstores is contracting. Theloss of market share by one or more of our large customers or the shift of market share away from the traditional office product superstores and office productresellers towards mass merchandisers, online merchants and other competitors (with whom we may do a smaller volume of business) could adversely affectour sales and margins and have a material adverse effect on our business, results of operations and financial condition.6The market for products sold by our Computer Products Group is rapidly changing and highly competitive.Our Computer Products Group faces additional competitive challenges due to the nature of its business which is characterized by rapid change,including changes in technology, short product life cycles and a dependency on the introduction by third party manufacturers of new equipment which drivesdemand for accessories sold by the Company. In order to compete successfully, we need to anticipate and bring to market innovative new accessories in atimely and effective way which requires significant skills and investment. We may not have sufficient market intelligence, talent or resources to successfullymeet these challenges. Additionally, the short product life cycle increases the risk of product obsolescence. Rapid changes in technology, the market or demandfor PCs and mobile devices as well as a delay in the introduction of new technology and our ability to anticipate and respond to these changes and delays couldmaterially and adversely affect the demand for our products and have a material adverse effect on the business, results of operations and financial condition ofour Computer Products Group segment.Sales 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 economic conditions, particularly in categories where we compete against private label, otherbranded and/or generic products that compete on price, quality, service or other grounds. In periods of economic uncertainty or weakness, the demand for ourproducts may decrease, as businesses and consumers may seek or be forced to purchase more lower cost, private label or other economy brands, may morereadily switch to electronic, digital or web-based products serving similar functions, or may forgo certain purchases altogether. As a result, adverse changes ineconomic conditions or sustained periods of economic uncertainty or weakness particularly in the U.S. and in other geographies where we operate couldnegatively affect our earnings and could have a material adverse effect on our business, results of operations, cash flows and financial position.If we fail to realize the sales synergies and other revenue growth opportunities we anticipated in connection with the acquisition of MeadC&OP, we may not achieve the financial results that we expected as a result of the Merger.Among the factors considered in connection with our acquisition of Mead C&OP were the opportunities for sales synergies and other revenue growth. Wecannot predict with certainty if or when these sales synergies and growth opportunities may occur, or the extent to which they actually will be achieved.Realization of any synergies could be adversely affected by number of factors beyond our control, including, without limitation, deteriorating or anemiceconomic conditions, increased operating costs, increased competition and regulatory developments. If we fail to realize the sales synergies and other revenuegrowth opportunities we anticipated, we may not achieve the financial results that we expected as a result of the Merger.We have identified a material weakness in our information technology general controls over financial reporting that, if not properlyremediated, could materially adversely affect our operations and result in material misstatements of our financial statements.As described in "Item 9A. Controls and Procedures" of this report, we have concluded that our internal control over financial reporting and ourdisclosure controls and procedures were ineffective as of December 31, 2013 because a material weakness existed in the information technology general controlsrelated to the enterprise resource planning application for our recently acquired U.S. and Canadian Mead C&OP businesses.The integration and transition associated with the acquisition of Mead C&OP, including those related to changes to, or implementation of criticalinformation technology systems, required modifications to our internal control systems, processes and information technology systems. Failure tosuccessfully complete the integration and transition could adversely affect our internal control over financial reporting, our disclosure controls and proceduresand our ability to effectively and timely report our financial results. If we are unable to accurately report our financial results in a timely manner or are unableto remedy our existing material weakness, avoid future material weaknesses, and conclude that our internal control over financial reporting and disclosurecontrols and procedures are effective, our business, results of operation and financial condition, investor, supplier and customer confidence in our reportedfinancial information, the market perception of our Company and/or the trading price of our common stock could be materially and adversely affected.7We rely extensively on information technology systems to operate, transact and otherwise manage our business. Any material failure,inadequacy, interruption or security failure of that technology or its infrastructure could materially adversely affect our business, results ofoperation or financial condition.We rely extensively on our information technology systems, most of which are managed by third-party service providers, across our operations. Ourability to effectively manage our business and execute the production, distribution and sale of our products as well as our ability to manage and report ourfinancial results and run other support functions depends significantly on the reliability and capacity of these systems and our third-party service providers.The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or a breach in the security of these systemscould disrupt service to our customers, negatively impact our ability to report our financial results in a timely and accurate manner and adversely affect ourbusiness, results of operations and financial condition.Our information technology general controls are an important aspect of our internal control over financial reporting and our disclosure controls andprocedures. Failure to successfully execute our IT general controls could adversely affect our internal control over financial reporting, our disclosure controlsand procedures and our ability to effectively and timely report our financial results. If we are unable to accurately report our financial results in a timelymanner or to conclude that our internal control over financial reporting and disclosure controls and procedures are effective, our business, results of operationand financial condition, investor, supplier and customer confidence in our reported financial information, the market perception of our Company and/or thetrading price of our common stock could be materially and adversely affected.Our growth strategy includes increased concentration in our emerging market geographies, which could create greater exposure to unstablepolitical conditions, civil unrest or economic volatility.An increasing percentage of the Company's sales are derived from emerging markets such as Latin America and Asia. Moreover, the profitable growth ofour business in emerging markets is key to our long term growth strategy. If we are unable to successfully expand our businesses in emerging markets, orachieve the return on capital we expect as a result of our investments, our financial performance could be adversely affected.Factors that could adversely affect our business results in these developing and emerging markets include: regulations on the transfer of funds to andfrom foreign countries, which, from time to time, result in significant cash balances in foreign countries and limitations on the repatriation of funds; currencyhyperinflation or devaluation; the lack of well-established or reliable legal systems; and increased costs of business due to compliance with complex foreignand United States laws and regulations that apply to our international operations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.In addition, disruption in these markets due to adverse economic conditions, political instability or civil unrest could result in a decline in consumerpurchasing power, thereby reducing demand for our products or otherwise having a material adverse effect on our business, results of operation and financialcondition.Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.In connection with our May 1, 2012 acquisition of Mead C&OP we assumed all of the tax liabilities for the acquired foreign operations. In December of2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary,Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the tax deduction of goodwill from Tilibra's taxable income for the year 2007. A secondassessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013. Theassessments seek payment of approximately R95.2 million ($40.4 million based on current exchange rates) of tax, penalties and interest.Tilibra is disputing both of the tax assessments through established administrative procedures. We believe we have meritorious defenses and intend tovigorously contest these matters; however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge theFRD's tax assessments, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a numberof years. In addition, Tilibra's 2011-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional taxassessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years. If the FRD's initial position is ultimately sustained, theamount assessed would adversely affect our cash flow in the year of settlement.Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers theoutcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in theamount of $44.5 million in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price and included the2008-2012 tax years plus interest and penalties through December 2012. In addition, the Company will continue to accrue interest related to this contingencyuntil such time as8the outcome is known or until evidence is presented that we are more likely than not to prevail. During 2013 and 2012, the Company accrued additionalinterest as a charge to current tax expense of $1.8 million and $1.2 million, respectively.There are various other claims, lawsuits and pending actions against us incidental to our operations. It is the opinion of management that the ultimateresolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, we canmake no assurances that we will ultimately be successful in our defense of any of these matters.Risks associated with outsourcing the production of certain of our products could materially and adversely affect our business, results ofoperations and financial condition.We outsource certain manufacturing functions to suppliers 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 andmisappropriation of trade secrets. In addition, performance issues with these suppliers could result in cost overruns, delayed deliveries, shortages, quality andcompliance issues or other problems. Moreover, if one or more of our suppliers becomes insolvent, is unable or unwilling to continue to provide products ofacceptable quality, at acceptable cost or in a timely manner, or if customer demand for our products increases, we may be unable to secure sufficientadditional capacity from our current suppliers, or others, on commercially reasonable terms, if at all. Any of these events could negatively affect our ability todeliver our products and services to our customers, which could materially and adversely affect our business, results of operations and financial condition.All of our suppliers must comply with our design and product content specifications, applicable laws, including product safety, security, labor andenvironmental laws, and otherwise be certified as meeting our and our customers' supplier codes of conduct. In addition, as we expect our suppliers to complywith, be responsive to our audits, and conform to our and our customers' expectations with respect to product safety, product quality and social responsibility,any failure to do so may result in our having to cease contracting with such supplier or cease production at a particular facility. Any need to identify andqualify substitute suppliers or facilities due to compliance issues could result in unforeseen operational problems, production delays and additional costs.Substitute suppliers might not be available or, if available, might be unwilling or unable to offer products on acceptable terms or in a timely manner. If oursuppliers are unable to meet our and our customers' compliance and other requirements and otherwise comply with applicable laws our ability to deliverproducts and services to our customers could be severely impaired, which could materially and adversely affect our business, results of operations andfinancial condition.Some of our suppliers are dependent upon other industries for raw materials and other products and services necessary to produce and provide theproducts they supply to us. Any adverse impacts to those industries could have a ripple effect on these suppliers, which could adversely impact their ability tosupply us at levels we consider necessary or appropriate for our business, or at all. Any such disruptions could negatively impact our ability to deliverproducts and services to our customers, which in turn could have an adverse impact on our business, results of operations and financial condition.Decline in the use of paper-based dated time management and productivity tools could adversely affect our business.A number of our products and brands consist of paper-based time management and productivity tools that historically have tended to be higher-marginproducts. However, consumer preference for technology-based solutions for time management and planning continues to grow worldwide. Many consumersuse or have access to electronic tools that may serve as substitutes for traditional paper-based time management and productivity tools. Accordingly, thecontinued introduction of new digital software applications and web-based services by companies offering time management and productivity solutions couldadversely impact the revenue and profitability of our largely paper-based portfolio of time management products.Material disruptions at one of our or at one of our suppliers' major manufacturing or distribution facilities could negatively impact ourbusiness, results of operations and financial condition.A material operational disruption in one of our or at one of our supplier's major facilities could negatively impact production and customer deliveries.Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, labor stoppages, transportationfailures affecting the supply and shipment of materials and finished goods, severe weather conditions, natural disasters, civil unrest, war or terrorism anddisruptions in utility services, and bankruptcy. Any such disruptions could negatively impact our ability to deliver products and services to our customers,which in turn could have an adverse impact on our business, results of operation or financial condition.9We have a significant amount of indebtedness, which could adversely affect our business, results of operations and financial condition.As of December 31, 2013, we had $920.9 million of outstanding debt. This indebtedness could adversely affect us in a number of ways, includingrequiring us to dedicate a substantial portion of our cash flows from operating activities to payments on our indebtedness, thereby reducing the availability ofour cash flows to fund working capital, capital expenditures, research and development efforts, potential strategic acquisitions and other general corporatepurposes. In addition, approximately $420 million of our outstanding debt is subject to floating interest rates, which increases our exposure to fluctuations inmarket interest rates. Our significant indebtedness also may increase our vulnerability to economic downturns and changing market conditions and place us ata competitive disadvantage relative to competitors that have less debt, all of which could adversely affect our business, results of operations and financialcondition.The agreements governing our indebtedness contain financial and other restrictive covenants that limit our ability to engage in certainactivities that may be in our long-term best interests.The agreements governing our indebtedness contain financial and other covenants that limit our ability to engage in certain activities and restrict ouroperational flexibility. Among other things, these covenants restrict or limit our ability to incur additional indebtedness, incur certain liens on our assets, issuepreferred stock or certain disqualified stock, pay cash dividends, make restricted payments, including investments, sell our assets or merge with othercompanies, and enter into certain transactions with affiliates. We are also required to maintain specified financial ratios under certain conditions and satisfyfinancial condition tests. These covenants, ratios and tests may limit or prohibit us from engaging in certain activities and transactions that may be in ourlong-term best interests, and could place us at a competitive disadvantage relative to our competitors, which could adversely affect our business, results ofoperations and financial condition.Our failure to comply with our debt covenants could result in an event of default that, if not cured or waived, could result in the accelerationof all of our debts.Our ability to comply with the covenants and financial ratios and tests under the agreements governing our indebtedness may be affected by eventsbeyond our control, and we may not be able to continue to meet those covenants, ratios and tests. Our ability to generate sufficient cash from operations to meetour debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative,regulatory, business and other factors. Our breach of any of these covenants, ratios or tests, or any inability to pay interest on, or principal of, ouroutstanding debt as it becomes due, could result in an event of default, in which case our lenders could declare all amounts outstanding to be immediately dueand payable. If our lenders accelerate our indebtedness, our assets may not be sufficient to repay in full such indebtedness and any other indebtedness thatwould become due as a result of such acceleration and, if we were unable to obtain replacement financing or any such replacement financing was on terms thatwere less favorable than the indebtedness being replaced, our liquidity, results of operations and financial condition would be materially and adverselyaffected. See “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and CapitalResources."Our business is subject to risks associated with seasonality, which could adversely affect our cash flows, results of operations, and financialcondition.Historically, our business experiences higher volume in the third and fourth quarters of the calendar year. Two principal factors have contributed to thisseasonality: the office products industry's customers and our product line. We are major suppliers of products related to the “back-to-school” season, whichoccurs principally from June through September for our North American business and from November through January for our Australian and Brazilianbusinesses. Our product line also includes a number of products that lend themselves to calendar year-end purchase timing and our Computer Productssegment has higher sales in the fourth quarter driven by traditionally strong fourth quarter sales of personal computers, tablets and smartphones. As a result,we historically have generated, and expect to continue to generate, most of our earnings in the second half of the year and much of our cash flow in the first,third and fourth quarters as receivables are collected. If these typical seasonal increases in sales of certain portions of our product line do not materialize, itmay have an outsized impact on our business, which could result in a material adverse effect on our cash flows, results of operations and financial condition.Risks associated with currency volatility could harm our sales, profitability, cash flows and results of operations.With approximately 46% of our net sales for the fiscal year ended December 31, 2013 arising from foreign sales, fluctuations in currency exchange ratescan have a material impact on our results of operations. Our risk exposure is primarily related to the British pound, the Euro, the Australian dollar, theCanadian dollar, the Brazilian real, the Mexican peso and Japanese yen. Currency fluctuations impact the results of our non-U.S. operations that are reportedin U.S. dollars. As a result, a weak U.S. dollar benefits10us in the form of higher reported sales and a strong U.S. dollar reduces the dollar-denominated sales contributions from foreign operations.Additionally approximately half of the products we sell are sourced from China and other Asia-Pacific countries and are paid for in U.S. dollars basedon prevailing currency exchange rates. Thus, movements in the value of local currencies relative to the U.S. dollar in countries where we source our productsaffect our cost of goods sold, with a stronger dollar decreasing costs of goods sold and a weaker dollar increasing costs of goods sold.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 substantially strengthen,making the dollar significantly more valuable relative to other currencies in the global market, such an increase could harm our ability to compete orcompetitively price in those markets, and therefore, materially and adversely affect our sales, profitability, cash flows and results of operations.The 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. This gives rise to a delay before cost increases canbe passed 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 substantial increases in costs of materials and labor have occurred in the past and may recur, and raw materials may not continue to be available inadequate supply 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 inprice increases that could have a material adverse effect on our results of operations and financial condition.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. TheCompany's cash contributions to pension and defined benefit plans totaled $14.7 million in 2013; however the exact amount of cash contributions made topension plans in any year is dependent upon a number of factors, including the investment returns on pension plan assets. A significant increase in ourpension funding requirements could have a negative impact on our cash flow, results from operations and financial condition.Impairment charges could have a material adverse effect on our financial results.We have recorded significant amounts of goodwill and other intangible assets, which increased substantially as a result of our acquisition of MeadC&OP. Due to the recent acquisition of Mead C&OP, the fair values of certain indefinite-lived trade names are not substantially above their carrying values. In2008, we recorded significant goodwill and other asset impairment charges that adversely affected our financial results. Future events may occur that may alsoadversely affect the reported value of our assets and require impairment charges, which could further adversely affect our financial results. Such events mayinclude, but are not limited to, a sustained decline in our stock price or in sales of one or more of our branded product lines, strategic decisions made inresponse to changes in economic and competitive conditions, the impact of the economic environment on our customer base or a material adverse change in ourrelationship with significant customers.Our suppliers could change our payment terms.We purchase products for resale under credit arrangements with our suppliers. In weak global markets, suppliers 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,suppliers may demand that we accelerate our payment for their products. Also, credit insurers may curtail or eliminate coverage to the suppliers. If suppliersbegin to 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,these demands could have a significant adverse impact on our operating cash flows and result in a severe drain on our liquidity.11A bankruptcy of one or more of our major customers could have a material adverse effect on our cash flows, results of operations andfinancial condition.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 cash flows, results of operations and financial condition.We are subject to global environmental regulation and environmental risks as well as product content and product safety laws andregulations.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 as well as laws, directives and self-regulatoryrequirements related to the safety of our products. Environmental and product content and product safety laws and regulations can be complex and maychange often. Capital and operating expenses required to comply with environmental and product content laws and regulations can be significant, andviolations may result in substantial fines, penalties and civil damages. The costs of complying with environmental and product content and product safetylaws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future could have a material adverse effect onour results of operations and financial condition.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 could have a material adverse effect on our business.We could also incur substantial costs to pursue legal actions relating to the unauthorized use by third parties of our intellectual property, which couldhave a material adverse effect on our business, results of operation or financial condition. If our brands become diluted, if our patents are infringed or if ourcompetitors introduce brands and products that cause confusion with our brands in the marketplace, the value that our consumers associate with our brandsmay become diminished, which could negatively impact our sales. If third parties challenge the validity or enforceability of our intellectual property rights andwe cannot successfully defend these challenges, or our intellectual property is invalidated, we could lose our ability to use the technology, brand names or otherintellectual property that were the subject of those challenges, which, if such intellectual property is material to the operation of our business or our financialresults, could have a material adverse effect on our business, results from operations and financial condition.We may also become involved in defending intellectual property claims being asserted against us that could cause us to incur substantial costs, divertthe efforts of our management, 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.Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our end-userbrands.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 and penalties which could have a material effect on our results of operations and financial condition, product liability claimsor regulatory actions could result in negative publicity that could harm our reputation in the marketplace or the value of our end-user brands. We also could berequired 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 claims are subject to a self-insured deductible or could be excluded underthe terms of the policy.12We are unable to take certain significant actions following the Merger because such actions could adversely affect the tax-free status of theDistribution or the Merger. In certain circumstances, we may be obligated to indemnify MeadWestvaco Corporation (“MWV”) for any payment ofUnited States federal income taxes by MWV that result from our taking or failing to take certain actions in connection with the Distribution andthe Merger.In connection with (i) the transfer by MWV of Mead C&OP (the “Separation”) to a subsidiary we acquired pursuant to the Merger (“Monaco SpinCo”);(ii) the distribution by MWV of Monaco Spinco shares to MWV stockholders (the “Distribution”); and (iii) the Merger (the Separation, the Distribution, theMerger and certain related financing transactions being collectively referred to as the “Transactions”), MWV received a private letter ruling from the InternalRevenue Service (the “IRS”) as to the tax-free nature of the Transactions, MWV and Monaco SpinCo received an opinion from MWV's counsel as to the tax-free nature of the Distribution, and we, MWV and Monaco SpinCo received certain legal opinions from our respective counsel as to the tax-free nature of theMerger. The opinions of counsel were based on, among other things, the IRS ruling as to the matters addressed by the ruling, current law and certainassumptions and representations as to factual matters made by us, MWV and our respective subsidiaries.In connection with the Transactions, we entered into a tax matters agreement with MWV (the “Tax Matters Agreement”). The Tax Matters Agreementprohibits us from taking certain actions prior to May 1, 2014 that could cause the Distribution or the Merger to be taxable. These prohibited actions includecertain mergers, asset sales and transactions involving our capital stock. If we wish to take any such restricted action, we are required to cooperate with MWVin obtaining a supplemental IRS ruling or an unqualified tax opinion.Under the Tax Matters Agreement, in certain circumstances and subject to certain limitations, we are required to indemnify MWV against any taxes onthe Distribution that arise if we or our subsidiaries take certain actions or fail to take certain actions, or as a result of certain changes in the ownership of ourstock following the Merger, that adversely affect the tax-free status of the Distribution or the Merger. Moreover, if we do not carefully monitor our compliancewith the Tax Matters Agreement and relevant IRS rules, we might inadvertently trigger our obligation to indemnify MWV. If we are required to indemnifyMWV in the event the Distribution is taxable, this indemnification obligation would be substantial and could have a material adverse effect on our results ofoperations and financial condition.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, successfully implement our business strategy, and realize the anticipated benefits of the Merger.Additionally, we rely to a significant degree on compensating our officers and key employees with incentive awards that pay out only if specifiedperformance goals have been met. To the extent these performance goals are not met and the incentive awards do not pay out, or pay out less than the targetedamount, as has occurred in recent years, it may motivate certain officers and key employees to seek other opportunities.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.13ITEM 2. PROPERTIESWe have manufacturing facilities in North America, Europe, Brazil, Mexico and Australia, and maintain distribution centers in the regional markets weservice. We lease our corporate and U.S. headquarters in Lake Zurich, Illinois. The following table lists our principal manufacturing and distribution facilitiesas of December 31, 2013: LocationFunctional Use Owned/LeasedU.S. Properties: Ontario, CaliforniaDistribution/Manufacturing LeasedBooneville, MississippiDistribution/Manufacturing Owned/LeasedOgdensburg, New YorkDistribution/Manufacturing Owned/LeasedSidney, New YorkDistribution/Manufacturing OwnedAlexandria, PennsylvaniaDistribution/Manufacturing OwnedPleasant Prairie, WisconsinDistribution/Manufacturing LeasedNon-U.S. Properties: Sydney, AustraliaDistribution/Manufacturing OwnedBauru, BrazilDistribution/Manufacturing/Office OwnedMississauga, CanadaDistribution/Manufacturing/Office LeasedHalesowen, EnglandDistribution OwnedLillyhall, EnglandManufacturing LeasedTornaco, ItalyDistribution LeasedLerma, MexicoManufacturing/Office OwnedBorn, NetherlandsDistribution LeasedWellington, New ZealandDistribution/Office OwnedArcos de Valdevez, PortugalManufacturing OwnedWe believe that the properties are suitable to the respective businesses and have production capacities adequate to meet the needs of our businesses.ITEM 3. LEGAL PROCEEDINGSIn connection with our May 1, 2012 acquisition of Mead C&OP we assumed all of the tax liabilities for the acquired foreign operations. In December of2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary,Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the tax deduction of goodwill from Tilibra's taxable income for the year 2007. A secondassessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013. Theassessments seek payment of approximately R95.2 million ($40.4 million based on current exchange rates) of tax, penalties and interest.Tilibra is disputing both of the tax assessments through established administrative procedures. We believe we have meritorious defenses and intend tovigorously contest these matters; however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge theFRD's tax assessments, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a numberof years. In addition, Tilibra's 2011-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional taxassessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years. If the FRD's initial position is ultimately sustained, theamount assessed would adversely affect our reported cash flow in the year of settlement.Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers theoutcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in theamount of $44.5 million in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price and included the2008-2012 tax years plus interest and penalties through December 2012. In addition, the Company will continue to accrue interest related to this contingencyuntil such time as14the outcome is known or until evidence is presented that we are more likely than not to prevail. During 2013 and 2012, the Company accrued additionalinterest as a charge to current tax expense of $1.8 million and $1.2 million, respectively.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.15PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIESOur common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “ACCO.” The following table sets forth, for the periodsindicated, the high and low sales prices for our common stock as reported on the NYSE for 2012 and 2013: High Low2012 First Quarter$13.25 $9.24Second Quarter$13.30 $8.50Third Quarter$10.94 $6.01Fourth Quarter$7.95 $5.802013 First Quarter$9.16 $6.55Second Quarter$7.63 $5.97Third Quarter$7.44 $6.08Fourth Quarter$7.26 $5.56As of February 3, 2014, we had approximately 17,490 registered holders of our common stock.Dividend PolicyWe have not paid any dividends on our common stock since becoming a public company. We intend to retain any 2014 earnings to reduce ourindebtedness, absent a value-creating acquisition. Currently our debt agreements restrict our ability to make dividend payments until we reduce our LeverageRatio to below 2.5 to 1. As of December 31, 2013 our Leverage Ratio was approximately 3.3 to 1. Any determination as to the declaration of dividends is at ourBoard of Directors’ sole discretion based on factors it deems relevant at that time.16STOCK 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, 2008 through December 31, 2013. Cumulative Total Return 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13ACCO Brands Corporation.$100.00 $211.01 $246.96 $279.71 $212.75 $194.78Russell 2000100.00 127.17 161.32 154.59 179.86 249.69S&P Office Services and Supplies(SuperCap1500)100.00 116.23 142.28 122.98 119.20 190.3117ITEM 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, 2013 are derived from our consolidated financial statements. The data should be read in conjunction with the consolidated financial statementsand related notes included elsewhere in this report. Year Ended December 31, 2013 2012(1) 2011 2010 2009(in millions of dollars, except per share data) Income Statement Data: Net sales$1,765.1 $1,758.5 $1,318.4 $1,284.6 $1,233.3Operating income(2)145.8 139.3 115.2 109.7 75.4Interest expense, net54.7 89.3 77.2 78.3 67.0Other expense, net(3)7.6 61.3 3.6 1.2 5.4Income (loss) from continuing operations(4)77.3 117.0 18.6 7.8 (118.6)Per common share: Income (loss) from continuing operations(4) Basic$0.68 $1.24 $0.34 $0.14 $(2.18)Diluted$0.67 $1.22 $0.32 $0.14 $(2.18)Balance Sheet Data (at year end): Total assets$2,382.9 $2,507.7 $1,116.7 $1,149.6 $1,106.8External debt920.9 1,072.1 669.0 727.6 725.8Total stockholders’ equity (deficit)702.3 639.2 (61.9) (79.8) (117.2)Other Data: Cash provided (used) by operating activities$194.5 $(7.5) $61.8 $54.9 $71.5Cash (used) provided by investing activities(33.3) (423.2) 40.0 (14.9) (3.9)Cash (used) provided by financing activities(155.5) 360.1 (63.1) (0.1) (44.5) (1)On May 1, 2012, we completed the Merger of Mead C&OP with a wholly-owned subsidiary of the Company. Accordingly, the results of MeadC&OP are included in the Company's consolidated financial statements from the date of the Merger. For further information on the Merger, see"Note 3. Acquisitions" to the consolidated financial statements, contained in Item 8 of this report.(2)Operating income for the years 2013, 2012, 2011, 2010 and 2009 was impacted by restructuring charges (income) of $30.1 million, $24.3million, $(0.7) million, $(0.5) million and $17.4 million, respectively.(3)Other expense, net for the years 2013 and 2012 was impacted by $9.4 million and $61.4 million in charges, respectively, related to therefinancings completed in 2013 and 2012. For further information on our refinancing, see "Note 4. Long-term Debt and Short-termBorrowings" to the consolidated financial statements, contained in Item 8 of this report.(4)Income (loss) from continuing operations for the year 2009, was impacted by a non-cash charge of $108.1 million to establish a valuation allowance against our U.S.deferred taxes. Due to the Merger, we analyzed our need to maintain valuation allowances against the expected U.S. future tax benefits. Based on ouranalysis we determined in 2012 that there existed sufficient evidence in the form of future taxable income from the combined operations to release$126.1 million of the valuation allowance that had been previously recorded against the U.S. deferred income tax assets. In 2013 and 2012, we released$19.0 million and $11.6 million, respectively, of valuation allowances in certain foreign jurisdictions. For a further discussion, see"Note 11. Income Taxes" to the consolidated financial statements, contained in Item 8 of this report.18ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONSINTRODUCTIONManagement’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.ACCO Brands is a leading global manufacturer and marketer of office, school and calendar products and select computer and electronic accessories. Wesell our products to consumers and commercial end-users, primarily through resellers, including traditional office resellers, wholesalers, retailers and e-tailers.We design, develop, manufacture and market a wide variety of traditional and computer-related office products, school supplies and paper-based calendarproducts. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of our consumers and commercialend-users. We compete through a balance of product innovation, category management, a low-cost operating model and an efficient supply chain. We sell ourproducts primarily to markets located in the United States, Northern Europe, Canada, Brazil, Australia and Mexico. We currently manufacture approximatelyhalf of our products locally where we operate, and source approximately the other half of our products, primarily from Asia.We believe our leading product positions provide the scale to enable us to invest in product innovation and drive 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. We plan to grow via a strategy of organic growth supplemented by acquisitions.ACCO Brands North America and ACCO Brands International manufacture, source and sell traditional office, school and calendar product lines undername brands such as AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy, Marbig, Mead®, NOBO, Quartet®, Rexel, Swingline®, Tilibra, WilsonJones® and many others. Products and brands are not necessarily confined to one channel or product category and are sold based on end-user preference ineach geographic location.The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards,are used by businesses. Most of these end-users purchase their products from our customers, which include commercial contract stationers, massmerchandisers, retail superstores, wholesalers, resellers, e-tailers, club stores and dealers. We also supply some of our products directly to large commercialand industrial end-users and provide business machine maintenance and certain repair services.Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily throughtraditional and online retail, mass merchandisers, grocery, drug and office superstore channels. We also supply private label products within the schoolproducts sector.Our calendar products are sold throughout all channels where we sell office or school products, as well as direct to consumers.Our Computer Products Group designs, sources, distributes, markets and sells accessories for laptop and desktop computers, and tablets andsmartphones. These accessories primarily include security products, tablet covers and keypads, smartphone accessories, power adapters, input devices suchas mice, laptop computer carrying cases, hubs, docking stations and ergonomic devices. We sell these products mostly under the Kensington®, Microsaver®and ClickSafe® brand names, with the majority of our revenue coming from the U.S. and Western Europe. Our computer products are manufactured bythird-party suppliers, principally in Asia, and are distributed from our regional facilities. Our computer products are sold primarily to consumer electronicsretailers, information technology value-added resellers, original equipment manufacturers and office products retailers.Our results are dependent upon a number of factors, including pricing and competition. Historically, key drivers of demand in the office and schoolproducts industries have included trends in white collar employment levels, enrollment levels in education, gross domestic product (GDP) and growth in thenumber of small businesses and home offices together with usage of personal computers. Current pricing and demand levels for office products reflect thesubstantial consolidation within the global resellers of office products. This consolidation has led to multiple years of industry pricing pressure and a moreefficient level of asset utilization by customers, resulting in lower sales pricing and volume for suppliers of office products. Two of our large customers, OfficeDepot and OfficeMax, have merged in the fourth quarter of 2013. Management currently expects the combined companies will take actions to harmonizepricing from their suppliers, close retail outlets and rationalize their supply chain which will negatively impact our sales and margins. These adverse affectsare expected to take several years to be fully realized. See “Part I, Item1A. Risk Factors - Our customers may further consolidate, which could adverselyimpact our margins and sales."19Overall commodity pricing has been fairly flat in 2013; however paper pricing has recently increased together with Chinese wage rates and these couldimpact the future business performance if we are not able to recover our additional costs with increases in our product pricing. We continue to monitorcommodity costs and work with suppliers and customers to negotiate balanced and fair pricing that best reflects the current economic environment. See “PartI, Item1A. Risk Factors - The raw materials and labor costs we incur are subject to price increases that could adversely affect our profitability."With approximately 46% of our net sales for the fiscal year ended December 31, 2013 arising from foreign sales, fluctuations in currency exchange ratescan have a material impact on our results of operations. Currency fluctuations impact the results of our non-U.S. operations that are reported in U.S. dollars.As a result, a weak U.S. dollar benefits, and a strong U.S. dollar reduces, the dollar-denominated contributions from foreign operations. Additionally,approximately half of the products we sell are sourced from China and other Asia-Pacific countries and are paid for in U.S. dollars. Thus, movements in thevalue of local currency relative to the U.S. dollar in countries where we source our products affect our cost of goods sold. Further, our international operationssell in their local currencies and are exposed to their domestic currency movements against the U.S. dollar. See “Part I, Item1A. Risk Factors - Risksassociated with currency volatility could harm our sales, profitability, cash flows and results of operations" and "Note 13. Derivative FinancialInstruments" to the consolidated financial statements contained in Item 8 of this report.Mead Consumer and Office Products Business MergerOn May 1, 2012, we completed the Merger of Mead C&OP with a wholly-owned subsidiary of the Company. Mead C&OP is a leading manufacturerand 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., Canada and Brazil.The results of Mead C&OP are included in the Company's consolidated financial statements from the date of the Merger.Debt RefinancingEffective May 13, 2013 (the “Effective Date”), the Company entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”)among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other agents and lenders partythereto. The Restated Credit Agreement amended and restated the Company's prior credit agreement, dated as of March 26, 2012, as amended (the “2012Credit Agreement”), that had been entered into in connection with the Merger.The Restated Credit Agreement provides for a $780 million, five-year senior secured credit facility, which consists of a $250.0 million multi-currencyrevolving credit facility, due May 2018 (the “Revolving Facility”), and a $530.0 million U.S. dollar denominated Senior Secured Term Loan A, due May2018 (the “Restated Term Loan A"). Specifically, in connection with the Restated Credit Agreement, the Company:•replaced its then-existing U.S.-dollar denominated Senior Secured Term Loan A, due May 2017, under the 2012 Credit Agreement, which had anaggregate principal amount of $220.8 million outstanding immediately prior to the Effective Date, with the Restated Term Loan A, due May 2018,in an aggregate original principal amount of $530.0 million;•prepaid in full its then-existing U.S.-dollar denominated Senior Secured Term Loan B, due May 2019, under the 2012 Credit Agreement, whichhad an aggregate principal amount of $310.2 million outstanding immediately prior to the Effective Date, using a portion of the proceeds from theRestated Term A Loan; and•replaced the $250.0 million revolving credit facility under the 2012 Credit Agreement with the Revolving Facility, under which $47.3 million wasoutstanding immediately following the Effective Date.Prior to the Effective Date, the Company's repaid in full the $21.4 million Canadian-dollar denominated Senior Secured Term Loan A, due May 2017that had been drawn under the 2012 Credit Agreement.RestructuringDuring the fourth quarter of 2013, in light of current economic and industry conditions and in anticipation of an uncertain demand environment as wellas the impact of industry consolidation in 2014, we committed to restructuring actions that were primarily focused on streamlining our North Americanschool, office and computer products operations. These actions will reduce20approximately 12% of our North American salaried workforce, impacting all operational, supply chain and administrative functions, with efforts beginningin early 2014. Such efforts are expected to be complete by the end of 2014. We expect to realize approximately $24 million in annual savings from theserestructuring actions.Also during the year 2013, we committed to incremental cost savings plans intended to improve the efficiency and effectiveness of our businesses. Theseplans relate to cost-reduction initiatives within our North American and International segments, and are primarily associated with post-merger integrationactivities of the North American operations following the Merger and changes in the European business model and manufacturing footprint. The mostsignificant of these plans was finalized during the second quarter of 2013, and relates to the closure of our Brampton, Canada distribution and manufacturingfacility and relocation of its activities to other facilities within the Company.During the year 2012, we initiated cost savings plans related to the consolidation and integration of our then recently acquired Mead C&OP business.The most significant of these plans related to our dated goods business and included closure of a manufacturing and distribution facility in East Texas,Pennsylvania and relocation of its activities to other facilities within the Company, which was completed during the second quarter of 2013. We alsocommitted to certain cost savings plans that are expected to improve the efficiency and effectiveness of our U.S. and European businesses, which wereindependent of any plans related to our acquisition of Mead C&OP.Income TaxesIn 2012, due to the Merger, we analyzed our need for maintaining a valuation allowance against the expected U.S. future tax benefits. Based on ouranalysis we determined that there existed sufficient evidence in the form of future taxable income from the combined operations to release $126.1 million of thevaluation allowance that had been previously recorded against the U.S. deferred income tax assets. The resulting deferred tax assets are comprised principallyof net operating loss carryforwards that are expected to be fully realized within the expiration period and other temporary differences. Also in 2012, valuationallowances in the amount of $19.0 million were released in certain foreign jurisdictions. In 2013, the company had a net tax benefit from the release of certainforeign jurisdictions in the amount of $11.6 million.Discontinued OperationsAs of May 31, 2011, we disposed of the GBC Fordigraph Pty Ltd (“GBC Fordigraph”) business. The Australia-based business was formerly part ofthe ACCO Brands International segment and the results of operations are included in the financial statements as a discontinued operation for all periodspresented. In 2011, we received net proceeds of $52.9 million and recorded a gain on the sale of $41.9 million ($36.8 million after-tax).For further information on discontinued operations see "Note 19. Discontinued Operations" to the consolidated financial statements contained in Item 8of this report.Overview of 2013 Company PerformanceThe financial results for the 2013 year include the full year results for Mead C&OP while 2012 included only eight months of Mead C&OP results.Operating income increased by $6 million, primarily due to synergies and productivity improvements, but was adversely impacted primarily by theperformance of the Computer Products Group segment and by adverse foreign exchange. The additional four months of January through April of Mead C&OPcontributed additional sales and gross profit, but it was not a profit contributor to the Company as a whole as these months were not historically profitable dueto the seasonality of sales of the the acquired business (absent synergies and productivity savings). Sales for the year were impacted by challenging markets inthe North America and Computer Products Group segments and the adverse impact of foreign exchange, partially offset by strength in the Internationalsegment. The Company generated significant cash flow and used this to reduce its debt by $151 million.21Fiscal 2013 versus Fiscal 2012The following table presents the Company’s results for the years ended December 31, 2013, and 2012. Year Ended December 31, Amount of Change (in millions of dollars)2013 2012 $ % Net sales$1,765.1 $1,758.5 $6.6 0.4 % Cost of products sold1,220.3 1,225.1 (4.8) (0.4)% Gross profit544.8 533.4 11.4 2 % Gross profit margin30.9% 30.3% 0.6pts Advertising, selling, general and administrative expenses344.2 349.9 (5.7) (2)% Amortization of intangibles24.7 19.9 4.8 24 % Restructuring charges30.1 24.3 5.8 24 % Operating income145.8 139.3 6.5 5 % Operating income margin8.3% 7.9% 0.4pts Interest expense, net54.7 89.3 (34.6) (39)% Equity in earnings of joint ventures(8.2) (6.9) (1.3) 19 % Other expense, net7.6 61.3 (53.7) (88)% Income tax expense (benefit)14.4 (121.4) 135.8 112 % Effective tax rate15.7% NM NM Income from continuing operations77.3 117.0 (39.7) (34)% Loss from discontinued operations, net of income taxes(0.2) (1.6) 1.4 88 % Net income77.1 115.4 (38.3) (33)% Net SalesNet sales increased $6.6 million, or 0.4%, to $1.765 billion compared to $1.759 billion in the prior-year period. The acquisition of Mead C&OPcontributed incremental sales of approximately $125 million with twelve months of results included in the current year and only eight months of results in theprior year. The underlying decline of approximately $118 million includes an unfavorable currency translation of $27.5 million, or 2%. The remaining salesdecline was primarily in the North America segment and resulted from soft demand, consumers purchasing more lower-priced products, lost placements andthe exit from unprofitable business. Additionally, the Computer Products Group segment declined primarily due to increased competition in the tablet andsmartphone categories.Cost of Products SoldCost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in themanufacturing, procurement and distribution process, inbound and outbound freight, shipping and handling costs, purchasing costs associated withmaterials and packaging used in the production processes, including an allocation of information technology costs. Cost of products sold decreased $4.8million, or 0.4% to $1.220 billion compared to $1.225 billion in the prior-year period and includes $18.7 million of favorable currency translation. Theunderlying decrease was due to lower sales demand, together with synergies and productivity savings and the absence of $13.3 million of amortization of step-up in inventory value due to the Merger, which was partially offset by the full year impact from the acquisition of Mead C&OP.Gross ProfitManagement believes that gross profit and gross profit margin provide enhanced shareholder appreciation of underlying profit drivers. Gross profitincreased $11.4 million, or 2%, to $544.8 million, compared to $533.4 million in the prior-year period, and includes $8.8 million of unfavorable currencytranslation. The underlying increase was due to the full year results from the acquisition of Mead C&OP, together with synergies and productivity savings,which partly offset by the absence of $13.3 million of amortization of step-up in inventory value due to the Merger and by lower sales volume.22Gross profit margin increased to 30.9% from 30.3%. The increase was driven by synergies and productivity savings, as well as the full year impact ofMead C&OP, which has historically higher relative margins, but was partially offset by adverse sales mix, particularly in the Computer Products Group.Advertising, selling, general and administrative expensesAdvertising, selling, general and administrative expenses ("SG&A") include advertising, marketing, selling (including commissions), research anddevelopment, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrativeexpenses outside the manufacturing and distribution functions (e.g., finance, human resources, information technology, corporate expenses, etc.). SG&Adecreased $5.7 million, or 2%, to $344.2 million, compared to $349.9 million in the prior-year period, and includes $4.7 million of favorable currencytranslation. The underlying decrease was primarily due to a reduction in transaction and integration charges associated with the Merger, which were $18.6million higher in the prior-year period, synergies and productivity savings, and a $2.5 million gain on the sale of a facility in 2013. The decrease waspartially offset by the inclusion of the full year expense for Mead C&OP, higher stock compensation, and $1.8 million in expenses related to the relocation ofour corporate and U.S. headquarters.As a percentage of sales, SG&A decreased to 19.5% compared to 19.9% in the prior-year period primarily due to a reduction in transaction andintegration charges.Amortization of IntangiblesAmortization of intangibles increased to $24.7 million compared to $19.9 million in the prior-year period. The increase was driven by incrementalamortization as a result of the Merger.Restructuring ChargesRestructuring charges were $30.1 million compared to $24.3 million in the prior-year period. Employee termination and severance charges included inrestructuring charges in the current and prior year relate our North American and International operations and are primarily associated with post-mergerintegration activities following the Merger and changes in the European business model and manufacturing footprint. In addition, during the fourth quarter of2013 we committed to restructuring actions that were primarily focused on streamlining our North American school, office and computer products operations.Operating IncomeOperating income increased $6.5 million, or 5%, to $145.8 million, compared to $139.3 million in the prior-year period, including unfavorablecurrency translation of $3.5 million. The increase was primarily due to synergies and productivity savings and a reduction in transaction and integrationcharges, which were partially offset by a less profitable sales mix.Interest Expense, Net, Equity in Earnings of Joint Ventures and Other Expense, NetInterest expense, net of interest income, decreased to $54.7 million, compared to $89.3 million in the prior-year period, due to the absence of $16.4million of costs, primarily Merger-related, for the committed financing in the prior-year period and substantially lower effective interest rates as a result of theMay 2013 refinancing. Reduced debt outstanding and higher interest income also contributed to the decline.Equity in earnings of joint ventures increased to $8.2 million, compared to $6.9 million in the prior-year period. During 2012 we took an impairmentcharge of $1.9 million related our Neschen GBC Graphics Films, LLC joint venture.Other expense, net was $7.6 million compared to $61.3 million in the prior-year period. The improvement was due to the absence of one-time Merger-related refinancing costs of $61.4 million for the repurchase or discharge of all of the Company's outstanding Senior Secured Notes in the prior year. Thecurrent year includes $9.4 million for the write-off of debt origination costs related to the May 2013 refinancing and $2.0 million for a gain related to a bargainpurchase on an acquisition completed in the fourth quarter of 2013. For a further discussion of the Company’s refinancing completed in the second quarter of2013 see "Note 4. Long-term Debt and Short-term Borrowings" to our consolidated financial statements contained in Item 8 of this report.Income TaxesIncome tax expense from continuing operations was $14.4 million on income from continuing operations before taxes of $91.7 million. The low tax rateof 15.7% is primarily due to the reversal of valuation allowances for certain foreign jurisdictions23in the amount of $11.6 million. For the prior-year period, the Company reported an income tax benefit from continuing operations of $121.4 million on a lossfrom continuing operations before taxes of $4.4 million, primarily due to the release of certain valuation allowances for the U.S. and certain foreignjurisdictions in the amount of $126.1 million and $19.0 million, respectively.Segment Discussion Year Ended December 31, 2013 Amount of Change Net Sales SegmentOperatingIncome (A) OperatingIncome Margin Net Sales Net Sales SegmentOperatingIncome SegmentOperatingIncome Margin Points (in millions of dollars) $ % $ % ACCO Brands North America$1,041.4 $98.2 9.4% $13.2 1% $12.0 14 % 100ACCO Brands International566.6 66.5 11.7% 15.4 3% 4.5 7 % 50Computer Products Group157.1 13.7 8.7% (22.0) (12)% (22.2) (62)% (1,130)Total segment sales$1,765.1 $178.4 $6.6 $(5.7) Year Ended December 31, 2012 Net Sales SegmentOperatingIncome (A) OperatingIncome Margin (in millions of dollars) ACCO Brands North America$1,028.2 $86.2 8.4% ACCO Brands International551.2 62.0 11.2% Computer Products Group179.1 35.9 20.0% Total segment operating income$1,758.5 $184.1 (A) Segment operating income excludes corporate costs; Interest expense, net; Equity in earnings of joint ventures and Other expense, net. See Note 16.Information on Business Segments to the 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 North AmericaACCO Brands North America net sales increased $13.2 million, or 1%, to $1,041.4 million, compared to $1,028.2 million in the prior-year period.The Merger contributed incremental sales of approximately $88 million, with twelve months of results included in the current year and only eight months ofresults in the prior year. The underlying decline of approximately $75 million includes unfavorable currency translation of $4.2 million. The decline wasdriven by soft consumer demand, consumers purchasing more lower-priced products, and lost placements with some customers. These factors impacted boththe acquired Mead and legacy ACCO Brands businesses. The planned exit from unprofitable business accounted for $26.0 million of the decline.ACCO Brands North Americas operating income increased $12.0 million, or 14%, to $98.2 million compared to $86.2 million in the prior-year period, and operatingincome margin increased to 9.4% from 8.4% in the prior-year period. The improvement was due to synergies and productivity savings and the absence of$11.5 million of amortization of step-up in inventory value due to the Merger. Partially offsetting the improvement were lower sales volume, unfavorablecustomer/product mix, higher amortization of intangibles of $5.1 million and $1.8 million of costs related to the relocation of our corporate and U.S.headquarters.ACCO Brands InternationalACCO Brands International net sales increased $15.4 million, or 3%, to $566.6 million compared to $551.2 million in the prior-year period. TheMerger contributed incremental sales of $37.3 million, with twelve months of results included in the current year and only eight months of results in the prioryear. The underlying decline of $21.9 million includes unfavorable currency translation of $23.5 million, or 4%. Excluding the effect of the Merger andcurrency translation, sales increased $1.7 million with growth in Brazil due to higher pricing and volume. Partially offsetting the increase were lower sales inother regions, primarily in Europe during the first quarter, which included $3.6 million of unprofitable business that was exited.ACCO Brands International operating income increased $4.5 million, or 7%, to $66.5 million, compared to $62.0 million in the prior-year period, andoperating income margin increased to 11.7% from 11.2% in the prior-year period. Foreign currency translation negatively impacted results by $3.7 million, or6%. The underlying improvement (exclusive of currency translation)24reflects productivity savings, lower pension expenses, a $2.5 million gain on the sale of a facility and the absence of $1.8 million of amortization of step-up ininventory value due to the Merger. This was partially offset by higher restructuring charges of $3.1 million.Computer Products GroupComputer Products Group net sales decreased $22.0 million, or 12%, to $157.1 million, compared to $179.1 million in the prior-year period. Volumedecreased 9% primarily due to increased competition in the tablet and smartphone categories resulting in market share loss and lower sales and pricing. Inaddition, we experienced a continuation of the decline in sales of PC accessory and security products due to the ongoing contraction of worldwide PC unit salesvolumes. Lower net pricing due to promotions and the loss of $2.3 million in royalty income from security products unfavorably impacted sales by 3%.Computer Products Group operating income decreased $22.2 million, or 62%, to $13.7 million, compared to $35.9 million in the prior-year period,and operating margin decreased to 8.7% from 20.0% in the prior-year period. The decline in operating income and margin was primarily due to lower sales,lower pricing (including royalties), higher inventory obsolescence expenses and increased restructuring charges.Fiscal 2012 versus Fiscal 2011The following table presents the Company’s results for the years ended December 31, 2012 and 2011. Year Ended December 31, Amount of Change (in millions of dollars)2012 2011 $ % Net sales$1,758.5 $1,318.4 $440.1 33 % Cost of products sold1,225.1 919.2 305.9 33 % Gross profit533.4 399.2 134.2 34 % Gross profit margin30.3% 30.3% 0.0pts Advertising, selling, general and administrative expenses349.9 278.4 71.5 26 % Amortization of intangibles19.9 6.3 13.6 NM Restructuring charges (income)24.3 (0.7) 25.0 NM Operating income139.3 115.2 24.1 21 % Operating income margin7.9% 8.7% (0.8)pts Interest expense, net89.3 77.2 12.1 16 % Equity in earnings of joint ventures(6.9) (8.5) 1.6 (19)% Other expense, net61.3 3.6 57.7 NM Income tax (benefit) expense(121.4) 24.3 (145.7) NM Effective tax rateNM 56.6% NM Income from continuing operations117.0 18.6 98.4 NM (Loss) income from discontinued operations, net of income taxes(1.6) 38.1 (39.7) NM Net income115.4 56.7 58.7 104 % Net SalesNet sales increased $440.1 million, or 33%, to $1.76 billion compared to $1.32 billion in the prior-year period. The acquisition of Mead C&OPcontributed sales of $551.5 million. The underlying decline of $111.4 million includes an unfavorable currency translation of $17.1 million, or 1%. Theremaining decline of $94.3 million, or 7%, occurred primarily in the International and North America business segments.International segment sales declined $61 million (excluding the effect of Mead C&OP and currency translation) of which the decline in the Europeanbusiness accounted for $56 million. Approximately $32 million of the European decline was due to the Company's decision to re-focus on more profitablebusiness; the remainder of the European decline was due to the weak economic environment. Australia also experienced weak consumer demand and lowerprice points.25North American segment sales declined $27 million (excluding the effect of Mead C&OP and currency translation). Approximately half of the salesdecline was in the direct channel, which services large U.S. print finishing customers, with the remainder mainly from lower Canadian sales and declines inthe calendar business.Cost of Products SoldCost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in themanufacturing, procurement and distribution process, allocation of certain information technology costs supporting those processes, inbound and outboundfreight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes. Cost of products soldincreased $305.9 million, or 33%, to $1.23 billion. The acquisition of Mead C&OP contributed $355.8 million, which includes $13.3 million inamortization of the acquisition step-up in inventory value. Excluding the impact of Mead C&OP acquisition, the principal drivers of the underlying decline of$49.9 million were lower sales volumes and a $12.1 million impact of favorable currency translation.Gross ProfitManagement believes that gross profit and gross profit margin provide enhanced shareholder understanding of underlying profit drivers. Gross profitincreased $134.2 million, or 34%, to $533.4 million. The acquisition of Mead C&OP contributed $195.7 million, which includes a $13.3 million charge forthe acquisition step-up in inventory value. The principal drivers of the underlying decline of $61.5 million were lower sales volumes and a $5.0 millionimpact of unfavorable currency translation. Gross profit margin was unchanged at 30.3%. The inclusion of Mead C&OP, which has a mix of relatively highermargin products, was offset by an adverse sales mix in the legacy ACCO Brands businesses and the charge for the acquisition step-up in inventory value.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, corporate expenses, etc.). SG&A increased $71.5million, or 26%, to $349.9 million, and as a percentage of sales, SG&A decreased to 19.9% from 21.1% in the prior-year period. The acquisition of MeadC&OP contributed $77.9 million of the increase. The underlying decrease of $6.4 million was driven by savings in the North America and Internationalbusiness segments and the absence of $4.5 million of business rationalization charges within our European operations incurred during 2011 as well asfavorable currency translation of $2.6 million, partially offset by $22.9 million in transaction and integration costs associated with the acquisition of MeadC&OP.Restructuring Charges (Income)Employee termination and severance charges included in restructuring charges primarily relate to our plans for integration with Mead C&OP that wereinitiated in the second quarter of 2012. These charges were $24.3 million in the current year period compared to income of $0.7 million in the prior-year perioddue to the release of reserves related to prior projects no longer required. The current year period charges primarily relate to consolidation and integration of therecently acquired Mead C&OP business, but also include certain cost savings plans that are expected to improve the efficiency and effectiveness of our U.S.and European businesses.Operating IncomeOperating income increased $24.1 million, or 21%, to $139.3 million and as a percentage of sales operating income declined to 7.9% from 8.7%. Theacquisition of Mead C&OP increased operating income by $101.2 million. The underlying decline of $77.1 million was driven by $24.3 million inrestructuring costs, $22.9 million in transaction and integration costs associated with the acquisition of Mead C&OP, a $13.3 million charge for theacquisition step-up in inventory value, lower sales volume in the legacy ACCO Brands businesses and unfavorable currency translation of $2.2 million.Savings in the North America and International business segments and the absence of $4.5 million of business rationalization charges within our Europeanoperations incurred during 2011 partially offset the underlying decline.26Interest Expense, Net, Equity in Earnings of Joint Ventures and Other Expense, NetInterest expense was $89.3 million compared to $77.2 million in the prior-year period. The increase was due to merger-related expenses for the committedfinancing required for the Merger of $16.4 million and accelerated amortization of debt origination costs of $3.6 million. The underlying decrease was due toour refinancing completed in May 2012 which substantially lowered our effective interest rate. Also, 2011 includes $1.2 million of accelerated amortization ofdebt origination costs resulting from debt repayments in the third quarter of 2011.Equity in earnings of joint ventures was income of $6.9 million compared to $8.5 million in the prior-year period. During the fourth quarter of 2012we took an impairment charge of $1.9 million related our Neschen GBC Graphics Films, LLC ("Neschen") joint venture.Other expense, net, was $61.3 million compared to expense of $3.6 million in the prior year period. The significant increase was due to the refinancingof our debt in May 2012. The Company repurchased or discharged all of its outstanding Senior Secured Notes of $425.1 million, due March 2015, for$464.7 million including a premium and related fees of $39.6 million, and redeemed all of its outstanding Senior Subordinated Notes of $246.3 million, dueAugust 2015, for $252.6 million including a premium of $6.3 million. The increase was also due to the write-off of debt origination costs of $15.5 millionrelated to the refinanced debt. In the prior year we paid $3.0 million in premiums on the repurchase of $34.9 million of our Senior Secured Notes.Income TaxesIncome tax benefit from continuing operations was $121.4 million on a loss before taxes of $4.4 million compared to an income tax expense fromcontinuing operations of $24.3 million on income before taxes of $42.9 million in the prior-year period. The tax benefit for 2012 is primarily due to the releaseof certain valuation allowances for the U.S. of $126.1 million and certain foreign jurisdictions in the amount of $19.0 million. The high effective tax rate for2011 of 56.6% is due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recordedagainst future tax benefits. For a further discussion of income taxes and the release of the valuation allowances see "Note 11. Income Taxes" to theconsolidated financial statements contained in Item 8 of this report.(Loss) Income from Discontinued OperationsLoss from discontinued operations was $1.6 million, or $0.02 per diluted share, compared to income of $38.1 million, or $0.66 per diluted share inthe prior-year.Discontinued operations include the results of GBC Fordigraph, which was sold during the second quarter of 2011, and the commercial print finishingbusiness, which was sold during 2009. For a further discussion of discontinued operations see "Note 19. Discontinued Operations" to the consolidatedfinancial statements contained in Item 8 of this report.The components of discontinued operations for the years ended December 31, 2012 and 2011 are as follows:(in millions of dollars)2012 2011Income from operations before income taxes$— $2.5(Loss) gain on sale before income taxes(2.1) 41.5Income tax (benefit) expense(0.5) 5.9(Loss) income from discontinued operations$(1.6) $38.127Segment Discussion Year Ended December 31, 2012 Amount of Change Net Sales SegmentOperatingIncome (A) OperatingIncome Margin Net Sales Net Sales SegmentOperatingIncome SegmentOperatingIncome Margin Points (in millions of dollars) $ % $ % ACCO Brands North America$1,028.2 $86.2 8.4% $405.1 65% $48.8 130 % 240ACCO Brands International551.2 62.0 11.2% 46.2 9% 3.1 5 % (50)Computer Products Group179.1 35.9 20.0% (11.2) (6)% (11.2) (24)% (480)Total segment$1,758.5 $184.1 $440.1 $40.7 Year Ended December 31, 2011 Net Sales SegmentOperatingIncome (A) OperatingIncome Margin (in millions of dollars) ACCO Brands North America623.1 37.4 6.0% ACCO Brands International505.0 58.9 11.7% Computer Products Group190.3 47.1 24.8% Total segment$1,318.4 $143.4 (A) Segment operating income excludes corporate costs; Interest expense, net; Equity in earnings of joint ventures and Other expense, net. See Note 16,Information on Business Segments, to the 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 North AmericaACCO Brands North America net sales increased $405.1 million, or 65%, to $1.03 billion, compared to $623.1 million in the prior-year period. Theacquisition of Mead C&OP contributed sales of $432.6 million. The remaining decline of $27.5 million includes an unfavorable currency translation of $0.9million. The comparable decline (exclusive of currency translation) of $26.6 million, or 4%, occurred in the legacy ACCO Brands U.S. and Canadianbusinesses due to lower demand from large print finishing customers, weak demand including lower customer inventories and declines in the calendarbusiness. ACCO Brands North Americas operating income increased $48.8 million, or 130%, to $86.2 million, and operating income margin increased to 8.4%from 6.0% in the prior-year period. The acquisition of Mead C&OP contributed $81.4 million, net of other charges consisting of $11.5 million inamortization of the acquisition step-up in inventory value and $2.2 million of restructuring charges. The underlying decrease of $32.6 million was driven by$23.5 million of other charges, consisting of $18.4 million of restructuring charges, $5.1 million of integration charges, as well as, lower sales andunfavorable product mix (higher sales of low-margin products). This was partially offset by savings within SG&A. ACCO Brands InternationalACCO Brands International net sales increased $46.2 million, or 9%, to $551.2 million compared to $505.0 million in the prior-year period. Theacquisition of Mead C&OP contributed sales of $118.9 million. The remaining decline of $72.7 million includes an unfavorable currency translation of$11.9 million, or 2%. The comparable decline (exclusive of currency translation) was $60.8 million, or 12%. Of this decline, Europe accounted for $56million - of which approximately $32 million was anticipated from our previously announced plans to restructure the business and focus on more profitableproducts, channels and/or geographic markets. The remaining $24 million in European sales decline together with an $11 million decline in our Australiansales was due to weak consumer demand, lower pricing, customer focus on lower-price-point items and share loss to our customers' directly sourced openingprice point items. We achieved some modest growth in the legacy Latin American business that partially offset the declines noted above.ACCO Brands International operating income increased $3.1 million, or 5%, to $62.0 million, and operating income margin decreased to 11.2% from11.7% in the prior-year period. The acquisition of Mead C&OP contributed $19.8 million, net of other charges consisting of $1.8 million in amortization ofthe acquisition step-up in inventory value. Europe also incurred $3.4 million in restructuring charges, primarily during the first quarter of 2012. Theremaining decrease of $13.3 million in operating income28was primarily driven by lower sales volume and pricing in Australia. The European business largely offset its substantial top-line decline through costreductions.Computer Products GroupComputer Products net sales decreased $11.2 million, or 6%, to $179.1 million compared to $190.3 million in the prior-year period. Unfavorableforeign currency translation decreased sales by $4.3 million, or 2%. The remaining decrease primarily reflects lower net pricing due to promotions and the lossof $3.2 million in royalty income. Volume increased slightly as sales of new products for smartphones and tablets offset lower sales of PC accessories,including high-margin PC security products.Operating income decreased $11.2 million, or 24%, to $35.9 million, and operating margin decreased to 20.0% from 24.8%. The decrease wasprimarily due to lower pricing, loss of royalty income and unfavorable product mix, impacted by the lower security product volume as noted above.Liquidity and Capital ResourcesOur primary liquidity needs are to service indebtedness, reduce our borrowings, fund capital expenditures and support working capital requirements.Our principal sources of liquidity are cash flows from operating activities, cash and cash equivalents held and seasonal borrowings under our $250.0 millionRevolving Facility. Based on our borrowing base, as of December 31, 2013, $235.9 million remained available for borrowing under this facility. We maintainadequate financing arrangements at market rates. Because of the seasonality of our business we typically generate much of our cash flow in the first, third andfourth quarters as receivables are collected. Our Brazilian business is highly seasonal due to the combined impact of the back-to-school season coinciding withthe calendar year-end in the fourth quarter. Due to various tax laws, it is costly to transfer short-term working capital in and out of Brazil. Our normal practiceis therefore to hold seasonal cash requirements within Brazil, invested in Brazilian government securities. Our priority for all other cash flow use over the nearterm, after funding internal growth, is debt reduction, and acquisitions.Any available overseas cash, other than that held for working capital requirements in Brazil, is repatriated on a continuous basis. Undistributedearnings of foreign subsidiaries that are expected to be permanently reinvested and thus not available for repatriation, aggregate to approximately $606 millionand $586 million as of December 31, 2013 and 2012, respectively, of which approximately $46 million is cash held at foreign subsidiaries as ofDecember 31, 2013. If these amounts were distributed to the U.S., in the form of a dividend or otherwise, we would be subject to additional U.S. income taxes.Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable.Refinancing TransactionsEffective May 13, 2013 the Company entered into the Restated Credit Agreement and on May 1, 2012 we entered into the 2012 Credit Agreement inconjunction with the Merger.For further information on our refinancings see "Introduction - Debt Refinancings" contained elsewhere in this Item 7 and "Note 4. Long-term Debtand Short-term Borrowings" to the consolidated financial statements contained in Item 8 of this report.Loan CovenantsThe Restated Credit Agreement contains customary affirmative and negative covenants as well as events of default, including payment defaults, breachof representations and warranties, covenant defaults, cross-defaults, certain bankruptcy or insolvency events, certain ERISA-related events, changes incontrol or ownership and invalidity of any loan document. Under the Restated Credit Agreement, the Company is required to meet certain financial tests, including a maximum consolidated leverage ratio (asdefined in the Restated Credit Agreement, the "Leverage Ratio") as determined by reference to the following ratios: Period Maximum Consolidated LeverageRatio(1)Effective Date through June 30, 2014 4.50:1.00July 1, 2014 through June 30, 2015 4.00:1.00July 1, 2015 through June 30, 2017 3.75:1.00July 1, 2017 and thereafter 3.50:1.0029(1)The Leverage Ratio is computed by dividing the Company's net funded indebtedness by the cumulative four-quarter-trailing EBITDA, which excludestransaction costs, restructuring and other charges up to certain limits as well as other adjustments defined in the Restated Credit Agreement.Beginning with the fiscal quarter ending June 30, 2013, the Restated Credit Agreement also requires the Company to maintain a consolidated fixed chargecoverage ratio (as defined in the Restated Credit Agreement, the "Fixed Charge Coverage Ratio") as of the end of any fiscal quarter at or above 1.25 to1.00. Under the Restated Credit Agreement, the Company no longer must meet certain minimum interest coverage ratios that were present in the 2012 CreditAgreement.The indenture governing the 6.75% Senior Unsecured Notes, due April 2020 (the "Senior Notes"), does not contain financial performance covenants.However, that indenture does contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to:•incur additional indebtedness;•pay dividends on our capital stock or repurchase our capital stock;•enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to the Company;•enter into certain transactions with affiliates;•make investments;•create liens; and•sell certain assets or merge with or into other companies.Certain of these covenants will be subject to suspension when and if the notes are rated at least “BBB–” by Standard & Poor’s or at least “Baa3” byMoody’s. Each of the covenants is subject to a number of important exceptions and qualifications.See also "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financial statements contained in Item 8 of this report.Compliance with Loan CovenantsAs of December 31, 2013, our Leverage Ratio was approximately 3.3 to 1 and the Fixed Charge Coverage Ratio was approximately 3.7 to 1.As of and for the period ended December 31, 2013, we were in compliance with all applicable loan covenants.Guarantees and SecurityGenerally, obligations under the Restated Credit Agreement are irrevocably and unconditionally guaranteed, jointly and severally, by certain of theCompany's existing and future domestic subsidiaries, and are secured by substantially all of the Company's and certain guarantor subsidiaries' assets,subject to certain exclusions and limitations.The Senior Notes, are irrevocably and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and futuredomestic subsidiaries other than certain excluded subsidiaries. The Senior Notes and the related guarantees will rank equally in right of payment with all ofthe existing and future senior debt of the Company and the guarantors, senior in right of payment to all of the existing and future subordinated debt of theCompany and the guarantors, and effectively subordinated to all of the existing and future secured indebtedness of the Company and the guarantors to theextent of the value of the assets securing such indebtedness. The Senior Notes and the guarantees are and will be structurally subordinated to all existing andfuture liabilities, including trade payables, of each of the Company's subsidiaries that do not guarantee the notes.Cash FlowFiscal 2013 versus Fiscal 2012Cash Flow from Operating ActivitiesFor the year ended December 31, 2013, cash provided by operating activities was $194.5 million, compared to the cash used in the prior-year period of$7.5 million. Net income for 2013 was $77.1 million, compared to $115.4 million in 2012. The 2012 net income includes non-cash income from the releaseof income tax valuation allowances of $145.1 million.30The operating cash generated in 2013 is much higher than prior year period because it includes a full 12 months of cash flow associated with the MeadC&OP business that was acquired on May 1, 2012; and due to the seasonality of the acquired business, nearly all of its net cash generation occurs during thefirst quarter (prior to our acquisition date). In addition, the absence of debt extinguishment and transaction costs included in the 2012 year, and increasedoperating profits and lower cash interest payments resulting from our debt refinancing activities in 2013 also contributed to the improvement. Cash sourcedfrom net working capital was $33.8 million in 2013, and was driven by cash from accounts payable of $26.8 million that was attributed to our continuedfocus on extending supplier payment terms and to timing of our inventory purchases. In addition, improved supply chain management resulted in lower yearend inventory levels and a cash inflow of $6.5 million. Other significant cash payments in 2013 included interest payments of $52.0 million, income taxpayments of $31.1 million and contributions to the Company's pension and defined benefit plans of $14.7 million.The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2013 and 2012,respectively: 2013 2012Accounts receivable $0.5 $(153.8)Inventories 6.5 61.8Accounts payable 26.8 (25.0)Cash flow provided (used) by net working capital $33.8 $(117.0)Cash Flow from Investing ActivitiesCash used by investing activities was $33.3 million and $423.2 million for the years ended December 31, 2013 and 2012, respectively. The 2012 cashoutflow reflects $397.5 million of net cash paid for the Mead C&OP business. Capital expenditures were $36.6 million and $30.3 million for the years endedDecember 31, 2013 and 2012, respectively. The increase in capital expenditures reflects investments associated with the acquisition of Mead C&OP, includingintegration-related spending in association with the relocation of our Day-Timer operations to other Company locations, investments in the Company's newcorporate and U.S. headquarters, and continuing information technology investments.Cash Flow from Financing ActivitiesCash used by financing activities for the year ended December 31, 2013 was $155.5 million, and reflects a net repayment of outstanding debtassociated with the Company's new and previously existing debt facilities of $150.2 million. Included in this amount were proceeds from new debt facilities of$530.0 million, offset by repayments of the Company's extinguished and new debt facilities of $679.5 million. In addition, debt issuance payments in 2013were $4.3 million. Cash provided by financing activities in 2012 was $360.1 million, representing proceeds from new debt facilities of $1.27 billion, offsetby repayments of the Company's extinguished and new debt facilities of $872.0 million and debt issuance payments of $38.5 million.Fiscal 2012 versus Fiscal 2011Cash Flow from Operating ActivitiesFor the year ended December 31, 2012, cash used by operating activities was $7.5 million, compared to the cash provided in the prior-year period of$61.8 million. Net income for 2012 was $115.4 million, compared to $56.7 million in 2011. Non-cash and non-operating adjustments to net income on apre-tax basis in 2012 totaled $106.6 million, compared to $10.0 million in 2011. The 2012 net adjustments were substantially higher than 2011, largely dueto the inclusion of Mead C&OP in 2012 and the sale of GBC Fordigraph in 2011 which resulted in a pre-tax net gain of $41.9 million.The operating cash outflow in 2012 of $7.5 million for the year ended December 31, 2012 was driven by the May 1, 2012 timing of the Merger withMead C&OP, and only includes the cash flow from Mead C&OP since that date. The outflow includes cash payments of $16.1 million related to thetransaction and $61.6 million related to the associated debt extinguishment and refinancing. This was largely offset by cash generated from operating profits.The use of cash for net working capital was $117.0 million in 2012, and reflects a large seasonal investment in working capital for the Mead C&OPbusiness. The Mead business has a very seasonal cash flow pattern whereby strong sales during the fourth quarter result in substantial accounts receivable atthe end of the year and strong cash collections during the early part of the following year. As a result, nearly all of the Mead annual net cash generation occursduring the first quarter. The use of cash for accounts payable reflects lower inventory purchases, primarily for Mead C&OP, due to the seasonally lower salesvolume anticipated during the first quarter. Other significant cash31payments in 2012 included interest payments of $79.3 million (excluding financing-related payments), income tax payments of $28.8 million andcontributions to the Company's pension and defined benefit plans of $19.2 million.The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2012 and 2011,respectively: 2012 2011Accounts receivable $(153.8) $0.6Inventories 61.8 5.4Accounts payable (25.0) 16.8Cash flow (used) provided by net working capital $(117.0) $22.8Cash Flow from Investing ActivitiesCash used by investing activities was $423.2 million for the year ended December 31, 2012 and reflects $397.5 million of net cash paid for MeadC&OP. For additional information, see "Note 3. Acquisitions" to the consolidated financial statements contained in Item 8 of this report. Cash provided byinvesting activities in 2011 was $40.0 million and included proceeds from the sale of GBC Fordigraph of $53.6 million. Capital expenditures were $30.3million and $13.5 million for the years ended December 31, 2012 and 2011, respectively. The increase in capital expenditures reflects the acquisition of MeadC&OP, as well as additional investments in information technology systems, including the cost of replacing the I.T. infrastructure previously supplied byMead C&OP's former parent company. During 2012, the Company also received net proceeds of $3.1 million from the sale of assets, which included amanufacturing facility located in the U.K. In addition, $1.5 million of net proceeds associated with the 2009 sale of the Company’s former commercial printfinishing business were collected in 2012, while additional cash expenditures associated with the sale and exit of the business of approximately $2.4 millionare anticipated during the 2013 year.Cash Flow from Financing ActivitiesCash provided by financing activities for the year ended December 31, 2012 was $360.1 million, and includes proceeds from new debt facilities of$1.27 billion, offset by repayments of the Company's extinguished and new debt facilities of $872.0 million and debt issuance payments of $38.5 million.Cash used by financing activities in 2011 was $63.1 million, primarily representing repayments of long-term debt.CapitalizationWe had approximately 113.7 million common shares outstanding as of December 31, 2013.Adequacy of Liquidity SourcesBased on our 2014 business plan and latest forecasts, we believe that cash flows from operations, our current cash balance and other sources ofliquidity, including borrowings available under our Revolving Facility will be adequate to support requirements for working capital, capital expenditures, andto service 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. For more information on these risks see “Part I, Item1A. Risk Factors".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.32Our contractual obligations and related payments by period at December 31, 2013 were as follows: 2014 2015 - 2016 2017 -2018 Thereafter Total(in millions of dollars) Contractual obligations Debt(1)$0.1 $99.3 $321.5 $500.0 $920.9Interest on debt(2)45.3 86.5 77.4 50.6 259.8Operating lease obligations22.5 36.3 25.3 38.0 122.1Purchase obligations(3)80.0 26.9 12.9 — 119.8Other long-term liabilities(4)16.3 5.9 — — 22.2Total$164.2 $254.9 $437.1 $588.6 $1,444.8 (1)The required 2014 principal cash payments on the Restated Term Loan A were made in 2013.(2)Interest calculated at December 31, 2013 rates for variable rate debt.(3)Purchase obligations primarily consist of contracts and non-cancelable purchase orders for raw materials and finished goods.(4)Obligations related to 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, 2013, we are unableto make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $52.1 million of unrecognized taxbenefits have been excluded from the contractual obligations table above. See "Note 11. Income Taxes" to the consolidated financial statements contained inItem 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 statementsrequires 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 some 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 moving33inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specific identification ofitems, such as product discontinuance or engineering/material changes. These estimates could vary significantly, either favorably or unfavorably, from actualrequirements if future economic conditions, 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 yearsComputer software 5 to 7 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 the ourindustry as estimated by using comparable publicly traded companies.Intangible AssetsIntangible assets are comprised primarily of indefinite-lived and amortizable intangible assets acquired and arising from the application of purchaseaccounting. Indefinite-lived intangible assets are not amortized, but are evaluated annually to determine whether the indefinite useful life is appropriate. Inaddition, amortizable intangible assets other than goodwill are amortized over their useful lives. Certain of our trade names have been assigned an indefinite lifeas we currently anticipate that these trade names will contribute cash flows to ACCO Brands indefinitely.We review indefinite-lived intangibles for impairment annually, normally in the second quarter, and whenever market or business events indicate theremay be a potential adverse impact on 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 eachbusiness in both the near and long term, as well as their impact on any identifiable intangible asset associated with the business. Based on recent businessresults, consideration of significant external and internal factors, and the resulting business projections, indefinite-lived intangible assets are reviewed todetermine whether they are likely to remain indefinite-lived, or whether a finite life is more appropriate. In addition, based on events in the period and futureexpectations, management considers whether the potential for impairment exists. Finite lived intangibles are amortized over 10, 15, 23 or 30 years.During 2013, we adopted ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets forImpairment. ASU No. 2012-02 permits entities to first assess qualitative factors to determine if it is more likely than not that the fair value of a indefinite-lived intangible unit is less than its carrying amount as a basis for determining whether further impairment testing of indefinite-lived intangible assets isnecessary.We performed our annual assessment in the second quarter of 2013 and concluded that no impairment exists. However, due to the recent acquisition ofMead C&OP, the fair values of certain indefinite-lived trade names are not substantially above their carrying values.34As part of our review in the second quarter of 2012, $21.4 million of the value previously assigned to one of our legacy indefinite-lived trade names waschanged to an amortizable intangible asset. The legacy indefinite-lived trade name was not impaired. The change was made in respect of decisions regardingour future use of the trade name. We commenced amortizing the trade name in June of 2012 on a prospective basis over a life of 30 years.GoodwillThe authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. We havedetermined that our reporting units are ACCO Brands North America, ACCO Brands International and Computer Products Group segments. We test goodwillfor impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. During 2012, we adoptedASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits entities to first assessqualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determiningwhether it is necessary to perform the two-step goodwill impairment test included in U.S. GAAP. Entities are not required to calculate the fair value of areporting unit unless they determine that it is more likely than not that the fair value is less than the carrying amount. We performed our annual assessment inthe second quarter of 2013 and concluded that no impairment exists; however we did conclude it was necessary to apply the traditional two-step fair valuequantitative impairment test in ASC 350 to our reporting units in 2013 due to the Merger and the decline in sales. When applying a fair-value-based test, if it isdetermined to be required, 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 ofthe net 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 assignedto a 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.Given the current economic environment and the uncertainties regarding their impact on our business, there can be no assurance that our estimates andassumptions made for purposes of our qualitative impairment testing during 2013 will prove to be accurate predictions of the future. If our assumptionsregarding forecasted revenue or margin growth rates of certain reporting units are not achieved, we may be required to record impairment charges in futureperiods, whether in connection with our next annual impairment testing in the second quarter of fiscal year 2014 or prior to that, if a triggering event isidentified outside of the quarter from when the annual impairment test is performed. It is not possible at this time to determine if any such future impairmentcharge would result or, 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 U.S. GAAP, which include various actuarial assumptions, includingdiscount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. Actuarial assumptions are reviewed on anannual basis and modifications to these assumptions are made based on current rates and trends when it is deemed appropriate. As required by U.S. GAAP,the effect of our modifications are generally recorded and amortized over future periods. We believe that the assumptions utilized in recording our obligationsunder the plans are reasonable based on our experience. The actuarial assumptions used to record our plan obligations could differ materially from actualresults due to changing economic and market conditions, higher or lower withdrawal rates or other factors which may impact the amount of retirement relatedbenefit expense recorded by us in future periods.The discount rate assumptions used to determine the post-retirement 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. Our discount rates were determined by considering the average of pension yieldcurves constructed of a large population of high quality corporate bonds. The resulting discount rates reflect the matching of plan liability cash flows to theyield 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.35At the end of each calendar year an actuarial evaluation is performed to determine the funded status of our pension and post-retirement obligations andany actuarial gain or loss is recognized in other comprehensive income (loss) and then amortized into the income statement in future periods.Pension expense was $6.3 million, $8.9 million and $6.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. The $2.6million decrease in pension expense in 2013 compared to 2012 was due to higher expected returns on the plans' assets because of higher level of assets,primarily due to actual market returns and a $1.0 million curtailment gain, which were partially offset by higher amortization of actuarial losses in the U.S.plans. The $2.0 million increase in pension expense in 2012 compared to 2011 was due to the inclusion of the Mead C&OP plans and the settlement losses onthe Supplemental Retirement Plan (the "SRP") as part of the Merger. Post-retirement expense (income) was $0.2 million, $(0.8) million and $0.2 million for theyears ended December 31, 2013, 2012 and 2011, respectively. The $1.0 million increase in post-retirement expense in 2013 compared to 2012 was due toreduced amortization of actuarial gains.The weighted average assumptions used to determine benefit obligations for the years ended December 31, 2013, 2012, and 2011 were as follows: Pension Benefits Post-retirement U.S. International 2013 2012 2011 2013 2012 2011 2013 2012 2011Discount rate5.0% 4.2% 5.0% 4.3% 4.3% 4.7% 4.4% 4.0% 4.5%Rate of compensation increaseN/A N/A N/A 3.3% 4.0% 3.6% — — —The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2013, 2012 and 2011 were as follows: Pension Benefits Post-retirement U.S. International 2013 2012 2011 2013 2012 2011 2013 2012 2011Discount rate4.2% 5.0% 5.5% 4.3% 4.7% 5.4% 4.0% 4.5% 5.0%Expected long-term rate ofreturn8.2% 8.2% 8.2% 6.8% 6.2% 6.4% — — —Rate of compensation increaseN/A N/A N/A 4.0% 3.6% 4.4% — — —In 2014, we expect pension income of approximately $0.1 million and post-retirement income of approximately $0.4 million. The estimated $6.4 milliondecrease in pension expense for 2014 compared to 2013 is due to reduced amortization of actuarial losses, primarily in the U.S., which have resulted fromhigher discount rates at the end of 2013 compared to the end of 2012. Additionally, investment returns in excess of the expected returns contributed to anactuarial gain for the plans during 2013.A 25-basis point change (0.25%) in our discount rate assumption would lead to an increase or decrease in our pension and post-retirement expense ofapproximately $0.6 million for 2014. A 25-basis point change (0.25%) in our long-term rate of return assumption would lead to an increase or decrease inpension and post-retirement expense of approximately $1.2 million for 2014.Pension and post-retirement liabilities of $61.7 million as of December 31, 2013, decreased from $119.8 million at December 31, 2012, due to higherdiscount rates (primarily in the U.S.) compared to prior year assumptions and by the actual over performance of the assets of the pension plans compared tothe expected long-term rate of return of the assets of the pension plans.Customer Program CostsCustomer programs and incentives are a common practice in our industry. We incur customer program costs to obtain favorable product placement, topromote sell-through of products and to maintain competitive pricing. Customer program costs and incentives, including rebates, promotional funds andvolume allowances, are accounted for as a reduction to gross sales. These costs are recorded at the time of sale based on management’s best estimates.Estimates are based on individual customer contracts and projected sales to the customer in comparison to any thresholds indicated by contract. In the absenceof a signed contract, estimates are based on historical or projected experience for each program type or customer. Management periodically reviews accruals forthese rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in sales volume expectations or customercontracts).36Income 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 us to revise the conclusions on our ability to realize certainnet 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 $606 million and $586 million as of December 31, 2013 and 2012, respectively. If these amounts were distributed tothe U.S., in the form of a dividend or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferredincome 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.Prior to 2012 we utilized historical volatility for a pool of peer companies for a period of time that is comparable to the expected life of the option/SSAR todetermine volatility assumptions for stock-based compensation. Beginning in 2012, volatility was calculated using a combination of peer companies (50%)and ACCO Brands' historic volatility (50%). In 2013, volatility was calculated using a combination of peer companies (25%) and ACCO Brands' historicvolatility (75%). 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 experience.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 OptionExpected volatility Higher HigherExpected life Higher HigherRisk-free interest rate Higher HigherDividend yield Higher LowerThe 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.37We recognized stock-based compensation expense of $16.4 million, $9.2 million and $6.3 million for the years ended December 31, 2013, 2012 and2011, respectively.Recent Accounting PronouncementsFor information on recent accounting pronouncements see "Note 2. Significant Accounting Policies" to the consolidated financial statements containedin Item 8 of this report.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur industry is concentrated in a small number of major customers, principally office products superstores, large retailers, wholesalers and contractstationers. Customer consolidation and share growth of private-label products continue to increase pricing pressures, which may adversely affect margins forus and our competitors. We are addressing these challenges through design innovations, value-added features and services, as well as continued cost and assetreductions.We are exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. We enter into financialinstruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments aremajor financial institutions.Foreign Exchange Risk ManagementWe enter into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventorypurchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe, Australia, Canada, Brazil, Mexicoand Japan. All of the existing foreign exchange contracts as of December 31, 2013 have maturity dates in 2014. Increases and decreases in the fair marketvalues of the forward agreements are expected to be offset by gains/losses in recognized net underlying foreign currency transactions or loans. Notionalamounts of outstanding foreign currency forward exchange contracts were $144.2 million and $175.4 million at December 31, 2013 and 2012, respectively.The net fair value of these foreign currency contracts was $0.9 million and $0.4 million at December 31, 2013 and 2012, respectively. At December 31, 2013,a 10% unfavorable exchange rate movement in our portfolio of foreign currency forward contracts would have reduced our unrealized gains by $12.2 million.Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset bycorresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, we believe these forwardcontracts and the offsetting 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 "Note14. Derivative Financial Instruments" to the consolidated financial statements contained in Item 8 of this report.Interest Rate Risk ManagementAs discussed in "Note 4. Long-term Debt and Short-term Borrowings" to our consolidated financial statements contained in Item 8 of this report, ourprevious senior secured credit facilities were refinanced in May 2013.Amounts outstanding under the Restated Credit Agreement bear interest (i) in the case of Eurodollar loans, at a rate per annum equal to the Eurodollarrate (which is based on an average British Bankers Association Interest Settlement Rate) plus the applicable rate; (ii) in the case of loans made at the Base Rate(which means the highest of (a) the Bank of America, N.A. prime rate then in effect, (b) the Federal Funds Effective Rate (as defined in the Restated CreditAgreement) then in effect plus ½ of 1.00% and (c) the Eurodollar rate that would be payable on such day for a Eurodollar loan with a one-month interest periodplus 1.00%), at a rate per annum equal to the Base Rate plus the applicable rate; and (iii) in the case of swing line loans, at a rate per annum equal to the BaseRate plus the applicable rate for the Revolving Facility. Separate base interest rate and applicable rate provisions will apply for any Canadian or Australiancurrency denominated loans outstanding under the Revolving Facility.The applicable rate applied to outstanding Eurodollar loans and Base Rate loans is based on the Company's consolidated Leverage Ratio as follows:38ConsolidatedLeverage Ratio Eurodollar Credit Spread Base Rate Credit Spread> 4.00 to 1.00 2.50% 1.50%≤ 4.00 to 1.00 and > 3.50 to 1.00 2.25% 1.25%≤ 3.50 to 1.00 and > 2.50 to 1.00 2.00% 1.00%≤ 2.50 to 1.00 1.75% 0.75%The Senior Notes have fixed interest rates and, accordingly, are not exposed to market risk resulting from changes in interest rates. However, the fairmarket value of our long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase asinterest rates fall and decrease as interest rates rise. In addition, fair market values will also reflect the credit markets' view of credit risk spreads and our riskprofile. These interest rate changes may affect the fair market value of the fixed interest rate debt and any repurchases of these notes, but do not impact ourearnings or cash flows.The following table summarizes information about our major debt components as of December 31, 2013, including the principal cash payments andinterest rates.Debt Obligations Stated Maturity Date (in millions of dollars)2014(1) 2015 2016 2017 2018 Thereafter Total Fair ValueLong term debt: Fixed rate Senior Unsecured Notes, dueApril 2020$— $— $— $— $— $500.0 $500.0 $491.3Average fixed interest rate6.75% 6.75% 6.75% 6.75% 6.75% 6.75% Variable rate U.S. Dollar Senior SecuredTerm Loan A, due May 2018$— $43.5 $55.0 $57.9 $263.6 $— $420.0 $420.9Average variable interest rate(2)2.49% 2.49% 2.49% 2.49% 2.49% —% (1)The required 2014 principal cash payments on the Restated Term Loan A were made in 2013.(2)Rates presented are as of December 31, 2013.39ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm41Consolidated Balance Sheets42Consolidated Statements of Income43Consolidated Statements of Comprehensive Income44Consolidated Statements of Cash Flows45Consolidated Statements of Stockholders’ Equity (Deficit)46Notes to Consolidated Financial Statements4740Report 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 (the Company) as of December 31, 2013 and 2012, and the relatedconsolidated statements of income, comprehensive income, cash flows and stockholders’ equity (deficit) for each of the years in the three-year period ended December 31, 2013.In connection with our audits of the consolidated financial statements, we also audited the related consolidated financial statement schedule, Schedule II - Valuation and QualifyingAccounts and Reserves. We also have audited ACCO Brands Corporation’s internal control over financial reporting as of December 31, 2013, based on criteria established inInternal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ACCO BrandsCorporation’s management is responsible for these consolidated financial statements and financial statement schedule, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control OverFinancial Reporting appearing under Item 9A(c) of the Company's December 31, 2013 annual report on Form 10-K. Our responsibility is to express an opinion on theseconsolidated financial statements and financial statement schedule and an opinion on the Company’s internal control over financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan andperform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financialreporting was maintained in all material respects. Our audits of the consolidated financial statements included 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 the overall financial statementpresentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such otherprocedures as we considered 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 reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policiesand procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to futureperiods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a materialmisstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness related to U.S. and Canadianinformation technology general controls related to the configuration set-up of the system, user access and change management controls for the Mead C&OP business has beenidentified and included in management’s assessment. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the2013 consolidated financial statements.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ACCO Brands Corporation and subsidiaries asof December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013, in conformitywith U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financialstatements taken as a whole, presents fairly, in all material respects, the information set forth therein.Also in our opinion, because of the effect of the aforementioned material weakness on the achievement of the objectives of the control criteria, ACCO Brands Corporation has notmaintained effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework (1992) issuedby the Committee of Sponsoring Organizations of the Treadway Commission (COSO)./s/ KPMG LLPChicago, IllinoisFebruary 25, 201441ACCO Brands Corporation and SubsidiariesConsolidated Balance Sheets December 31, 2013 December 31, 2012(in millions of dollars, except share data) Assets Current assets: Cash and cash equivalents$53.5 $50.0Accounts receivable less allowances for discounts, doubtful accounts and returns of $21.2 and $19.3,respectively471.9 498.7Inventories254.7 265.5Deferred income taxes33.5 31.1Other current assets28.1 29.0Total current assets841.7 874.3Total property, plant and equipment548.5 591.4Less accumulated depreciation(295.2) (317.8)Property, plant and equipment, net253.3 273.6Deferred income taxes37.3 36.4Goodwill568.3 589.4Identifiable intangibles, net of accumulated amortization of $147.8 and $123.3, respectively607.0 646.6Other non-current assets75.3 87.4Total assets$2,382.9 $2,507.7Liabilities and Stockholders' Equity Current liabilities: Notes payable to banks$— $1.2Current portion of long-term debt0.1 0.1Accounts payable177.9 152.4Accrued compensation32.0 38.0Accrued customer program liabilities123.6 119.0Accrued interest7.0 6.3Other current liabilities104.5 112.4Total current liabilities445.1 429.4Long-term debt920.8 1,070.8Deferred income taxes169.1 165.0Pension and post-retirement benefit obligations61.7 119.8Other non-current liabilities83.9 83.5Total liabilities1,680.6 1,868.5Stockholders' equity: 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; 114,056,416 and 113,403,824 shares issuedand 113,663,856 and 113,143,344 outstanding, respectively1.1 1.1Treasury stock, 392,560 and 260,480 shares, respectively(3.5) (2.5)Paid-in capital2,035.0 2,018.5Accumulated other comprehensive loss(185.6) (156.1)Accumulated deficit(1,144.7) (1,221.8)Total stockholders' equity702.3 639.2Total liabilities and stockholders' equity$2,382.9 $2,507.7See notes to consolidated financial statements.42ACCO Brands Corporation and SubsidiariesConsolidated Statements of Income Year Ended December 31,(in millions of dollars, except per share data)2013 2012 2011Net sales$1,765.1 $1,758.5 $1,318.4Cost of products sold1,220.3 1,225.1 919.2Gross profit544.8 533.4 399.2Operating costs and expenses: Advertising, selling, general and administrative expenses344.2 349.9 278.4Amortization of intangibles24.7 19.9 6.3Restructuring charges (income)30.1 24.3 (0.7)Total operating costs and expenses399.0 394.1 284.0Operating income145.8 139.3 115.2Non-operating expense (income): Interest expense, net54.7 89.3 77.2Equity in earnings of joint ventures(8.2) (6.9) (8.5)Other expense, net7.6 61.3 3.6Income (loss) from continuing operations before income tax91.7 (4.4) 42.9Income tax expense (benefit)14.4 (121.4) 24.3Income from continuing operations77.3 117.0 18.6(Loss) income from discontinued operations, net of income taxes(0.2) (1.6) 38.1Net income$77.1 $115.4 $56.7Per share: Basic income per share: Income from continuing operations$0.68 $1.24 $0.34(Loss) income from discontinued operations$— $(0.02) $0.69Basic income per share$0.68 $1.23 $1.03Diluted income per share: Income from continuing operations$0.67 $1.22 $0.32(Loss) income from discontinued operations$— $(0.02) $0.66Diluted income per share$0.67 $1.20 $0.98Weighted average number of shares outstanding: Basic113.5 94.1 55.2Diluted115.7 96.1 57.6See notes to consolidated financial statements.43ACCO Brands Corporation and SubsidiariesConsolidated Statements of Comprehensive Income Year Ended December 31,(in millions of dollars)2013 2012 2011Net income$77.1 $115.4 $56.7Other comprehensive income (loss), before tax: Unrealized gain (loss) on derivative financial instruments: Gain (loss) arising during the period3.7 (0.2) (0.3)Reclassification of (gain) loss included in net income(3.4) (1.9) 4.9Foreign currency translation: Foreign currency translation adjustments(61.6) (10.9) (8.9)Less: reclassification adjustment for sale of GBC Fordigraph Pty Ltd included in netincome— — (6.1)Pension and other post-retirement plans: Actuarial gain (loss) arising during the period39.3 (21.1) (46.3)Amortization of actuarial loss and prior service cost included in net income11.5 7.2 7.8Other(2.1) (4.5) 0.9Other comprehensive loss, before tax(12.6) (31.4) (48.0)Income tax (expense) benefit related to items of other comprehensive loss(16.9) 6.3 3.1Comprehensive income$47.6 $90.3 $11.8See notes to consolidated financial statements.44ACCO Brands Corporation and SubsidiariesConsolidated Statements of Cash Flows Year Ended December 31,(in millions of dollars)2013 2012 2011Operating activities Net income$77.1 $115.4 $56.7Amortization of inventory step-up— 13.3 —(Gain) loss on disposal of assets(4.1) 2.0 (40.4)Deferred income tax provision(0.7) (9.9) 3.9Release of tax valuation allowance(11.6) (145.1) —Depreciation39.9 34.5 26.5Other non-cash charges1.2 2.3 0.1Amortization of debt issuance costs and bond discount6.2 9.9 8.2Amortization of intangibles24.7 19.9 6.4Stock-based compensation16.4 9.2 6.3Loss on debt extinguishment9.4 15.5 2.9Equity in earnings of joint ventures, net of dividends received(2.7) 3.0 (2.9)Changes in balance sheet items: Accounts receivable0.5 (153.8) 0.6Inventories6.5 61.8 5.4Other assets0.1 7.4 0.2Accounts payable26.8 (25.0) 16.8Accrued expenses and other liabilities9.0 30.1 (27.8)Accrued income taxes(4.2) 2.0 (1.1)Net cash provided (used) by operating activities194.5 (7.5) 61.8Investing activities Additions to property, plant and equipment(36.6) (30.3) (13.5)Assets acquired— — (1.4)(Payments) proceeds related to the sale of discontinued operations(1.5) 1.5 53.5Proceeds from the disposition of assets6.1 3.1 1.4Cost of acquisitions, net of cash acquired(1.3) (397.5) —Net cash (used) provided by investing activities(33.3) (423.2) 40.0Financing activities Proceeds from long-term borrowings530.0 1,270.0 0.1Repayments of long-term debt(679.5) (872.0) (63.0)(Repayments) borrowings of short-term debt, net(0.7) 1.2 —Payments for debt issuance costs(4.3) (38.5) —Other(1.0) (0.6) (0.2)Net cash (used) provided by financing activities(155.5) 360.1 (63.1)Effect of foreign exchange rate changes on cash and cash equivalents(2.2) (0.6) (0.7)Net increase (decrease) in cash and cash equivalents3.5 (71.2) 38.0Cash and cash equivalents Beginning of the period50.0 121.2 83.2End of the period$53.5 $50.0 $121.2Cash paid during the year for: Interest$52.0 $94.9 $71.9Income taxes$31.1 $28.8 $27.7 Year Ended December 31,(in millions of dollars)2013 2012 2011Significant non-cash transactions: Common stock issued in conjunction with the acquisition of Mead C&OP$— $602.3 $—See notes to consolidated financial statements.45ACCO Brands Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity (Deficit) (in millions of dollars)CommonStock Paid-inCapital AccumulatedOtherComprehensiveIncome (Loss) TreasuryStock AccumulatedDeficit TotalBalance at December 31, 2010$0.6 $1,401.1 $(86.1) $(1.5) $(1,393.9) $(79.8)Net income— — — — 56.7 56.7Income on derivative financialinstruments, net of tax— — 3.7 — — 3.7Translation impact— — (15.0) — — (15.0)Pension and post-retirementadjustment, net of tax— — (33.6) — — (33.6)Stock-based compensation activity— 6.3 — (0.2) — 6.1Balance at December 31, 20110.6 1,407.4 (131.0) (1.7) (1,337.2) (61.9)Net income— — — — 115.4 115.4Stock issuance - Mead C&OPacquisition0.5 601.8 — — — 602.3Loss on derivative financialinstruments, net of tax— — (2.1) — — (2.1)Translation impact— — (10.9) — — (10.9)Pension and post-retirementadjustment, net of tax— — (12.1) — — (12.1)Stock-based compensation activity— 9.4 — (0.8) — 8.6Other— (0.1) — — — (0.1)Balance at December 31, 20121.1 2,018.5 (156.1) (2.5) (1,221.8) 639.2Net income— — — — 77.1 77.1Income on derivative financialinstruments, net of tax— — 0.2 — — 0.2Translation impact— — (61.6) — — (61.6)Pension and post-retirementadjustment, net of tax— — 31.9 — — 31.9Stock-based compensation activity— 16.4 — (1.0) — 15.4Other— 0.1 — — — 0.1Balance at December 31, 2013$1.1 $2,035.0 $(185.6) $(3.5) $(1,144.7) $702.3Shares of Capital Stock CommonStock TreasuryStock NetSharesShares at December 31, 201055,080,463 (157,680) 54,922,783Stock issuances - stock based compensation579,290 (26,338) 552,952Shares at December 31, 201155,659,753 (184,018) 55,475,735Stock issuances - stock based compensation654,263 (76,462) 577,801Stock issuance - Mead C&OP acquisition57,089,808 — 57,089,808Shares at December 31, 2012113,403,824 (260,480) 113,143,344Stock issuances - stock based compensation652,592 (132,080) 520,512Shares at December 31, 2013114,056,416 (392,560) 113,663,856See notes to consolidated financial statements.46ACCO 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 an equity investment in the following joint venture: Pelikan-Artline Pty Ltd (“Pelikan-Artline”) - 50%ownership. Our share of earnings from equity investments is included on the line entitled “Equity in earnings of joint ventures” in the Consolidated Statementsof Income.On May 1, 2012, we completed the merger of the Mead Consumer and Office Products Business (“Mead C&OP”) with a wholly-owned subsidiary ofthe Company (the "Merger"). Accordingly, the results of Mead C&OP are included in our consolidated financial statements from the date of the Merger, May1, 2012. For further information on the Merger see "Note 3. Acquisitions".We sold our GBC Fordigraph Pty Ltd (“GBC Fordigraph”) business to The Neopost Group as of May 31, 2011. This business was part of the ACCOBrands International segment. GBC Fordigraph is reported as a discontinued operation on the Consolidated Statements of Income for all periods presented inthis annual report. The cash flows from discontinued operations have not been separately classified on the accompanying consolidated statements of cashflows. For further information on the Company’s discontinued operations see "Note 18. Discontinued Operations".2. Significant Accounting PoliciesNature of BusinessACCO Brands is primarily involved in the manufacturing, marketing and distribution of office products; such as stapling, binding and laminatingequipment and related consumable supplies, shredders and whiteboards; school products; such as notebooks, folders, decorative calendars, and stationeryproducts; calendar products; and accessories for laptop and desktop computers, smartphones and tablets. We sell primarily to large resellers and oursubsidiaries operate principally in the United States, Northern Europe, Canada, Brazil, Australia and Mexico.Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ from these estimates.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 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 provision47ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)for product returns based on historical trends. In addition, the allowance includes a reserve for currently authorized customer returns that are considered to beabnormal 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, which improve and extend the life of an assetare capitalized; maintenance and repair costs are expensed. Purchased computer software is capitalized and amortized over the software’s useful life. Thefollowing table 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 yearsComputer software 5 to 7 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 ourindustry as estimated by using comparable publicly traded companies.Intangible AssetsIntangible assets are comprised primarily of indefinite-lived and amortizable intangible assets acquired and arising from the application of purchaseaccounting. Indefinite-lived intangible assets are not amortized, but are evaluated annually to determine whether the indefinite useful life is appropriate. Inaddition, amortizable intangible assets other than goodwill are amortized over their useful lives. Certain of our trade names have been assigned an indefinite lifeas we currently anticipate that these trade names will contribute cash flows to ACCO Brands indefinitely.We review indefinite-lived intangibles for impairment annually, normally in the second quarter, and whenever market or business events indicate theremay be a potential adverse impact on 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 eachbusiness in both the near and long term, as well as their impact on any identifiable intangible asset associated with the business. Based on recent businessresults, consideration of significant external and internal factors, and the resulting business projections, indefinite-lived intangible assets are reviewed todetermine whether they are likely to remain indefinite-lived, or whether a finite life is more appropriate. In addition, based on events in the period and futureexpectations, management considers whether the potential for impairment exists. Finite lived intangibles are amortized over 10, 15, 23 or 30 years.48ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)During 2013, we adopted ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets forImpairment. ASU No. 2012-02 permits entities to first assess qualitative factors to determine if it is more likely than not that the fair value of a indefinite-lived intangible unit is less than its carrying amount as a basis for determining whether further impairment testing of indefinite-lived intangible assets isnecessary.We performed our annual assessment in the second quarter of 2013 and concluded that no impairment exists. However, due to the recent acquisition ofMead C&OP, the fair values of certain indefinite-lived trade names are not substantially above their carrying values.As part of our review in the second quarter of 2012, $21.4 million of the value previously assigned to one of our legacy indefinite-lived trade names waschanged to an amortizable intangible asset. The legacy indefinite-lived trade name was not impaired. The change was made in respect of decisions regardingour future use of the trade name. We commenced amortizing the trade name in June of 2012 on a prospective basis over a life of 30 years.GoodwillGoodwill has been recorded on our balance sheet and represents the excess of the cost of the acquisitions when compared to the fair value of the net assetsacquired. The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. We havedetermined that our reporting units are ACCO Brands North America, ACCO Brands International and Computer Products Group segments. We test goodwillfor impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. During 2012, we adoptedASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits entities to first assessqualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determiningwhether it is necessary to perform the two-step goodwill impairment test included in U.S. GAAP. Entities are not required to calculate the fair value of areporting unit unless they determine that it is more likely than not that the fair value is less than the carrying amount. We performed our annual assessment inthe second quarter of 2013 and concluded that no impairment exists, however we did conclude it was necessary to apply the traditional two-step fair valuequantitative impairment test in ASC 350 to our reporting units in 2013 due to the Merger and the decline in sales. When applying a fair-value-based test, if it isdetermined to be required, 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 ofthe net 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 assignedto a 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.Employee Benefit PlansWe provide a range of benefits to our employees and retired employees, including pension, post-retirement, post-employment and health care benefits. Werecord annual amounts relating to these plans based on calculations, which include various actuarial assumptions, including discount rates, assumed rates ofreturn on plan assets, compensation increases, turnover rates and health care cost trend rates. We review our actuarial assumptions on an annual basis andmake 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 and cause us to revise the conclusions on our ability to realize certainnet 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 to49ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments arerevised or resolved.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 uncollectible receivables 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, procurement and distribution process, allocation of certain information technology costs supporting those processes, inbound and outboundfreight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes.Advertising, Selling, General and Administrative ExpensesAdvertising, selling, general and administrative expenses ("SG&A") include advertising, marketing, selling (including commissions), research anddevelopment, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrativeexpenses outside the manufacturing and distribution functions (e.g., finance, human resources, information technology, corporate expenses, 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. Wegenerally 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 HandlingWe reflect all amounts billed to customers for shipping and handling in net sales and the costs incurred from shipping and handling product (includingcosts 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 and prepare products forshipment) in cost of products sold.Warranty ReservesWe offer our customers various warranty terms based on the type of product that is sold. Estimated future obligations related to products sold underthese warranty terms are provided by charges to cost of products sold in the period in which the related revenue is recognized.Advertising CostsAdvertising costs amounted to $131.0 million, $125.7 million and $98.1 million for the years ended December 31, 2013, 2012 and 2011, 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.50ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Research and DevelopmentResearch and development expenses, which amounted to $22.5 million, $20.8 million and $20.5 million for the years ended December 31, 2013, 2012and 2011, 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, restricted stock unit awards, and performance stock unit awards. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period.Where awards are made with non-substantive vesting periods (for example, where a portion of the award vests upon retirement eligibility), we estimate andrecognize 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 comprehensive income (loss) in stockholders’ equity. Some transactions are made in currencies different from an entity’s functionalcurrency. Gains and losses on these foreign currency transactions are included in income as they occur.Derivative Financial InstrumentsWe recognize all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. If the derivative is designatedas 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 are recognized inearnings in the same period. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recordedin other comprehensive income (loss) and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in thefair value of cash flow hedges are recognized in earnings.Certain forecasted transactions, assets and liabilities are exposed to foreign currency risk. We continually monitor our foreign currency exposures inorder to maximize the overall effectiveness of our foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australiandollar, Canadian dollar and British pound.Recent Accounting PronouncementsIn July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2012-02, Intangibles-Goodwilland Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. It allows companies the ability to perform a qualitative assessment todetermine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. It iseffective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. We adopted the standard in 2013 and it didnot have a significant effect on our consolidated financial statements or results of operations.In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Therevised standard is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. It is effective for fiscal periodsbeginning after December 15, 2012. We adopted the standard in 2013 and its required disclosure.In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, aSimilar Tax Loss, or a Tax Credit Carryforward Exists. This guidance requires netting unrecognized tax benefits against deferred tax assets for a loss orother carryforward that would apply in settlement of uncertain tax positions. It is effective for annual reporting periods beginning after December 15, 2013, butearly adoption is permitted. We adopted the standard in 2013 and it did not have a significant effect on our consolidated financial statements or results ofoperations.51ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)3. AcquisitionsOn May 1, 2012, the Company completed the Merger of Mead C&OP with a wholly-owned subsidiary of the Company. Mead C&OP is a leadingmanufacturer 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., Canada and Brazil.In the Merger, MeadWestvaco Corporation (“MWV”) shareholders received 57.1 million shares of the Company's common stock, or 50.5% of thecombined company, valued at $602.3 million on the date of the Merger. After the transaction was completed the Company had 113.1 million common sharesoutstanding.ACCO’s management determined that ACCO is the accounting acquiror in this combination. Accordingly, the results of Mead C&OP are included in theCompany's consolidated financial statements from the date of the Merger, May 1, 2012.The purchase price, net of working capital adjustments and cash acquired, was $999.8 million. The consideration given included 57.1 million sharesof ACCO Brands common stock, which were issued to MWV shareholders with a fair value of $602.3 million and a $460.0 million dividend paid to MWV.The calculation of consideration given for Mead C&OP was finalized during the fourth quarter of 2012 and is described in the following table:(in millions, except per share price)At May 1, 2012Calculated consideration for Mead C&OP: Outstanding shares of ACCO Brands common stock(1)56.0Multiplier needed to calculate shares to be issued(2)1.0202020202Number of shares issued to MWV shareholders57.1Closing price per share of ACCO Brands common stock(3)$10.55Value of common shares issued$602.3Plus: Dividend paid to MWV460.0Less: Working capital adjustment(4)(30.5)Consideration for Mead C&OP$1,031.8(1) Represents the number of shares of the Company's common stock as of May 1, 2012.(2) Represents MWV shareholders' negotiated ownership percentage in ACCO Brands of 50.5% divided by the 49.5% that was owned by ACCO Brandsshareholders upon completion of the Merger.(3) Represents the closing price per share of the Company's stock as of April 30, 2012.(4) Represents the difference between the target net working capital and the closing net working capital as of April 30, 2012.52ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table presents the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of acquisition:(in millions of dollars)At May 1, 2012Calculation of Goodwill: Consideration given for Mead C&OP$1,031.8Cash acquired(32.0) Net purchase price$999.8Plus fair value of liabilities assumed: Accounts payable and accrued liabilities103.9Current and non-current deferred tax liabilities209.6Other non-current liabilities72.9 Fair value of liabilities assumed$386.4 Less fair value of assets acquired: Accounts receivable73.3Inventory143.5Property, plant and equipment136.6Identifiable intangibles543.2Other assets24.3 Fair value of assets acquired$920.9 Goodwill$465.3In the first quarter of 2013 we finalized our fair value estimate of assets acquired and liabilities assumed as of the acquisition date. The final excess ofthe purchase price over the fair value of net assets acquired has been allocated to goodwill in the amount of $465.3 million. As the allowable one-yearevaluation period since the date of acquisition has expired, no additional adjustments to the goodwill related to the acquisition of Mead C&OP will berecognized.In connection with our May 1, 2012 acquisition of Mead C&OP we assumed all of the tax liabilities for the acquired foreign operations. See "Note 11.Income Taxes - Income Tax Assessment" for details on tax assessments issued by the Federal Revenue Department of the Ministry of Finance of Brazil("FRD") against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the tax deduction of goodwill fromTilibra's taxable income for the years 2007 through 2010.Acquisition-related costs of $14.5 million that were incurred during the twelve months ended December 31, 2012, and $5.6 million that were expensedduring 2011, were classified as SG&A expenses.53ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)4. Long-term Debt and Short-term BorrowingsNotes payable and long-term debt, listed in order of their security interests, consisted of the following as of December 31, 2013 and 2012: (in millions of dollars)2013 2012U.S. Dollar Senior Secured Term Loan A, due May 2018 (floating interest rate of 2.49% at December 31, 2013)$420.0 $—U.S. Dollar Senior Secured Term Loan B, due May 2019 (floating interest rate of 4.25% at December 31, 2012)— 326.8U.S. Dollar Senior Secured Term Loan A, due May 2017 (floating interest rate of 3.32% at December 31, 2012)— 220.8Canadian Dollar Senior Secured Term Loan A, due May 2017 (floating interest rate of 4.26% at December 31,2012)— 21.8Senior Unsecured Notes, due April 2020 (fixed interest rate of 6.75%)500.0 500.0Other borrowings0.9 2.7Total debt920.9 1,072.1Less: current portion(0.1) (1.3)Total long-term debt$920.8 $1,070.8Effective May 13, 2013 (the “Effective Date”), the Company entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”)among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other agents and lenders partythereto. The Restated Credit Agreement amended and restated the Company's prior credit agreement, dated as of March 26, 2012, as amended (the “2012Credit Agreement”), that had been entered into in connection with the Merger.The Restated Credit Agreement provides for a $780 million, five-year senior secured credit facility, which consists of a $250.0 million multi-currencyrevolving credit facility, due May 2018 (the “Revolving Facility”) and a $530.0 million U.S. dollar denominated Senior Secured Term Loan A, due May 2018(the “Restated Term Loan A"). Specifically, in connection with the Restated Credit Agreement, the Company:•replaced its then-existing U.S.-dollar denominated Senior Secured Term Loan A, due May 2017 ("the Term Loan A"), under the 2012 CreditAgreement, which had an aggregate principal amount of $220.8 million outstanding immediately prior to the Effective Date, with the RestatedTerm Loan A, due May 2018, in an aggregate original principal amount of $530.0 million;•prepaid in full its then-existing U.S.-dollar denominated Senior Secured Term Loan B (the "Term Loan B"), due May 2019, under the 2012Credit Agreement, which had an aggregate principal amount of $310.2 million outstanding immediately prior to the Effective Date, using a portionof the proceeds from the Restated Term A Loan; and•replaced the $250.0 million revolving credit facility under the 2012 Credit Agreement with the Revolving Facility, under which $47.3 million wasoutstanding immediately following the Effective Date.Prior to the Effective Date, the Company repaid in full the $21.4 million Canadian-dollar denominated Senior Secured Term Loan A, due May 2017,that had been drawn under the 2012 Credit Agreement.As of December 31, 2013, there were no borrowings under the Revolving Facility. The amount available for borrowings was $235.9 million (allowingfor $14.1 million of letters of credit outstanding on that date).During the twelve months ended December 31, 2013, we included in "Other expense, net" a $9.4 million charge for the write-off of debt origination costsassociated with the refinancing. Additionally, we incurred approximately $4.5 million in bank, legal and other fees associated with the Restated CreditAgreement. Of these fees, $4.2 million were capitalized and will be amortized over the life of the Restated Term Loan A and the Revolving Facility.The Revolving Facility is expected to be available for working capital and general corporate purposes. Undrawn amounts54ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)under the Revolving Facility are subject to a commitment fee rate of 0.25% to 0.50% per annum, depending on the Company's consolidated leverage ratio (asdefined in the Restated Credit Agreement, the "Leverage Ratio"). As of December 31, 2013, the commitment fee rate was 0.375%. Prior to the refinancing thecommitment fee rate was 0.50%.Maturity and amortizationBorrowings under the Revolving Facility and the Restated Term Loan A will mature on May 13, 2018. Amounts under the Revolving Facility are non-amortizing. Beginning September 30, 2013, the outstanding principal amount under the Restated Term Loan A was payable in quarterly installments in anamount representing, on an annual basis, 5.0% of the initial aggregate principal amount of such loan and increasing to 12.5% of the initial aggregate principalamount of such loan by June 30, 2016. Due to prepayments made during 2013, the next scheduled installment is due March 31, 2015.Interest ratesAmounts outstanding under the Restated Credit Agreement will bear interest (i) in the case of Eurodollar loans, at a rate per annum equal to theEurodollar rate (which is based on an average British Bankers Association Interest Settlement Rate) plus the applicable rate; (ii) in the case of loans made at theBase Rate (which means the highest of (a) the Bank of America, N.A. prime rate then in effect, (b) the Federal Funds Effective Rate (as defined in the RestatedCredit Agreement) then in effect plus ½ of 1.00% and (c) the Eurodollar rate that would be payable on such day for a Eurodollar loan with a one-month interestperiod plus 1.00%), at a rate per annum equal to the Base Rate plus the applicable rate; and (iii) in the case of swing line loans, at a rate per annum equal to theBase Rate plus the applicable rate for the Revolving Facility. Separate base interest rate and applicable rate provisions will apply for any Canadian orAustralian currency denominated loans outstanding under the Revolving Facility.As of December 31, 2013, the Eurodollar credit spread for the Restated Term Loan A and amounts drawn under the Revolving Credit Facility was2.25%, which represents a reduction from the Eurodollar credit spread of 3.00% for Term Loan A and 3.25% for Term Loan B in effect immediately prior tothe Effective Date under the 2012 Credit Agreement. In addition, under the 2012 Credit Agreement, the Eurodollar rate for Term Loan B was subject to aminimum rate of 1%. This minimum is no longer applicable to the Restated Credit Agreement.The credit spread applied to outstanding Eurodollar loans and Base Rate loans is based on our Leverage Ratio as calculated in the most recentlysubmitted compliance certificate. The credit spreads are as follows:ConsolidatedLeverage Ratio Eurodollar Credit Spread Base Rate Credit Spread> 4.00 to 1.00 2.50% 1.50%≤ 4.00 to 1.00 and > 3.50 to 1.00 2.25% 1.25%≤ 3.50 to 1.00 and > 2.50 to 1.00 2.00% 1.00%≤ 2.50 to 1.00 1.75% 0.75%PrepaymentsSubject to certain conditions and exceptions, the Restated Credit Agreement requires the Company to prepay outstanding loans in certain circumstances,including (a) in an amount equal to 100% of the net cash proceeds from sales or dispositions of property or assets in excess of $10.0 million per fiscal year,(b) in an amount equal to 100% of the net cash proceeds from property insurance or condemnation awards in excess of $10.0 million per fiscal year and (c) inan amount equal to 100% of the net cash proceeds from additional debt other than debt permitted under the Restated Credit Agreement. The Company also isrequired to prepay outstanding loans with specified percentages of excess cash flow based on its leverage. The Restated Credit Agreement contains othercustomary prepayment obligations and provides for voluntary commitment reductions and prepayment of loans, subject to certain conditions and exceptions.Loan CovenantsWe must meet certain restrictive financial covenants as defined under the Restated Credit Agreement. The covenants become more restrictive over timeand require us to maintain certain ratios related to Leverage Ratio. We are also subject to certain customary restrictive covenants under the Senior UnsecuredNotes, due April 2020 (the "Senior Notes").The Restated Credit Agreement contains customary affirmative and negative covenants as well as events of default, including55ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)payment defaults, breach of representations and warranties, covenant defaults, cross-defaults, certain bankruptcy or insolvency events, certain ERISA-relatedevents, changes in control or ownership and invalidity of any loan document.Under the Restated Credit Agreement, the Company is required to meet certain financial tests, including a maximum Leverage Ratio as determined byreference to the following ratios:Period Maximum Consolidated LeverageRatio(1)Effective Date through June 30, 2014 4.50:1.00July 1, 2014 through June 30, 2015 4.00:1.00July 1, 2015 through June 30, 2017 3.75:1.00July 1, 2017 and thereafter 3.50:1.00(1)The Leverage Ratio is computed by dividing the Company's net funded indebtedness by the cumulative four-quarter-trailing EBITDA, which excludestransaction costs, restructuring and other charges up to certain limits as well as other adjustments defined in the Restated Credit Agreement.Beginning with the fiscal quarter ending June 30, 2013, the Restated Credit Agreement also requires the Company to maintain a consolidated fixed chargecoverage ratio (as defined in the Restated Credit Agreement) as of the end of any fiscal quarter at or above 1.25 to 1.00. Under the Restated Credit Agreement,the Company no longer must meet certain minimum interest coverage ratios that were present in the 2012 Credit Agreement.The indenture governing the Senior Notes does not contain financial performance covenants. However, that indenture does contain covenants that limit,among other things, our ability and the ability of our restricted subsidiaries to:•incur additional indebtedness;•pay dividends on our capital stock or repurchase our capital stock;•enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to the Company;•enter into certain transactions with affiliates;•make investments;•create liens; and•sell certain assets or merge with or into other companies.Certain of these covenants will be subject to suspension when and if the notes are rated at least “BBB–” by Standard & Poor’s or at least “Baa3” byMoody’s. Each of the covenants is subject to a number of important exceptions and qualifications.Guarantees and SecurityGenerally, obligations under the Restated Credit Agreement are irrevocably and unconditionally guaranteed, jointly and severally, by certain of theCompany's existing and future domestic subsidiaries, and are secured by substantially all of the Company's and certain guarantor subsidiaries' assets,subject to certain exclusions and limitations.The Senior Notes, are irrevocably and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and futuredomestic subsidiaries other than certain excluded subsidiaries. The Senior Notes and the related guarantees will rank equally in right of payment with all ofthe existing and future senior debt of the Company and the guarantors, senior in right of payment to all of the existing and future subordinated debt of theCompany, and the guarantors, and effectively subordinated to all of the existing and future secured indebtedness of the Company and the guarantors to theextent of the value of the assets securing such indebtedness. The Senior Notes and the guarantees are and will be structurally subordinated to all existing andfuture liabilities, including trade payables, of each of the Company's subsidiaries that do not guarantee the notes.Compliance with Loan CovenantsAs of and for the year ended December 31, 2013, we were in compliance with all applicable loan covenants.56ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)5. Pension and Other Retiree BenefitsWe have a number of pension plans, principally in the U.K. and the U.S. The plans provide for payment of retirement benefits, primarily commencingbetween the ages of 60 and 65, and also for payment of certain disability and severance benefits. After meeting certain qualifications, an employee acquires avested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length of service and earnings. Cashcontributions to the plans are made as necessary to ensure legal funding requirements are satisfied.We provide post-retirement health care and life insurance benefits to certain employee groups outside of the U.S and certain employees and retirees in theU.S. These benefit plans for most employees 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 our ACCO Brands Corporation Pension Planfor Salaried and Certain Hourly Paid Employees in the U.S. effective March 7, 2009. No additional benefits will accrue under these plans after that date untilfurther action by the Board of Directors. On September 30, 2012, our U.K. pension plan was frozen.The Merger has added additional pension and post-retirement plans in the U.S. and Canada. In the U.S. we have added a pension plan for certainbargained hourly employees of Mead C&OP. In Canada we have assumed the Mead C&OP pension and post-retirement plans for its Canadian employees. Asof December 31, 2013, we have frozen the Salaried and Supplemental Executive Retirement Plans in Canada.57ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table sets forth our defined benefit pension and post-retirement plans funded status and the amounts recognized in our consolidatedbalance sheets: Pension Benefits Post-retirement U.S. International (in millions of dollars)2013 2012 2013 2012 2013 2012Change in projected benefit obligation(PBO) Projected benefit obligation at beginning ofyear$191.7 $171.9 $361.0 $284.6 $16.0 $13.4Service cost2.0 1.2 1.6 2.1 0.2 0.2Interest cost7.9 8.4 14.7 14.3 0.6 0.6Actuarial (gain) loss(19.0) 19.9 1.9 30.7 (2.8) 0.1Participants’ contributions— — 0.3 0.8 0.1 0.2Benefits paid(8.9) (12.2) (13.9) (13.2) (0.7) (0.8)Curtailment gain— — (1.0) — — —Plan amendments3.7 — — — — —Foreign exchange rate changes— — 6.8 13.6 (0.1) 0.2Other items— 0.7 — (0.4) — —Mead C&OP acquisition— 1.8 — 28.5 — 2.1Projected benefit obligation at end of year177.4 191.7 371.4 361.0 13.3 16.0Change in plan assets Fair value of plan assets at beginning of year135.4 119.1 311.9 242.7 — —Actual return on plan assets21.7 19.8 32.2 35.5 — —Employer contributions8.1 8.7 6.0 9.9 0.6 0.6Participants’ contributions— — 0.3 0.8 0.1 0.2Benefits paid(8.9) (12.2) (13.9) (13.2) (0.7) (0.8)Foreign exchange rate changes— — 6.3 11.8 — —Mead C&OP acquisition— — — 24.4 — —Fair value of plan assets at end of year156.3 135.4 342.8 311.9 — —Funded status (Fair value of plan assets lessPBO)$(21.1) $(56.3) $(28.6) $(49.1) $(13.3) $(16.0)Amounts recognized in the consolidatedbalance sheet consist of: Other non-current assets$— $— $0.3 $— $— $—Other current liabilities— — 0.6 0.5 1.0 1.1Pension and post-retirement benefitobligations(1)21.1 56.3 28.3 48.6 12.3 14.9Components of accumulated othercomprehensive income, net of tax: Unrecognized prior service cost (credit)2.7 0.4 (0.3) (0.2) (0.1) —Unrecognized actuarial loss (gain)33.3 57.8 63.6 74.2 (2.9) (1.1)(1)Pension and post-retirement obligations of $61.7 million as of December 31, 2013, decreased from $119.8 million as of December 31, 2012, due to higherdiscount rates (primarily in the U.S.) compared to prior year assumptions and the actual over performance of the assets of the pension planscompared to the expected long-term rate of return of the assets of the pension plans.58ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Of the amounts included within accumulated other comprehensive income (loss), we expect to recognize the following pre-tax amounts as components ofnet periodic benefit cost during 2014: Pension Benefits Post-retirement(in millions of dollars)U.S. International Prior service cost$0.4 $— $—Actuarial loss (gain)5.1 2.0 (1.2) $5.5 $2.0 $(1.2)All of our plans have projected benefit obligations in excess of plan assets, except for two of our Canadian pension plans which are fully funded.The accumulated benefit obligation for all pension plans was $533.5 million and $536.2 million at December 31, 2013 and 2012, 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)2013 2012 2013 2012Projected benefit obligation$177.4 $191.7 $331.2 $349.6Accumulated benefit obligation173.0 189.8 321.7 335.3Fair value of plan assets156.3 135.4 302.8 300.6The components of net periodic benefit cost for pension and post-retirement plans for the years ended December 31, 2013, 2012, and 2011, respectively,were as follows: Pension Benefits Post-retirement U.S. International (in millions of dollars)2013 2012 2011 2013 2012 2011 2013 2012 2011Service cost$2.0 $1.2 $— $1.6 $2.1 $2.1 $0.2 $0.2 $0.2Interest cost7.9 8.4 8.6 14.7 14.3 14.7 0.6 0.6 0.6Expected return on plan assets(10.4) (10.4) (10.7) (20.6) (16.2) (16.0) — — —Amortization of prior servicecost0.1 — — — 0.4 0.2 — — —Amortization of net loss (gain)9.6 6.2 4.3 2.4 2.2 3.9 (0.6) (1.6) (0.6)Curtailment gain— — — (1.0) — (0.2) — — —Settlement loss— 0.7 — — — — — — —Net periodic benefit cost(income)$9.2 $6.1 $2.2 $(2.9) $2.8 $4.7 $0.2 $(0.8) $0.2In 2013 we had a curtailment gain of $1.0 million due to the freezing of two of our Canadian pension plans.During the second quarter of 2012, due to the Merger, we settled the Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan(the "SRP"), which resulted in a settlement charge of $0.7 million. The SRP provided that the accrued vested benefit of each participant be paid in an actuarialequivalent lump sum upon the occurrence of a change of control (as defined in the SRP).59ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)During the first quarter of 2012, we changed the amortization of our net loss included in accumulated other comprehensive income (loss) for our U.K.pension plan from the average remaining service period of active employees expected to receive benefits under the plan to the average remaining life expectancyof the inactive participants. This change was the result of decreases in plan participation resulting in substantially all of the participants now being inactive.This change reduced the net periodic benefit cost by approximately $3.3 million for the year ended December 31, 2012.Other changes in plan assets and benefit obligations that were recognized in other comprehensive income (loss) during the years ended December 31,2013, 2012, and 2011 were as follows: Pension Benefits Post-retirement U.S. International (in millions of dollars)2013 2012 2011 2013 2012 2011 2013 2012 2011Current year actuarial loss(gain)$(30.2) $9.6 $23.5 $(10.0) $11.4 $22.8 $(2.8) $0.1 $—Amortization of actuarial(loss) gain(9.6) (6.2) (4.3) (2.4) (2.2) (3.9) 0.6 1.6 0.6Current year prior service cost(credit)3.7 0.8 — — (0.3) — — — —Amortization of prior servicecost(0.1) — — — (0.4) (0.2) — — —Foreign exchange rate changes— — — 2.1 4.1 (1.0) — (0.1) —Total recognized in othercomprehensive income (loss)$(36.2) $4.2 $19.2 $(10.3) $12.6 $17.7 $(2.2) $1.6 $0.6Total recognized in netperiodic benefit cost and othercomprehensive income (loss)$(27.0) $10.3 $21.4 $(13.2) $15.4 $22.4 $(2.0) $0.8 $0.8AssumptionsThe weighted average assumptions used to determine benefit obligations for the years ended December 31, 2013, 2012, and 2011 were as follows: Pension Benefits Post-retirement U.S. International 2013 2012 2011 2013 2012 2011 2013 2012 2011Discount rate5.0% 4.2% 5.0% 4.3% 4.3% 4.7% 4.4% 4.0% 4.5%Rate of compensation increaseN/A N/A N/A 3.3% 4.0% 3.6% — — —The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2013, 2012, and 2011 were as follows: Pension Benefits Post-retirement U.S. International 2013 2012 2011 2013 2012 2011 2013 2012 2011Discount rate4.2% 5.0% 5.5% 4.3% 4.7% 5.4% 4.0% 4.5% 5.0%Expected long-term rate ofreturn8.2% 8.2% 8.2% 6.8% 6.2% 6.4% — — —Rate of compensation increaseN/A N/A N/A 4.0% 3.6% 4.4% — — —60ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The weighted average health care cost trend rates used to determine post-retirement benefit obligations and net periodic benefit cost as of December 31,2013, 2012, and 2011 were as follows: Post-retirement Benefits 2013 2012 2011Health care cost trend rate assumed for next year8% 7% 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 rate2020 2020 2020Assumed 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 DecreaseIncrease (decrease) on total of service and interest cost$0.2 $(0.2)Increase (decrease) on post-retirement benefit obligation1.3 (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 alternative assets. Thetarget asset allocation for non-U.S. plans is set by the local plan trustees.Our pension plan weighted average asset allocations as of December 31, 2013 and 2012 were as follows: 2013 2012 U.S. International U.S. InternationalAsset category Equity securities62% 48% 64% 47%Fixed income31 36 30 39Real estate— 3 — 4Other(1) 7 13 6 10Total100% 100% 100% 100%(1)Insurance contracts, multi-strategy hedge funds and cash and cash equivalents for certain of our plans.61ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)U.S. Pension Plan AssetsThe fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2013 were as follows:(in millions of dollars)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2013Common stocks$9.4 $— $— $9.4Mutual funds87.8 — — 87.8Common collective trust funds— 7.5 — 7.5Government debt securities— 6.2 — 6.2Corporate debt securities— 14.9 — 14.9Asset-backed securities— 9.7 — 9.7Multi-strategy hedge funds— 7.8 — 7.8Government mortgage-backed securities— 7.5 — 7.5Collateralized mortgage obligations, mortgage backed securities,and other— 5.5 — 5.5Total$97.2 $59.1 $— $156.3The fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2012 were as follows:(in millions of dollars)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2012Common stocks$8.1 $— $— $8.1Mutual funds79.1 — — 79.1Common collective trust funds— 8.0 — 8.0Government debt securities— 4.4 — 4.4Corporate debt securities— 11.2 — 11.2Asset-backed securities— 8.6 — 8.6Multi-strategy hedge funds— 6.2 — 6.2Government mortgage-backed securities— 4.2 — 4.2Collateralized mortgage obligations, mortgage backedsecurities, and other— 5.6 — 5.6Total$87.2 $48.2 $— $135.4Mutual 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,government mortgage-backed securities and other debt securities are valued using quotes from independent pricing vendors based on recent trading activity andother relevant information, including market 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).62ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 AssetsThe fair value measurements of our international pension plans assets by asset category as of December 31, 2013 were as follows:(in millions of dollars)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2013Cash and cash equivalents$2.2 $— $— $2.2Equity securities150.6 17.1 — 167.7Corporate debt securities— 110.0 — 110.0Multi-strategy hedge funds— 25.9 — 25.9Insurance contracts— 13.6 — 13.6Other debt securities— 10.6 — 10.6Real estate— 9.0 1.0 10.0Government debt securities— 2.8 — 2.8Total$152.8 $189.0 $1.0 $342.8The fair value measurements of our international pension plans assets by asset category as of December 31, 2012 were as follows: (in millions of dollars)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2012Cash and cash equivalents$4.3 $— $— $4.3Equity securities130.5 15.8 — 146.3Corporate debt securities— 103.6 — 103.6Multi-strategy hedge funds— 15.0 — 15.0Insurance contracts— 12.2 — 12.2Other debt securities— 10.3 — 10.3Real estate— 9.9 1.0 10.9Government debt securities— 9.3 — 9.3Total$134.8 $176.1 $1.0 $311.9Equity 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, consist 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).63ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Real estate: Real estate, exclusive of the Canadian plan, consists of managed real estate investment trust securities (level 2 inputs). Real estate in theCanadian plans is appraised by a third party on an annual basis (level 3 inputs). There have been no substantial purchases or gains/losses in 2013 or 2012.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 ContributionsWe contributed $14.7 million to our pension and post-retirement plans in 2013 and expect to contribute $16.3 million in 2014. The following table presents estimated future benefit payments for the next ten fiscal years: Pension Post-retirement(in millions of dollars)Benefits Benefits2014$24.7 $1.02015$25.3 $0.92016$26.1 $0.92017$27.0 $0.92018$28.2 $0.9Years 2019 — 2023$145.9 $4.0We also sponsor a number of defined contribution plans. Contributions are determined under various formulas. Costs related to such plans amounted to$8.4 million, $8.0 million and $6.6 million for the years ended December 31, 2013, 2012, and 2011, respectively. The $1.4 million increase in definedcontribution plan costs in 2012 compared to 2011 was due to the Merger.6. Stock-Based CompensationThe ACCO Brands Corporation 2011 Amended and Restated ACCO Brands Corporation Incentive Plan provides for stock based awards in the form ofRSUs, PSUs, non-qualified stock options, and stock appreciation rights, any of which may be granted alone or with other types of awards and dividendequivalents. We have one share-based compensation plan under which a total of 15,665,000 shares may be issued under awards to key employees and non-employee directors.The following table summarizes the impact of all stock-based compensation expense on our Consolidated Statements of Income for the years endedDecember 31, 2013, 2012 and 2011.(in millions of dollars)2013 2012 2011Advertising, selling, general and administrative expense$16.4 $9.2 $6.3Income from continuing operations before income tax16.4 9.2 6.3Income tax expense5.9 3.3 0.2Net income$10.5 $5.9 $6.1There was no capitalization of stock based compensation expense.64ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Stock-based compensation expense by award type (including stock options, stock-settled appreciation rights (“SSARs”), restricted stock units(“RSUs”) and performance stock units (“PSUs”)) for the years ended December 31, 2013, 2012 and 2011 were as follows:(in millions of dollars)2013 2012 2011Stock option compensation expense$3.0 $1.8 $0.6SSAR compensation expense— 0.1 0.2RSU compensation expense5.5 3.9 3.0PSU compensation expense7.9 3.4 2.5Total stock-based compensation$16.4 $9.2 $6.3Stock Option and SSAR AwardsThe exercise price of each stock option and SSAR equals or exceeds the fair market price of our stock on the date of grant. Options/SSARs can generallybe exercised over a maximum term of up to seven years. Stock options/SSARs outstanding as of December 31, 2013 generally vest ratably over three years.During 2013, 2012 and 2011, we granted only option awards. The fair value of each option grant is estimated on the date of grant using the Black-Scholesoption-pricing model using the weighted average assumptions as outlined in the following table: Year Ended December 31, 2013 2012 2011Weighted average expected lives4.5years 4.5years 4.5yearsWeighted average risk-free interest rate0.75% 0.75% 1.65%Weighted average expected volatility55.3% 55.7% 50.7%Expected dividend yield0.0% 0.0% 0.0%Weighted average grant date fair value$3.43 $5.41 $3.85 Prior to 2012 we utilized historical volatility for a pool of peer companies for a period of time that is comparable to the expected life of the option/SSAR todetermine volatility assumptions for stock-based compensation. Beginning in 2012 volatility was calculated using a combination of peer companies (50%) andACCO Brands' historic volatility (50%). In 2013, volatility was calculated using a combination of peer companies (25%) and ACCO Brands' historicvolatility (75%). The weighted average expected option/SSAR term reflects the application of the simplified method, which defines the life as the average of thecontractual term of the option/SSAR and the weighted average vesting period for all option tranches. The risk-free interest rate for the expected term of theoption is based 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 ofshare-based payment awards ultimately expected to vest. The forfeiture rate is based on historical experience.A summary of the changes in stock options/SSARs outstanding under our stock compensation plans during the year ended December 31, 2013 ispresented below: NumberOutstanding WeightedAverageExercisePrice Weighted AverageRemainingContractual Term AggregateIntrinsicValueOutstanding at December 31, 20124,878,553 $10.12 Granted1,312,986 $7.59 Exercised(115,212) $0.81 Lapsed(1,269,852) $15.27 Outstanding at December 31, 20134,806,475 $8.30 3.6 years $8.1 millionExercisable shares at December 31, 20132,969,369 $8.07 2.2 years $8.1 millionOptions/SSARs vested or expected to vest4,684,508 $8.28 3.5 years $8.1 million65ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)We received cash of $0.2 million from the exercise of stock options for the year ended December 31, 2012. No options were exercised in the year endedDecember 31, 2013. The aggregate intrinsic value of options exercised during the year ended December 31, 2012, was not significant.The aggregate intrinsic value of SSARs exercised during the years ended December 31, 2013, 2012 and 2011 totaled $0.7 million, $2.5 million and$3.0 million, respectively.The fair value of options and SSARs vested during the years ended December 31, 2013, 2012 and 2011 was $1.9 million, $1.0 million and $0.6million, respectively. As of December 31, 2013, we had unrecognized compensation expense related to stock options of $4.7 million, which will be recognizedover a weighted-average period of 1.9 years.Stock Unit AwardsRSUs vest over a pre-determined period of time, generally three to four years from the date of grant. Stock-based compensation expense for the yearsended December 31, 2013, 2012 and 2011 includes $0.9 million, $0.9 million and $0.6 million, respectively, of expense related to RSUs granted to non-employee directors, which became fully vested on the grant date. PSUs also vest over a pre-determined period of time, minimally three years, but are furthersubject to the achievement of certain business performance criteria in future periods. Based upon the level of achieved performance, the number of sharesactually awarded can vary from 0% to 150% of the original grant.There were 2,021,123 RSUs outstanding at December 31, 2013. All outstanding RSUs as of December 31, 2013 vest within four years of their date ofgrant. Also outstanding at December 31, 2013 were 2,294,792 PSUs. All outstanding PSUs as of December 31, 2013 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 generally recognized over the period during which the employees provide the requisiteservice to the Company. We generally recognize compensation expense for our PSU awards ratably over the performance period based on management’sjudgment of the likelihood that performance measures will be attained. We generally recognize compensation expense for our RSU awards ratably over theservice period.A summary of the changes in the stock unit awards outstanding under our equity compensation plans during 2013 is presented below: StockUnits WeightedAverageGrantDate FairValueOutstanding at December 31, 20122,999,597 $9.78Granted1,965,814 $7.54Vested(506,663) $7.15Forfeited and cancelled(278,723) $9.63Other - increase due to performance of PSU's135,890 $9.03Outstanding at December 31, 20134,315,915 $9.06The weighted-average grant date fair value of our stock unit awards was $7.54, $11.54, and $8.73 for the years ended December 31, 2013, 2012 and2011, respectively. The fair value of stock unit awards that vested during the years ended December 31, 2013, 2012 and 2011 was $3.6 million, $5.0 millionand $2.5 million, respectively. As of December 31, 2013, we have unrecognized compensation expense related to RSUs and PSUs of $6.7 million and $8.0million, respectively. The unrecognized compensation expense related to RSUs and PSUs will be recognized over a weighted-average period of 1.7 years and1.6 years, respectively.We will satisfy the requirement for delivering the common shares for stock-based plans by issuing new shares.66ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)7. InventoriesInventories are stated at the lower of cost or market value. The components of inventories were as follows: December 31,(in millions of dollars)2013 2012Raw materials$36.1 $40.1Work in process2.4 5.4Finished goods216.2 220.0Total inventories$254.7 $265.5 8. Property, Plant and Equipment, NetThe components of net property, plant and equipment were as follows: December 31,(in millions of dollars)2013 2012Land and improvements$23.3 $27.5Buildings and improvements to leaseholds133.3 151.3Machinery and equipment352.4 379.2Construction in progress39.5 33.4 548.5 591.4Less: accumulated depreciation(295.2) (317.8)Property, plant and equipment, net(1)$253.3 $273.6 (1)Net property, plant and equipment as of December 31, 2013 and 2012 contained $32.6 million and $26.9 million of computer software assets, whichare classified within machinery and equipment and construction in progress. Amortization of software costs was $6.7 million, $8.4 million and $9.5million for the years ended December 31, 2013, 2012 and 2011, respectively.9. Goodwill and Identifiable Intangible AssetsGoodwillChanges in the net carrying amount of goodwill by segment were as follows: (in millions of dollars)ACCOBrandsNorth America ACCOBrandsInternational ComputerProductsGroup Total Balance at December 31, 2011$77.8 $50.4 $6.8 $135.0 Mead C&OP acquisition318.7 144.7 — 463.4 Translation(0.2) (8.8) — (9.0) Balance at December 31, 2012396.3 186.3 6.8 589.4 Mead C&OP acquisition1.4 0.5 — 1.9 Translation(4.6) (18.4) — (23.0) Balance at December 31, 2013$393.1 $168.4 $6.8 $568.3 Goodwill$524.0 $252.6 $6.8 $783.4 Accumulated impairment losses(130.9) (84.2) — (215.1) Balance at December 31, 2013$393.1 $168.4 $6.8 $568.367ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Goodwill has been recorded on our balance sheet related to the Merger and represents the excess of the cost of the acquisition when compared to the fairvalue estimate of the net assets acquired on May 1, 2012 (the date of the Merger). See "Note 3. Acquisitions" for details on the calculation of the goodwillacquired in the Merger with Mead C&OP.Identifiable IntangiblesWe test indefinite-lived intangibles for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likelythan not that an impairment loss has been incurred. We performed this annual assessment in the second quarter of 2013 and concluded that no impairmentexists. However, due to the recent acquisition of Mead C&OP, the fair values of certain indefinite-lived trade names are not substantially above their carryingvalues.The gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2013 and 2012 were as follows: December 31, 2013 December 31, 2012(in millions of dollars)GrossCarryingAmounts AccumulatedAmortization NetBookValue GrossCarryingAmounts AccumulatedAmortization NetBookValueIndefinite-lived intangible assets: Trade names$510.5 $(44.5)(1) $466.0 $524.9 $(44.5)(1) $480.4Amortizable intangible assets: Trade names131.3 (47.5) 83.8 130.9 (36.7) 94.2Customer and contractual relationships102.7 (46.4) 56.3 103.7 (32.7) 71.0Patents/proprietary technology10.3 (9.4) 0.9 10.4 (9.4) 1.0Subtotal244.3 (103.3) 141.0 245.0 (78.8) 166.2Total identifiable intangibles$754.8 $(147.8) $607.0 $769.9 $(123.3) $646.6(1)Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time further amortizationceased.The Company’s intangible amortization was $24.7 million, $19.9 million and $6.3 million for the years ended December 31, 2013, 2012 and 2011,respectively. The increase was driven by incremental amortization as a result of the Merger.Estimated amortization expense for amortizable intangible assets for the next five years is as follows:(in millions of dollars)2014 2015 2016 2017 2018Estimated amortization expense$22.3 $19.9 $17.5 $14.3 $12.1Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangibleasset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events.10. RestructuringDuring the fourth quarter of 2013, in light of current economic and industry conditions and in anticipation of an uncertain demand environment as wellas the impact of industry consolidation in 2014, we committed to restructuring actions that were primarily focused on streamlining our North Americanschool, office and computer products operations. These actions will reduce approximately 12% of our North American salaried workforce, impacting alloperational, supply chain and administrative functions, with efforts beginning in early in 2014. Such efforts are expected to be complete by the end of 2014.Also during the year 2013, we committed to incremental cost savings plans intended to improve the efficiency and effectiveness of our businesses. Theseplans relate to cost-reduction initiatives within our North American and International segments, and are primarily associated with post-merger integrationactivities of the North American operations following the Merger and changes in the European business model and manufacturing footprint. The mostsignificant of these plans was finalized68ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)during the second quarter of 2013, and relates to the closure of our Brampton, Canada distribution and manufacturing facility and relocation of its activities toother facilities within the Company.During the year 2012, we initiated cost savings plans related to the consolidation and integration of our then recently acquired Mead C&OP business.The most significant of these plans related to our dated goods business and included closure of a manufacturing and distribution facility in East Texas,Pennsylvania and relocation of its activities to other facilities within the Company, which was completed during the second quarter of 2013. We alsocommitted to certain cost savings plans that are expected to improve the efficiency and effectiveness of our U.S. and European businesses, which wereindependent of any plans related to our acquisition of Mead C&OP.During the years ended December 31, 2013 and 2012, we recorded restructuring charges of $30.1 million and $24.3 million, respectively. No newrestructuring initiatives were expensed in the year ended December 31, 2011.A summary of the activity in the restructuring accounts and a reconciliation of the liability for the year ended December 31, 2013 was as follows:(in millions of dollars)Balance at December31, 2012 Provision (CashExpenditures)/ Proceeds Non-cashItems/Currency Change Balance at December31, 2013Employee termination costs$15.2 $26.4 $(22.5) $— $19.1Termination of lease agreements0.2 1.9 (0.7) — 1.4Asset impairments/net loss ondisposal of assets resulting fromrestructuring activities— 1.2 0.5 (1.7) —Other— 0.6 (0.6) — —Total restructuring liability$15.4 $30.1 $(23.3) $(1.7) $20.5Management expects the $19.1 million employee termination costs balance to be substantially paid within the next 12 months. Cash paymentsassociated with lease termination costs of $1.4 million are expected to be paid within the next 6 months.Not included in the restructuring table above is a $2.5 million net gain on the sale of the Company's Ireland distribution facility. The sale, whichoccurred during the second quarter of 2013, generated net cash proceeds of $3.8 million. The gain on sale has been recognized in the Consolidated Statementsof Income in SG&A.A summary of the activity in the restructuring accounts and a reconciliation of the liability for the year ended December 31, 2012 was as follows:(in millions of dollars)Balance at December31, 2011 Provision/ (Income) CashExpenditures Non-cashItems/Currency Change Balance at December31, 2012Employee termination costs$0.3 $24.0 $(9.2) $0.1 $15.2Termination of lease agreements0.7 (0.1) (0.4) — 0.2Asset impairments/net loss ondisposal of assets resulting fromrestructuring activities0.2 0.3 (0.3) (0.2) —Other— 0.1 (0.1) — —Total restructuring liability$1.2 $24.3 $(10.0) $(0.1) $15.4Not included in the restructuring table above is a $0.1 million net gain on the sale of a manufacturing facility and certain assets in the U.K. The sale,which occurred during the second quarter of 2012, generated net cash proceeds of $2.7 million. The gain on sale has been recognized in the ConsolidatedStatements of Income in SG&A.69ACCO 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 the year ended December 31, 2011 was as follows:(in millions of dollars)Balance at December31, 2010 Provision/ (Income) CashExpenditures Non-cashItems/Currency Change Balance at December31, 2011Employee termination costs$2.2 $(0.6) $(1.4) $0.1 $0.3Termination of lease agreements3.0 (0.5) (1.9) 0.1 0.7Asset impairments/net loss ondisposal of assets resulting fromrestructuring activities— 0.4 (0.1) (0.1) 0.2Total restructuring liability$5.2 $(0.7) $(3.4) $0.1 $1.2In addition to the restructuring described above, in the first quarter of 2011 we initiated plans to rationalize our European operations. The associatedcosts primarily relate to employee terminations, which were accounted for as regular business expenses and were largely offset by associated savings realizedduring the remainder of the 2011 year. These costs totaled $4.5 million during the year ended December 31, 2011 and are included within SG&A in theConsolidated Statements of Income.A summary of the activity in the rationalization charges and a reconciliation of the liability for the year ended December 31, 2011 was as follows:(in millions of dollars)Balance at December31, 2010 Provision CashExpenditures Non-cashItems/Currency Change Balance at December31, 2011Employee termination costs$— $4.5 $(4.2) $0.1 $0.4The $0.4 million of employee termination costs remaining as of December 31, 2011 were paid in 2012.11. Income TaxesThe components of income (loss) before income taxes from continuing operations were as follows:(in millions of dollars)2013 2012 2011Domestic operations$1.8 $(94.9) $(48.6)Foreign operations89.9 90.5 91.5Total$91.7 $(4.4) $42.9The reconciliation of income taxes computed at the U.S. federal statutory income tax rate of 35% to our effective income tax rate for continuing operationswas as follows:(in millions of dollars)2013 2012 2011Income tax at U.S. statutory rate of 35%$32.1 $(1.5) $15.0State, local and other tax, net of federal benefit(1.4) (0.6) (1.3)U.S. effect of foreign dividends and earnings7.5 23.7 11.6Unrealized foreign currency (loss) gain on intercompany debt(3.5) (7.7) 0.9Foreign income taxed at a lower effective rate(6.4) (7.2) (7.7)(Decrease) increase in valuation allowance(11.6) (145.1) 5.4U.S. effect of capital gain— 11.0 —Correction of deferred tax error(3.1) 0.8 —Change in prior year tax estimates(0.8) (0.4) 1.0Other1.6 5.6 (0.6)Income taxes as reported$14.4 $(121.4) $24.3Effective tax rate15.7% NM 56.6%70ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)For 2013, we recorded an income tax expense from continuing operations of $14.4 million on income before taxes of $91.7 million. Included in theresults for 2013 is an out-of-period adjustment of $3.1 million made to correct an error related to the estimate of the tax benefit for certain equity compensationgrants exercised during 2012. The Company determined that the impact of the error was not significant to the current or prior period, and accordingly arestatement of the prior period tax expense was not deemed to be necessary. The low effective rate for 2013 of 15.7% is primarily due to the net tax benefit fromthe release of foreign valuation allowances of $11.6 million and due to earnings from foreign jurisdictions which are taxed at a lower rate.We continually review the need for establishing or releasing valuation allowances on our deferred tax attributes. Following the Merger in the secondquarter of 2012, the Company analyzed its need for maintaining valuation reserves against the expected U.S. future tax benefits. Based on that analysis theCompany determined that as of June 30, 2012 there existed sufficient evidence in the form of future taxable income from the combined operations to release$126.1 million of the valuation allowance that had been previously recorded against the U.S. deferred income tax assets. Also in 2012, valuation allowancesin the amount of $19.0 million were released in certain foreign jurisdictions. In 2013, the company had a net tax benefit from the release and generation ofvaluation allowances in certain foreign jurisdictions in the amount of $11.6 million due to there being sufficient evidence in the form of future taxable incomein those jurisdictions. The resulting deferred tax assets are comprised principally of net operating loss carryforwards that are expected to be fully realizedwithin the expiration period and other temporary differences.For 2012, we recorded an income tax benefit from continuing operations of $121.4 million on a loss before taxes of $4.4 million. The tax benefit for2012 was primarily due to the $145.1 million release of certain valuation allowances.For the year ended December 31, 2011, income tax expense from continuing operations was $24.3 million on income before taxes of $42.9 million. Thehigh effective rate for 2011 of 56.6% was due to net increases in the valuation allowance of $5.4 million. No tax benefit was being provided on losses incurredin the U.S. and certain foreign jurisdictions where valuation allowances were recorded against certain tax benefits.The effective tax rates for discontinued operations were 35.0%, 25.6% and 13.4% in 2013, 2012 and 2011, respectively. The lower rate in 2011 reflectsthe benefit of the goodwill tax basis and prior year capital loss carryforwards that reduced the taxable gain on the sale of GBC Fordigraph in Australia.The U.S. federal statute of limitations remains open for the year 2010 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 Australia (2009 forward), Brazil(2008 forward), Canada (2005 forward) and the U.K. (2011 forward). We are currently under examination in various foreign jurisdictions.The components of the income tax expense from continuing operations were as follows:(in millions of dollars)2013 2012 2011Current expense Federal and other$0.8 $6.0 $0.3Foreign25.3 27.1 19.8Total current income tax expense26.1 33.1 20.1Deferred (benefit) expense Federal and other(2.8) (129.5) 4.9Foreign(8.9) (25.0) (0.7)Total deferred income tax (benefit) expense(11.7) (154.5) 4.2Total income tax expense (benefit)$14.4 $(121.4) $24.371ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The components of deferred tax assets (liabilities) were as follows:(in millions of dollars)2013 2012Deferred tax assets Compensation and benefits$17.6 $15.6 Pension19.0 38.5 Inventory7.2 5.8 Other reserves20.9 18.0 Accounts receivable6.8 6.0 Foreign tax credit carryforwards20.5 20.5 Net operating loss carryforwards113.5 135.2 Other8.8 6.3Gross deferred income tax assets214.3 245.9 Valuation allowance(33.0) (55.4)Net deferred tax assets181.3 190.5Deferred tax liabilities Depreciation(19.6) (27.3) Identifiable intangibles(260.0) (257.4) Unrealized foreign currency gain on intercompany debt— (3.3)Gross deferred tax liabilities(279.6) (288.0)Net deferred tax liabilities$(98.3) $(97.5)Deferred income taxes are not provided on certain undistributed earnings of foreign subsidiaries that are expected to be permanently reinvested in thosecompanies, which aggregate to approximately $606 million and $586 million as of December 31, 2013 and at 2012, respectively. If these amounts weredistributed to the U.S., in the form of a dividend or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount ofunrecognized deferred income tax liabilities on these earnings is not practicable.At December 31, 2013, $334.6 million of net operating loss carryforwards are available to reduce future taxable income of domestic and internationalcompanies. These loss carryforwards expire in the years 2014 through 2032 or have an unlimited carryover period.Interest and penalties related to unrecognized tax benefits are recognized within "Income tax expense (benefit)" in the Consolidated Statements of Income.As of December 31, 2013, we have accrued a cumulative amount of $3.6 million for interest and penalties on unrecognized tax benefits.A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:(in millions of dollars)2013 2012 2011Balance at beginning of year$56.3 $5.5 $5.7Additions for tax positions of prior years2.4 2.0 0.1Reductions for tax positions of prior years— (1.5) (0.2)Settlements(0.1) — (0.1)Mead C&OP acquisition— 50.3 —Foreign exchange changes(6.5) — —Balance at end of year$52.1 $56.3 $5.5As of December 31, 2013 the amount of unrecognized tax benefits decreased to $52.1 million, of which $47.4 million would affect our effective tax rate,if recognized. We expect the amount of unrecognized tax benefits to change within the next twelve months, but these changes are not expected to have asignificant impact on our results of operations or financial position. None of the positions included in the unrecognized tax benefit relate to tax positions forwhich the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.72ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Income Tax AssessmentIn connection with our May 1, 2012 acquisition of Mead C&OP we assumed all of the tax liabilities for the acquired foreign operations. In December of2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary,Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the tax deduction of goodwill from Tilibra's taxable income for the year 2007. A secondassessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013. Theassessments seek payment of approximately R95.2 million ($40.4 million based on current exchange rates) of tax, penalties and interest.Tilibra is disputing both of the tax assessments through established administrative procedures. We believe we have meritorious defenses and intend tovigorously contest these matters; however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge theFRD's tax assessments, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a numberof years. In addition, Tilibra's 2011-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional taxassessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years. If the FRD's initial position is ultimately sustained, theamount assessed would adversely affect our cash flow in the year of settlement.Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers theoutcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in theamount of $44.5 million in consideration of this contingency , of which $43.3 million was recorded as an adjustment to the purchase price and included the2008-2012 tax years plus interest and penalties through December 2012. In addition, the Company will continue to accrue interest related to this contingencyuntil such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During 2013 and 2012, the Companyaccrued additional interest as a charge to current tax expense of $1.8 million and $1.2 million, respectively.12. Earnings per ShareTotal outstanding shares as of December 31, 2013 and 2012 were 113.7 million and 113.1 million, respectively. On May 1, 2012 we issued 57.1million shares of stock related to the Merger. The calculation of basic earnings per common share is based on the weighted average number of common sharesoutstanding in the year, or period, over which they were outstanding. Our calculation of diluted earnings per common share assumes that any common sharesoutstanding were increased by shares that would be issued upon exercise of those stock units for which the average market price for the period exceeds theexercise price; less, the shares that could have been purchased by us with the related proceeds, including compensation expense measured but not yetrecognized, net of tax.(in millions)2013 2012 2011Weighted-average number of common shares outstanding — basic113.5 94.1 55.2Stock options— 0.1 0.1Stock-settled stock appreciation rights0.9 0.9 1.7Restricted stock units1.3 1.0 0.6Adjusted weighted-average shares and assumed conversions — diluted115.7 96.1 57.6Awards of shares representing approximately 4.9 million, 5.4 million and 4.3 million as of December 31, 2013, 2012 and 2011, 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.13. Derivative Financial InstrumentsWe are exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. We enter into financialinstruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments aremajor financial institutions. We continually monitor our foreign currency exposures in order to maximize the overall effectiveness of our foreign currency hedgepositions. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar and British pound. We are subject to credit risk,which relates to the ability73ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)of counterparties to meet their contractual payment obligations or the potential non-performance by counterparties to financial instrument contracts.Management continues to monitor the status of our counterparties and will take action, as appropriate, to further manage our counterparty credit risk. Thereare no credit contingency features in our derivative financial instruments.When hedge accounting is applicable, the date in which we enter into a derivative, the derivative is designated as a hedge of the identified exposure. Wemeasure the effectiveness of our hedging relationships both at hedge inception and on an ongoing basis.Forward Currency ContractsWe enter into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventorypurchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe, Australia, Canada, Brazil, Mexicoand Japan.Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada and Japan and are designated ascash flow hedges. Unrealized gains and losses on these contracts for inventory purchases are deferred in other comprehensive income (loss) until the contractsare settled and the underlying hedged transactions are recognized, at which time the deferred gains or losses will be reported in the “Cost of products sold” linein the Consolidated Statements of Income. As of December 31, 2013 and December 31, 2012, the Company had cash flow designated foreign exchangecontracts outstanding with a U.S. dollar equivalent notional value of $88.7 million and $85.0 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 Income 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 beyond2014. As of December 31, 2013 and 2012, we have undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $55.5million and $90.4 million, respectively.The following table summarizes the fair value of our derivative financial instruments as of December 31, 2013 and 2012: Fair Value of Derivative Instruments Derivative Assets Derivative Liabilities(in millions of dollars)Balance SheetLocation December 31, 2013 December 31, 2012 Balance SheetLocation December 31, 2013 December 31, 2012Derivatives designated ashedging instruments: Foreign exchange contractsOther currentassets $1.4 $0.7 Other currentliabilities $0.8 $0.6Derivatives not designated ashedging instruments: Foreign exchange contractsOther currentassets 0.4 0.5 Other currentliabilities 0.1 0.2Total derivatives $1.8 $1.2 $0.9 $0.8 The following tables summarizes the pre-tax effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for theyears ended December 31, 2013, 2012 and 2011: The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Statements of Income forthe Years Ended December 31, Amount of Gain (Loss) Recognized inOCI (Effective Portion) Location of (Gain) LossReclassified from OCI to Income Amount of (Gain) LossReclassified from AOCI to Income(Effective Portion)(in millions of dollars)2013 2012 2011 2013 2012 2011Cash flow hedges: Foreign exchange contracts3.7 $(0.2) $(0.3) Cost of products sold $(3.4) $(1.9) $4.474ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) The Effect of Derivatives Not Designated as Hedging Instrumentson the Consolidated Statements of Income Location of (Gain) Loss Recognized inIncome on Derivatives Amount of (Gain) LossRecognized in Income year ended December 31, 2013 2012 2011Foreign exchange contractsOther expense, net $(0.6) $2.3 $0.914. Fair Value of Financial InstrumentsIn establishing a fair value, there is a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The basis of thefair value measurement is categorized in three levels, in order of priority, as described below:Level 1Unadjusted quoted prices in active markets for identical assets or liabilitiesLevel 2Unadjusted 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 3Unobservable inputs for the asset or liabilityWe utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level ofinput that is significant to the fair value measurement.We have determined that our financial assets and liabilities described in See "Note 13. Derivative Financial Instruments" are Level 2 in the fair valuehierarchy. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2013and 2012:(in millions of dollars)December 31, 2013 December 31, 2012Assets: Forward currency contracts$1.8 $1.2Liabilities: Forward currency contracts$0.9 $0.8Our forward currency contracts are included in "Other current assets" or "Other current liabilities" and mature within 12 months. The forward foreigncurrency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. Assuch, 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 $920.9 million and $1,072.1 million and the estimated fair value of total debt was$912.2 million and $1,097.5 million at December 31, 2013 and 2012, respectively. The fair values are determined from quoted market prices, whereavailable, and from investment bankers using current interest rates considering credit ratings and the remaining terms of maturity.75ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)15. 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 as follows:(in millions of dollars)DerivativeFinancialInstruments ForeignCurrencyAdjustments UnrecognizedPension and OtherPost-retirementBenefit Costs AccumulatedOtherComprehensiveIncome (Loss)Balance at December 31, 2011$2.2 $(17.1) $(116.1) $(131.0)Other comprehensive loss before reclassifications(0.2) (10.9) (19.3) (30.4)Amounts reclassified from accumulated other comprehensive income(loss)(1.9) — 7.2 5.3Balance at December 31, 20120.1 (28.0) (128.2) (156.1)Other comprehensive income (loss) before reclassifications2.6 (61.6) 24.4 (34.6)Amounts reclassified from accumulated other comprehensive income(loss)(2.4) — 7.5 5.1Balance at December 31, 2013$0.3 $(89.6) $(96.3) $(185.6)The reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2013 were as follows: Year EndedDecember 31, 2013 (in millions of dollars) Amount of (Gain)Loss Reclassifiedfrom AccumulatedOtherComprehensiveIncome (Loss) Affected Line Item in theStatement of ComprehensiveIncome (Loss)Details about Accumulated OtherComprehensive Income ComponentsGain on cash flow hedges: Foreign exchange contracts $(3.4) Cost of products sold (3.4) Total before tax 1.0 Tax benefit $(2.4) Net of taxDefined benefit plan items: Amortization of actuarial loss $11.5 (1) 11.5 Total before tax (4.0) Tax expense $7.5 Net of tax Total reclassifications for theperiod $5.1 Net of tax(1)This accumulated other comprehensive income component is included in the computation of net periodic benefit cost for pension and post-retirementplans (See "Note 5. Pension and Other Retiree Benefits" for additional details).16. Information on Business SegmentsACCO Brands is organized into three business segments: ACCO Brands North America, ACCO Brands International and Computer Products Group.Our three business segments are described below.76ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)ACCO Brands North America and ACCO Brands InternationalACCO Brands North America and ACCO Brands International manufacture, source and sell traditional office products, school supplies and calendarproducts. ACCO Brands North America comprises the U.S. and Canada, and ACCO Brands International comprises the rest of the world, principallyEurope, Latin America, Australia, and Asia-Pacific.Our office, school and calendar product lines use name brands such as: AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy®, Marbig, Mead®,NOBO, Quartet®, Rexel, Swingline®, Tilibra®, Wilson Jones® and many others. Products and brands are not confined to one channel or product categoryand are sold based on end-user preference in each geographic location. We manufacture approximately 50% of our products, and specify and sourceapproximately 50% of our products, primarily from Asia.The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards,are used by businesses. Most of these end-users purchase their products from our customers, which include commercial contract stationers, massmerchandisers, retail superstores, wholesalers, resellers, e-tailers, club stores and dealers. We also supply some of our products directly to large commercialand industrial end-users and provide business machine maintenance and certain repair services.Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily throughtraditional and online retail, mass merchandisers, grocery, drug and office superstore channels. We also supply private label products within the schoolproducts sector.Our calendar products are sold throughout all channels where we sell office or school products, as well as direct to consumers.The customer base to which we sell our products is primarily made up of large global and regional resellers of our products. Mass and retail channelsprimarily sell to individual consumers but also to small businesses. Office superstores primarily sell to commercial customers but also to individualconsumers and small businesses at their retail stores. As a result, there is no clear correlation between product, consumer or distribution channel. We also sellto commercial contract stationers, wholesalers, distributors, e-tailers, and independent dealers. Over half of our product sales by our customers are to businessend-users, who generally seek premium products that have added value or ease-of-use features and a reputation for reliability, performance and professionalappearance. Some of our binding and laminating equipment products are sold directly to high-volume end-users and commercial reprographic centers.Computer Products GroupOur Computer Products Group designs, sources, distributes, markets and sells accessories for laptop and desktop computers and tablets andsmartphones. These accessories primarily include security products, tablet covers and keypads, smartphone accessories, power adapters, input devices suchas mice, laptop computer carrying cases, hubs, docking stations and ergonomic devices. We sell these products mostly under the Kensington®, Microsaver®and ClickSafe® brand names, with the majority of our revenue coming from the U.S. and Western Europe. Our computer products are manufactured bythird-party suppliers, principally in Asia, and distributed from our regional facilities. Our computer products are sold primarily to consumer electronicsretailers, information technology value-added resellers, original equipment manufacturers and office products retailers.Net sales by business segment for the years ended December 31, 2013, 2012 and 2011 were as follows:(in millions of dollars)2013 2012 2011ACCO Brands North America$1,041.4 $1,028.2 $623.1ACCO Brands International566.6 551.2 505.0Computer Products Group157.1 179.1 190.3Net sales$1,765.1 $1,758.5 $1,318.4Operating income by business segment for the years ended December 31, 2013, 2012 and 2011 were as follows (a):77ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)(in millions of dollars)2013 2012 2011ACCO Brands North America$98.2 $86.2 $37.4ACCO Brands International66.5 62.0 58.9Computer Products Group13.7 35.9 47.1Segment operating income178.4 184.1 143.4Corporate(32.6) (44.8) (28.2)Operating income145.8 139.3 115.2Interest expense, net54.7 89.3 77.2Equity in earnings of joint ventures(8.2) (6.9) (8.5)Other expense, net7.6 61.3 3.6Income (loss) from continuing operations before income tax$91.7 $(4.4) $42.9(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 charges.Segment assets:The following table presents the measure of segment assets used by the Company’s chief operating decision maker. December 31,(in millions of dollars)2013 2012ACCO Brands North America (b)$465.4 $505.1ACCO Brands International (b)464.1 486.4Computer Products Group (b)88.1 90.3 Total segment assets1,017.6 1,081.8Unallocated assets1,364.3 1,424.5Corporate (b)1.0 1.4 Total assets$2,382.9 $2,507.7(b)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. December 31,(in millions of dollars)2013 2012ACCO Brands North America (c)$1,332.0 $1,398.6ACCO Brands International (c)758.4 814.3Computer Products Group (c)102.4 104.8 Total segment assets2,192.8 2,317.7Unallocated assets189.1 188.6Corporate (c)1.0 1.4 Total assets$2,382.9 $2,507.7(c)Represents total assets, excluding: intercompany balances, cash, deferred taxes, prepaid pension assets, prepaid debt issuance costs and joint venturesaccounted for on an equity basis.78ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Property, plant and equipment, net by geographic region were as follows: December 31,(in millions of dollars)2013 2012U.S.$134.4 $141.0Brazil54.7 62.1U.K.30.5 22.7Australia13.7 17.1Other countries20.0 30.7 Property, plant and equipment, net$253.3 $273.6Net sales by geographic region for the years ended December 31, 2013, 2012 and 2011 were as follows (d):(in millions of dollars)2013 2012 2011U.S.$955.5 $959.2 $621.3Canada159.7 160.8 105.2Brazil157.2 118.9 —Netherlands130.2 45.9 29.3Australia119.8 133.4 143.0U.K.101.3 98.0 115.6Other countries141.4 242.3 304.0 Net sales$1,765.1 $1,758.5 $1,318.4(d)Net sales are attributed to geographic areas based on the location of the selling company.Major CustomersSales to our five largest customers totaled $680.5 million, $716.2 million and $508.2 million in the years ended December 31, 2013, 2012 and 2011,respectively. Sales to Staples, our largest customer, were $229.5 million (13%), $236.3 million (13%) and $175.9 million (13%) in the years endedDecember 31, 2013, 2012 and 2011, respectively. Sales to Office Depot, our second largest customer were $138.9 million (11%) in the year endedDecember 31, 2011. Sales to no other customer exceeded 10% of consolidated sales for any of the last three years.A significant percentage of our sales are to customers engaged in the office products resale industry. Concentration of credit risk with respect to tradeaccounts receivable is partially mitigated because a large number of geographically diverse customers make up each operating companies’ domestic andinternational customer base, thus spreading the credit risk. At December 31, 2013 and 2012, our top five trade account receivables totaled $194.0 million and$184.3 million, respectively.17. Joint Venture InvestmentSummarized below is aggregated financial information for the Company’s joint venture, which is accounted for under the equity method. Accordingly,we record our proportionate share of earnings or losses on the line entitled “Equity in earnings of joint ventures” in the Consolidated Statements of Income. Ourshare of the net assets of the joint venture is included within “Other non-current assets” in the Consolidated Balance Sheets. Year Ended December 31,(in millions of dollars)2013 2012 2011Net sales$105.4 $116.6 $121.0Gross profit44.8 47.9 48.5Operating income23.0 24.7 25.3Net income16.4 17.3 18.079ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued) December 31,(in millions of dollars)2013 2012Current assets$71.8 $78.8Non-current assets32.5 34.2Current liabilities32.1 33.1Non-current liabilities4.9 9.7The Company had previously announced its intention to pursue an exit strategy related to its Neschen GBC Graphics Films, LLC joint venture("Neschen"). In October of 2013 we purchased the 50% of Neschen that we did not already own, and with effect from February 12, 2014 we sold all of ourinterest related to Neschen. As a result we have restated the historical presentation in this note to include only our one remaining joint venture.18. Commitments and ContingenciesPending LitigationIn connection with our May 1, 2012 acquisition of Mead C&OP we assumed all of the tax liabilities for the acquired foreign operations. See "Note 11.Income Taxes - Income Tax Assessment" for details on tax assessments issued by the Federal Revenue Department of the Ministry of Finance of Brazil("FRD") against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the tax deduction of goodwill fromTilibra's taxable income for the years 2007 through 2010.There are various other claims, lawsuits and pending actions against us incidental to our operations. It is the opinion of management that the ultimateresolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, we canmake no assurances that we will ultimately be successful in our defense of any of these matters.Lease CommitmentsFuture minimum rental payments for all non-cancelable operating leases (reduced by minor amounts from subleases) at December 31, 2013 were asfollows:(in millions of dollars) 2014$22.5201519.8201616.5201713.6201811.7Thereafter38.0Total minimum rental payments$122.1Less minimum rentals to be received under non-cancelable subleases6.4 $115.7Total rental expense reported in our Consolidated Statements of Income for all non-cancelable operating leases (reduced by minor amounts for subleases)amounted to $25.3 million, $22.3 million and $21.7 million for the years ended December 31, 2013, 2012 and 2011, respectively.80ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Unconditional Purchase CommitmentsFuture minimum payments under unconditional purchase commitments, primarily for inventory purchase commitments at December 31, 2013 were asfollows:(in millions of dollars) 2014$80.0201516.5201610.4201710.420182.5Thereafter—Total unconditional purchase commitments$119.8EnvironmentalWe 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 or results of operations.19. Discontinued OperationsDuring the second quarter of 2011, we sold GBC Fordigraph to The Neopost Group. The Australia-based business was formerly part of the ACCOBrands International segment and is included in the financial statements as discontinued operations. GBC Fordigraph represented $45.9 million in annual netsales for the year ended December 31, 2010. We received final proceeds of $52.9 million during 2011, inclusive of working capital adjustments and sellingcosts. 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 residual costs of our commercial print finishing business, which was sold in 2009. In association withongoing legal disputes related to this business, the Company recorded expenses of $0.2 million and $2.0 million, during 2013 and 2012, respectively.The operating results and financial position of discontinued operations were as follows:(in millions, except per share data)2013 2012 2011Operating Results: Net sales$— $— $19.9Income from operations before income taxes— — 2.5(Loss) gain on sale before income taxes(0.3) (2.1) 41.5Income tax (benefit) expense(0.1) (0.5) 5.9(Loss) income from discontinued operations$(0.2) $(1.6) $38.1Per share: Basic income (loss) from discontinued operations$— $(0.02) $0.69Diluted income (loss) from discontinued operations$— $(0.02) $0.66Litigation-related accruals of $1.2 million and $2.4 million for discontinued operations are included in the line "Other current liabilities" as ofDecember 31, 2013 and 2012, respectively.81ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)20. Quarterly Financial Information (Unaudited)The following is an analysis of certain items in the Consolidated Statements of Income by quarter for 2013 and 2012:(in millions of dollars, except per share data)1st Quarter 2nd Quarter 3rd Quarter 4th Quarter2013 Net sales$352.0 $440.2 $469.2 $503.7Gross profit96.7 137.1 141.1 169.9Operating income (loss)(9.2) 37.9 50.3 66.8Income (loss) from continuing operations(8.9) 9.5 26.4 50.3Loss from discontinued operations, net of income taxes(0.1) — — (0.1)Net income (loss)$(9.0) $9.5 $26.4 $50.2Basic income (loss) per share: Income (loss) from continuing operations (1)$(0.08) $0.08 $0.23 $0.44Loss from discontinued operations (1)$— $— $— $—Net income (loss) (1)$(0.08) $0.08 $0.23 $0.44Diluted income (loss) per share: Income (loss) from continuing operations (1)$(0.08) $0.08 $0.23 $0.43Loss from discontinued operations (1)$— $— $— $—Net income (loss) (1)$(0.08) $0.08 $0.23 $0.432012 Net sales$288.9 $438.7 $501.2 $529.7Gross profit79.8 124.3 151.2 178.1Operating income4.0 11.6 56.4 67.3Income (loss) from continuing operations(17.3) 94.2 55.2 (15.1)Loss from discontinued operations, net of income taxes(0.1) — — (1.5)Net income (loss)$(17.4) $94.2 $55.2 $(16.6)Basic income (loss) per share: Income (loss) from continuing operations (1)$(0.31) $1.00 $0.49 $(0.13)Loss from discontinued operations (1)$— $— $— $(0.01)Net income (loss) (1)$(0.31) $1.00 $0.49 $(0.15)Diluted income (loss) per share: Income (loss) from continuing operations (1)$(0.31) $0.98 $0.48 $(0.13)Loss from discontinued operations (1)$— $— $— $(0.01)Net income (loss) (1)$(0.31) $0.98 $0.48 $(0.15)(1)The sum of the quarterly earnings per share amounts may not equal the total for the year due to the effects of rounding and dilution as a result of issuingcommon shares during the year.82ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)21. Condensed Consolidated Financial InformationCertain of the Company’s 100% owned domestic subsidiaries are required to jointly and severally, fully and unconditionally guarantee the 6.75%Senior Unsecured Notes that are due in the year 2020. Rather than filing separate financial statements for each guarantor subsidiary with the Securities andExchange Commission, the Company has elected to present the following condensed consolidating financial statements, which detail the results of operationsfor the years ended December 31, 2013, 2012 and 2011, cash flows for the years ended December 31, 2013, 2012 and 2011 and financial position as ofDecember 31, 2013 and 2012 of the Company and its guarantor and non-guarantor subsidiaries (in each case carrying investments under the equity method),and the eliminations necessary to arrive at the reported amounts included in the condensed consolidated financial statements of the Company. Certainpreviously reported amounts within the December 2012 condensed consolidating balance sheet have been revised to appropriately reflect the allocation of $70.9million of goodwill and receivables from affiliates within the Guarantor balance sheet. The revisions resulted in these line items in the condensed consolidatingbalance sheet moving between the guarantor and non-guarantor columns of the accompanying balance sheet presentation. Such revisions were immaterial to thepreviously reported guarantors’ condensed consolidating balance sheet.83ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Balance Sheets December 31, 2013(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedAssets Current assets: Cash and cash equivalents$7.0 $1.0 $45.5 $— $53.5Accounts receivable, net— 177.3 294.6 — 471.9Inventories— 124.8 129.9 — 254.7Receivables from affiliates8.2 101.5 65.0 (174.7) —Deferred income taxes20.9 — 12.6 — 33.5Other current assets0.6 8.8 18.7 — 28.1Total current assets36.7 413.4 566.3 (174.7) 841.7Property, plant and equipment, net4.1 130.3 118.9 — 253.3Deferred income taxes— — 37.3 — 37.3Goodwill— 330.9 237.4 — 568.3Identifiable intangibles, net57.6 415.4 134.0 — 607.0Other non-current assets20.0 6.2 49.1 — 75.3Investment in, long term receivable from affiliates1,818.2 868.4 441.0 (3,127.6) —Total assets$1,936.6 $2,164.6 $1,584.0 $(3,302.3) $2,382.9Liabilities and Stockholders’ Equity Current liabilities: Current portion of long-term debt$— $0.1 $— — $0.1Accounts payable— 81.4 96.5 — 177.9Accrued compensation4.6 12.3 15.1 — 32.0Accrued customer programs liabilities— 65.5 58.1 — 123.6Accrued interest7.0 — — — 7.0Other current liabilities3.0 39.1 62.4 — 104.5Payables to affiliates9.5 206.4 244.0 (459.9) —Total current liabilities24.1 404.8 476.1 (459.9) 445.1Long-term debt920.7 0.1 — — 920.8Long-term notes payable to affiliates178.3 26.7 35.2 (240.2) —Deferred income taxes109.2 — 59.9 — 169.1Pension and post-retirement benefit obligations1.5 24.2 36.0 — 61.7Other non-current liabilities0.5 22.0 61.4 — 83.9Total liabilities1,234.3 477.8 668.6 (700.1) 1,680.6Stockholders’ equity: Common stock1.1 448.1 267.4 (715.5) 1.1Treasury stock(3.5) — — — (3.5)Paid-in capital2,035.0 1,551.2 743.0 (2,294.2) 2,035.0Accumulated other comprehensive loss(185.6) (45.6) (99.7) 145.3 (185.6)(Accumulated deficit) retained earnings(1,144.7) (266.9) 4.7 262.2 (1,144.7)Total stockholders’ equity702.3 1,686.8 915.4 (2,602.2) 702.3Total liabilities and stockholders’ equity$1,936.6 $2,164.6 $1,584.0 $(3,302.3) $2,382.984ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Balance Sheets December 31, 2012(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedAssets Current assets: Cash and cash equivalents$12.1 $(3.0) $40.9 $— $50.0Accounts receivable, net— 193.9 304.8 — 498.7Inventories— 133.7 131.8 — 265.5Receivables from affiliates7.9 219.4 17.5 (244.8) —Deferred income taxes18.1 — 13.0 — 31.1Other current assets1.0 13.0 15.0 — 29.0Total current assets39.1 557.0 523.0 (244.8) 874.3Property, plant and equipment, net0.3 140.7 132.6 — 273.6Deferred income taxes— — 36.4 — 36.4Goodwill— 329.7 259.7 — 589.4Identifiable intangibles, net57.7 434.3 154.6 — 646.6Other non-current assets16.3 16.6 54.5 — 87.4Investment in, long term receivable from affiliates1,248.0 869.0 441.0 (2,558.0) —Total assets$1,361.4 $2,347.3 $1,601.8 $(2,802.8) $2,507.7Liabilities and Stockholders’ Equity Current liabilities: Notes payable to banks$— $— $1.2 $— $1.2Current portion of long-term debt— 0.1 $— — 0.1Accounts payable— 76.5 75.9 — 152.4Accrued compensation4.7 16.8 16.5 — 38.0Accrued customer programs liabilities— 63.8 55.2 — 119.0Accrued interest0.2 6.1 — — 6.3Other current liabilities12.3 44.9 55.2 — 112.4Payables to affiliates28.5 191.8 245.0 (465.3) —Total current liabilities45.7 400.0 449.0 (465.3) 429.4Long-term debt401.6 647.4 21.8 — 1,070.8Long-term notes payable to affiliates178.2 26.7 373.0 (577.9) —Deferred income taxes93.8 — 71.2 — 165.0Pension and post-retirement benefit obligations1.8 60.9 57.1 — 119.8Other non-current liabilities1.1 13.9 68.5 — 83.5Total liabilities722.2 1,148.9 1,040.6 (1,043.2) 1,868.5Stockholders’ equity: Common stock1.1 448.0 315.5 (763.5) 1.1Treasury stock(2.5) — — — (2.5)Paid-in capital2,018.5 1,192.0 347.6 (1,539.6) 2,018.5Accumulated other comprehensive loss(156.1) (68.9) (52.2) 121.1 (156.1)Accumulated deficit(1,221.8) (372.7) (49.7) 422.4 (1,221.8)Total stockholders’ equity639.2 1,198.4 561.2 (1,759.6) 639.2Total liabilities and stockholders’ equity$1,361.4 $2,347.3 $1,601.8 $(2,802.8) $2,507.785ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2013(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedUnaffiliated sales$— $955.5 $809.6 $— $1,765.1Affiliated sales— 15.7 4.4 (20.1) —Net sales— 971.2 814.0 (20.1) 1,765.1Cost of products sold— 672.7 567.7 (20.1) 1,220.3Gross profit— 298.5 246.3 — 544.8Advertising, selling, general and administrative expenses40.6 180.6 123.0 — 344.2Amortization of intangibles0.1 19.7 4.9 — 24.7Restructuring charges0.5 14.3 15.3 — 30.1Operating income (loss)(41.2) 83.9 103.1 — 145.8Expense (income) from affiliates(1.5) (21.7) 23.2 — —Interest expense (income), net58.6 (0.1) (3.8) — 54.7Equity in earnings of joint ventures— — (8.2) — (8.2)Other expense, net4.8 0.8 2.0 — 7.6Income (loss) from continuing operations before income taxesand earnings of wholly owned subsidiaries(103.1) 104.9 89.9 — 91.7Income tax expense (benefit)(1.5) — 15.9 — 14.4Income (loss) from continuing operations(101.6) 104.9 74.0 — 77.3Loss from discontinued operations, net of income taxes— (0.2) — — (0.2)Income (loss) before earnings of wholly owned subsidiaries(101.6) 104.7 74.0 — 77.1Earnings of wholly owned subsidiaries178.7 72.6 — (251.3) —Net income$77.1 $177.3 $74.0 $(251.3) $77.1Comprehensive income$47.6 $200.6 $26.5 $(227.1) $47.686ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2012(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedUnaffiliated sales$— $959.2 $799.3 $— $1,758.5Affiliated sales— 17.3 4.1 (21.4) —Net sales— 976.5 803.4 (21.4) 1,758.5Cost of products sold— 687.7 558.8 (21.4) 1,225.1Gross profit— 288.8 244.6 — 533.4Advertising, selling, general and administrative expenses46.6 172.9 130.4 — 349.9Amortization of intangibles0.1 15.3 4.5 — 19.9Restructuring charges— 20.2 4.1 — 24.3Operating income (loss)(46.7) 80.4 105.6 — 139.3Expense (income) from affiliates(1.3) (24.6) 25.9 — —Interest expense (income), net61.4 28.2 (0.3) — 89.3Equity in (earnings) losses of joint ventures— 1.9 (8.8) — (6.9)Other expense (income), net59.7 3.3 (1.7) — 61.3(Loss) income from continuing operations before income taxesand earnings of wholly owned subsidiaries(166.5) 71.6 90.5 — (4.4)Income tax benefit(121.1) (0.2) (0.1) — (121.4)Income (loss) from continuing operations(45.4) 71.8 90.6 — 117.0(Loss) income from discontinued operations, net of incometaxes0.5 (1.4) (0.7) — (1.6)Income (loss) before earnings of wholly owned subsidiaries(44.9) 70.4 89.9 — 115.4Earnings of wholly owned subsidiaries160.3 79.0 — (239.3) —Net income$115.4 $149.4 $89.9 $(239.3) $115.4Comprehensive income$90.3 $146.3 $67.5 $(213.8) $90.387ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2011(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedUnaffiliated sales$— $621.3 $697.1 $— $1,318.4Affiliated sales— 18.9 5.9 (24.8) —Net sales— 640.2 703.0 (24.8) 1,318.4Cost of products sold— 471.6 472.4 (24.8) 919.2Gross profit— 168.6 230.6 — 399.2Advertising, selling, general and administrative expenses30.4 126.6 121.4 — 278.4Amortization of intangibles0.1 3.5 2.7 — 6.3Restructuring income— — (0.7) — (0.7)Operating income (loss)(30.5) 38.5 107.2 — 115.2Interest expense (income) from affiliates(1.1) (23.4) 24.5 — —Interest expense, net67.4 9.8 — — 77.2Equity in (earnings) losses of joint ventures— 0.5 (9.0) — (8.5)Other expense (income), net3.1 0.6 (0.1) — 3.6Income (loss) from continuing operations before income taxesand earnings of wholly owned subsidiaries(99.9) 51.0 91.8 — 42.9Income tax expense6.0 — 18.3 — 24.3Income (loss) from continuing operations(105.9) 51.0 73.5 — 18.6Income (loss) from discontinued operations, net of income taxes— (0.4) 38.5 — 38.1Income (loss) before earnings of wholly owned subsidiaries(105.9) 50.6 112.0 — 56.7Earnings of wholly owned subsidiaries162.6 103.3 — (265.9) —Net income$56.7 $153.9 $112.0 $(265.9) $56.7Comprehensive income$11.8 $135.1 $86.6 $(221.7) $11.888ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2013(in millions of dollars)Parent Guarantors Non-Guarantors ConsolidatedNet cash provided (used) by operating activities$(81.7) $186.5 $89.7 194.5Investing activities: Additions to property, plant and equipment— (21.2) (15.4) (36.6)Payments for (proceeds from) interest in affiliates— 55.6 (55.6) —Payments related to the sale of discontinued operations— (1.5) — (1.5)Proceeds from the disposition of assets— — 6.1 6.1Cost of acquisition, net of cash acquired— (1.3) — (1.3)Net cash (used) provided by investing activities— 31.6 (64.9) (33.3)Financing activities: Intercompany financing143.8 (168.2) 24.4 —Net dividends65.7 (45.9) (19.8) —Proceeds from long-term borrowings530.0 — — 530.0Repayments of long-term debt(658.1) — (21.4) (679.5)(Repayments) borrowings of short-term debt, net0.5 — (1.2) (0.7)Payments for debt issuance costs(4.3) — — (4.3)Other(1.0) — — (1.0)Net cash (used) provided by financing activities76.6 (214.1) (18.0) (155.5)Effect of foreign exchange rate changes on cash— — (2.2) (2.2)Net increase (decrease) in cash and cash equivalents(5.1) 4.0 4.6 3.5Cash and cash equivalents: Beginning of the period12.1 (3.0) 40.9 50.0End of the period$7.0 $1.0 $45.5 $53.589ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2012(in millions of dollars)Parent Guarantors Non-Guarantors ConsolidatedNet cash (used) provided by operating activities$(156.0) $137.5 $11.0 (7.5)Investing activities: Additions to property, plant and equipment— (22.4) (7.9) (30.3)Proceeds (payments) related to the sale of discontinuedoperations— 2.1 (0.6) 1.5Proceeds from the disposition of assets— — 3.1 3.1Cost of acquisition, net of cash acquired(429.5) — 32.0 (397.5)Net cash (used) provided by investing activities.(429.5) (20.3) 26.6 (423.2)Financing activities: Intercompany financing775.6 (777.4) 1.8 —Net dividends53.3 27.3 (80.6) —Proceeds from long-term borrowings545.0 690.0 35.0 1,270.0Repayments of long-term debt(816.2) (42.8) (13.0) (872.0)Borrowings of short-term debt, net— — 1.2 1.2Payments for debt issuance costs(21.5) (16.1) (0.9) (38.5)Other(0.6) — — (0.6)Net cash provided (used) by financing activities.535.6 (119.0) (56.5) 360.1Effect of foreign exchange rate changes on cash— — (0.6) (0.6)Net decrease in cash and cash equivalents(49.9) (1.8) (19.5) (71.2)Cash and cash equivalents: Beginning of the period62.0 (1.2) 60.4 121.2End of the period$12.1 $(3.0) $40.9 $50.0 Year Ended December 31,2011(in millions of dollars)Parent Guarantors Non- Guarantors ConsolidatedNet cash provided (used) by operating activities:$(95.5) $66.6 $90.7 61.8Investing activities: Additions to property, plant and equipment— (6.6) (6.9) (13.5)Assets acquired— (0.6) (0.8) (1.4)Proceeds related to the sale of discontinued operations— 0.4 53.1 53.5Proceeds from the disposition of assets— — 1.4 1.4Net cash provided (used) by investing activities— (6.8) 46.8 40.0Financing activities: Intercompany financing111.9 (94.8) (17.1) —Net dividends69.2 34.3 (103.5) —Proceeds from long-term borrowings— — 0.1 0.1Repayments of long-term debt(62.9) (0.1) — (63.0)Other(0.2) — — (0.2)Net cash (used) provided by financing activities118.0 (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 equivalents22.5 (0.8) 16.3 38.0Cash and cash equivalents: Beginning of the period39.5 (0.4) 44.1 83.2End of the period$62.0 $(1.2) $60.4 $121.290ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURENot applicable. ITEM 9A. CONTROLS AND PROCEDURES(a) Management's Evaluation of Disclosure Controls and ProceduresWe seek to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submittedunder the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the applicable SEC rules and forms, and thatsuch information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timelydecisions regarding required disclosures.As of the end of the period covered by this report, our management, under the supervision and with the participation of our Disclosure Committee andour Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures. Based uponthat evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective because ofmaterial weakness in internal control over financial reporting that existed as of December 31, 2013. The material weakness is related to deficiencies ininformation technology ("IT") general controls for the Mead C&OP business in the U.S. and Canada, which was acquired by the Company in May 2012.Following the acquisition, the Mead C&OP business was operated within its former parent company's IT environment under a transition services agreement.In 2013, the business was transferred onto a standalone SAP environment and the servers subsequently were moved to the Company's outsourced data centerwhich hosts our Oracle environment. It was during this transition that certain deficiencies aggregating to the identified material weakness were createdprimarily as a result of failures to properly configure change management control settings, including tracking of access and the history of changes. Theseincorrect change management control settings were not detected until we formally tested the controls in the fourth quarter of 2013.In light of this material weakness in internal control over financial reporting, prior to filing this report, we completed additional procedures, includingvalidating the completeness and accuracy of the related financial records. These additional procedures have allowed us to conclude that, notwithstanding thematerial weakness and the ineffectiveness of our controls and procedures, the Consolidated Financial Statements in this report fairly present, in all materialrespects, our financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with generally acceptedaccounting principles in the U.S.The material weakness and actions taken to address the material weakness as well as additional remediation plans are more fully described below.(b) Changes in Internal Control over Financial ReportingExcept as described below, there were no changes in our internal control over financial reporting during the quarter ended December 31, 2013 that havematerially affected or are reasonably likely to materially affect our internal control over financial reporting.(c) Management’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. Our internal control over financial reporting is designed byand under the supervision of our Chief Executive Officer and Chief Financial Officer and effected by management and our board of directors to providereasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles in the U.S.In designing and evaluating our internal control over financial reporting, management recognizes that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objective. Also, projections of any evaluationof the effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.91A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibilitythat a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.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, 2013. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (1992) in Internal Control-Integrated Framework.In the course of completing our assessment of internal control over financial reporting as of December 31, 2013, management identified a number ofdeficiencies related to the design, implementation and effectiveness of certain U.S. and Canadian information technology general controls for the Mead C&OPbusiness that have a direct impact on our financial reporting. Based on the nature and interrelationship of the noted deficiencies, management concluded thatthese deficiencies, in the aggregate, resulted in a reasonable possibility that a material misstatement in our interim or annual financial statements would not beprevented or detected on a timely basis, and as such, constitute a material weakness. In particular, these deficiencies related to the configuration set-up of thesystem, user access and change management controls that are intended to ensure that access to financial applications and data is adequately restricted toappropriate personnel and that all changes affecting the financial applications and underlying account records are identified, tested and implementedappropriately. Based on our assessment, management concluded that the Company did not maintain effective internal control over financial reporting as ofDecember 31, 2013.The effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 has been audited by KPMG LLP, an independentregistered public accounting firm, as stated in their report, which is included in Item 8 of this report.(d) Remediation PlanManagement has been actively engaged in developing and implementing a remediation plan to address the material weakness noted above. Theremediation actions include the following:•The appropriate change management control settings, including tracking of access and history of changes, have been properly configured.•Additional internal resources have been added to remediate the deficiencies identified and to control the IT environment.•An additional dedicated resource, reporting through our Chief Financial Officer, has been appointed to monitor and verify the IT control environmenton an ongoing basis.•Appropriate change management processes are being implemented.•Control techniques associated with IT system access are being reviewed, and where necessary revised.•Access rules for our outsourced service providers are being codified and implemented to remediate the deficiencies identified and to control the ITenvironment.•A robust training program is being designed and implemented to train or re-train all responsible personnel regarding the IT general control objectivesand their roles and responsibilities for them.Management believes the foregoing efforts will effectively remediate the material weakness. Because the reliability of the internal control process requiresrepeatable execution, the successful remediation of this material weakness will require review and evidence of effectiveness prior to management concludingthat the controls are effective and there is no assurance that additional remediation steps will not be necessary. Management believes the remediation efforts willbe completed during the first quarter of 2014 and will test and re-evaluate the effectiveness of the Mead C&OP information technology general controlsthereafter.ITEM 9B. OTHER INFORMATIONNot applicable.92PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEInformation required under this Item is contained in the Company’s 2014 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2014 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, Four Corporate Drive, Lake Zurich, IL 60047-2997, Attn: Office of theGeneral Counsel.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 2013 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 2014 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2014 and is incorporated herein by reference.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSEquity Compensation Plan InformationThe following table gives information, as of December 31, 2013, 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 categoryNumber 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)4,806,475 $8.30 8,208,141(2) Equity compensation plans not approved by security holders— — — Total4,806,475 $8.30 8,208,141(2) (1)This number includes 4,246,272 common shares that were subject to issuance upon the exercise of stock options/SSARs granted under the 2011Amended and Restated ACCO Brands Corporation Incentive Plan (the “Restated Plan”), and 560,203 common shares that were subject to issuanceupon the exercise of stock options/SSARs pursuant to the Company’s 2005 Assumed Option and Restricted Stock Unit Plan. The weighted-averageexercise price in column (b) of the table reflects all such options/SSARs.(2)These are shares available for grant as of December 31, 2013 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, the93following shares may become available for grant under the Restated Plan and, to the extent such shares have become available as of December 31,2013, they are included in the table as available for grant: shares covered by outstanding awards under the Plan that were forfeited or otherwiseterminated.Other information required under this Item is contained in the Company’s 2014 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2014, 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 2014 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2014 and is incorporated herein by reference.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation required under this Item is contained in the Company’s 2014 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2014 and is incorporated herein by reference.94PART 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 thereunder does not exceed 10 percent of our total assets on a consolidated basis.(a)Financial Statements, Financial Statement Schedules and Exhibits1.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: PageReports of Independent Registered Public Accounting Firm41Consolidated Balance Sheets as of December 31, 2013 and 201242Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 201143Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 201144Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 201145Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2013, 2012 and 201146Notes to Consolidated Financial Statements472.Financial Statement Schedule:Schedule II - Valuation and Qualifying Accounts and Reserves, for each of the years ended December 31, 2013, 2012 and 2011.The separate consolidated financial statements of Pelikan-Artline Pty Ltd, the Company’s 50 percent owned joint venture as of September 30, 2013 and2012 and for each of the years in the three-year period ended September 30, 2013 required to be included in this report pursuant to Rule 3-09 of Regulation S-X, are filed as Exhibit 99.1.3.Exhibits:A list of exhibits filed or furnished with this Report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished by theCompany) is provided in the accompanying Exhibit Index.95EXHIBIT INDEXNumber Description of Exhibit2.1Agreement and Plan of Merger, dated November 17, 2011, by and among MeadWestvaco Corporation, Monaco SpinCo Inc., ACCO BrandsCorporation and Augusta Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed by the Registrant on November 22, 2011 (FileNo. 001-08454))2.2Amendment No. 1, dated as of March 19, 2012, to the Agreement and Plan of Merger, dated as of November 17, 2011, by and amongMeadWestvaco Corporation, Monaco SpinCo Inc., ACCO Brands Corporation and Augusta Acquisition Sub, Inc. (incorporated by reference toExhibit 2.1 to Form 8-K filed by the Registrant on March 22, 2012 (File No. 001-08454))2.3Share Sale Agreement dated May 25, 2011 entered into by and between GBC Australia Pty Ltd, ACCO Brands Corporation, Neopost Holding PtyLtd 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))3.1Restated Certificate of Incorporation of ACCO Brands Corporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K filed by theRegistrant on May 19, 2008 (File No. 001-08454))3.2Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Reporton Form 8-K filed August 17, 2005 (File No. 001-08454))3.3By-laws of ACCO Brands Corporation, as amended through February 20, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s CurrentReport on Form 8-K filed February 26, 2013 (File No. 001-08454))4.1Rights Agreement, dated as of August 16, 2005, between ACCO Brands Corporation and Wells Fargo Bank, National Association, as rights agent(incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Registrant on August 17, 2005 (File No. 001-08454))4.2Indenture, dated as of April 30, 2012, among Monaco SpinCo Inc., as issuer, the guarantors named therein, and Wells Fargo Bank, NationalAssociation, as trustee (incorporated by reference to Exhibit 10.3 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))4.3First Supplemental Indenture, dated as of May 1, 2012, among the Company, Monaco SpinCo Inc., the guarantors named therein and Wells FargoBank, National Association, as trustee (incorporated by reference to Exhibit 10.4 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))4.4Second Supplemental Indenture, dated as of May 1, 2012, among the Company, Mead Products LLC, the guarantors named therein and WellsFargo Bank, National Association, as trustee (incorporated by reference to Exhibit 10.5 of the Registrant's Form 8-K filed on May 7, 2012 (File No.001-08454))4.5Registration Rights Agreement, dated as of May 1, 2012, among Monaco SpinCo Inc., the Company, the guarantors named therein, andrepresentatives of the initial purchasers named therein (incorporated by reference to Exhibit 10.6 of the Registrant's Form 8-K filed on May 7, 2012(File No. 001-08454))10.1ACCO Brands Corporation 2005 Assumed Option and Restricted Stock Unit Plan, together with Sub-Plan A thereto (incorporated by reference toExhibit 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))10.2Tax Allocation Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. (incorporated by reference toExhibit 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))10.3Tax Allocation Agreement, dated as of August 16, 2005, between General Binding Corporation and Lane Industries, Inc. (incorporated by reference toExhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 filed May 13, 2005 (File No. 001-08454))96EXHIBIT INDEXNumber Description of Exhibit10.4Employee Matters Agreement, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation and General BindingCorporation (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946))10.5Amended and Restated ACCO Brands Corporation 2005 Incentive Plan (incorporated by reference to Annex A of the Registrant’s definitive proxystatement filed April 4, 2006 (File No. 001-08454))10.6Amendment to the Amended and Restated ACCO Brands Corporation 2005 Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 8-Kfiled by the Registrant on May 19, 2008 (File No. 001-08454))10.7ACCO Brands Corporation Executive Severance Plan (effective December 1, 2007) (incorporated by reference to Exhibit 10.1 to Form 8-K filed bythe Registrant on November 29, 2007 (File No. 001-08454))10.82008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.31 to Form 10-K filedby the Registrant on February 29, 2008 (File No. 001-08454))10.9Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.1to Form 8-K filed by the Registrant on January 22, 2009 (File No. 001-08454))10.10Retirement Agreement for Neal V. Fenwick effective as of May 1, 2008 (incorporated by reference to Exhibit 10.4 to Form 10-Q filed by the Registranton May 7, 2008 (File No. 001-08454))10.11Letter Agreement dated November 4, 2008, between ACCO Brands Corporation and Robert J. Keller (incorporated by reference to Exhibit 10.1 toForm 8-K filed by the Registrant on November 5, 2008 (File No. 001-08454))10.12Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on December 24, 2008 (File No.001-08454))10.13Form of Stock-settled Stock Appreciation Rights Agreement under the ACCO Brands Corporation Amended and Restated 2005 Long-Term IncentivePlan, 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))10.14Amended and Restated ACCO Brands Deferred Compensation Plan for Non-Employee Directors, effective December 14, 2009 (incorporated byreference to Exhibit 10.41 to Form 10-K filed by the Registrant on February 26, 2010 (File No. 001-089454))10.15Amendment to Deferred Compensation Plan for Non-Employee Directors, effective January 1, 2014*10.16Form of 2011 Amended and Restated Incentive Plan Directors Restricted Stock Unit Award Agreement,*10.17Letter agreement, dated November 4, 2008, from ACCO Brands Corporation to Christopher M. Franey (incorporated by reference to Exhibit 10.42 toForm 10-K filed by the Registrant on February 26, 2010 (File No. 001-08454))10.18Description of certain compensation arrangements with respect to the Registrant's named executive officers (incorporated by reference to Item 5.02 ofRegistrant's Form 8-K filed on March 1, 2010 (File No. 001-08454))10.19Description of changes to compensation arrangements for Christopher M. Franey (incorporated by reference to Item 5.02 of Registrant's Form 8-Kfiled on September 21, 2010 (File No. 001-08454))10.20Description of changes to compensation arrangements for Boris Elisman (incorporated by reference to Item 5.02 of Registrant's Form 8-K filed onDecember 14, 2010 (File No. 001-08454))10.21Amended and Restated 2005 Incentive Plan Restricted Stock Unit Award Agreement, effective as of February 24, 2011 between Robert J. Keller andACCO 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))97EXHIBIT INDEXNumber Description of Exhibit10.222011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation'sCurrent Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454))10.23Form 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 (FileNo. 001-08454))10.24Form of Nonqualified Stock Option Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated byreference 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))10.25Form of Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated byreference 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))10.26Form of Performance Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporatedby 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))10.27Form of Stock-Settled Stock Appreciation Rights Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan(incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 20, 2011 (FileNo. 001-08454))10.28Separation Agreement, dated November 17, 2011, by and between MeadWestvaco and Monaco SpinCo Inc. (incorporated by reference to Exhibit10.1 of Registrant's Form 8-K filed on November 22, 2011 (File No. 001-08454))10.29Employee Benefits Agreement, dated as of November 17, 2011, by and among MeadWestvaco Corporation, Monaco Spinco Inc. and ACCO BrandsCorporation. (incorporated by reference to Exhibit 10.3 of Registrant's Form S-4/A filed on February 13, 2012 (File No. 333-178869))10.30Amendment to the February 24, 2011 Amended and Restated 2005 Restricted Stock Unit Award Agreement, made and entered into as of December 7,2011, between Robert J. Keller and ACCO Brands Corporation (incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed onDecember 12, 2011 (File No. 001-08454))10.31Amendment No. 1, dated as of March 19, 2012, to the Separation Agreement, dated as of November 17, 2011, by and among MeadWestvacoCorporation and Monaco SpinCo Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on March 22, 2012 (FileNo. 001-08454))10.32Credit Agreement, dated as of March 26, 2012, among ACCO Brands Corporation, certain direct and indirect subsidiaries of ACCO BrandsCorporation, Barclays Bank PLC and Bank of Montreal, as administrative agents, and the other agents and lenders named therein (incorporated byreference to Exhibit 10.1 to Form 8-K filed by the Registrant on March 30, 2012 (File No. 001-08454))10.33Amendment of 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant'sForm 8-K filed on April 24, 2012 (File No. 001-08454))10.34Transition Services Agreement, effective as of May 1, 2012, between Monaco SpinCo Inc. and MeadWestvaco Corporation (incorporated byreference to Exhibit 10.1 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))10.35Tax Matters Agreement, effective as of May 1, 2012, among the Company, MeadWestvaco Corporation and Monaco SpinCo Inc. (incorporated byreference to Exhibit 10.2 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))10.36Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.8of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))98EXHIBIT INDEXNumber Description of Exhibit10.37Amendment of the ACCO Brands Corporation Executive Severance Plan, adopted as of October 23, 2012 (incorporated by reference to Exhibit 10.1to Form 10-Q filed by the Registrant on October 31, 2012 (File No. 001-08454))10.38Form of Restricted Stock Unit Award Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporated by reference toExhibit 10.1 of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.39Form of Non-qualified Stock Option Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporated by reference toExhibit 10.2 of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.40Form of Performance Stock Unit Award Agreement under the 2011 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.3 ofthe Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.41Form of Performance Stock Unit Award Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporated by referenceto Exhibit 10.4 of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.42Second Amendment, dated as of May 13, 2013, to the Credit Agreement, dated as of March 26, 2012, among the Company, certain subsidiaries ofthe Company, Barclays Bank PLC and Bank of Montreal, as administrative agents, and the other agents and lenders party thereto. (incorporated byreference to Exhibit 10.1 of the Registrant's Form 8-K filed on May 13, 2013 (File No. 001-08454))10.43Amended and Restated Credit Agreement, dated as of May 13, 2013, among the Company, certain subsidiaries of the Company, Bank of America,N.A., as administrative agent, and the other agents and lenders party thereto. (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-Kfiled on May 13, 2013 (File No. 001-08454))10.44ACCO Brands 2013 Annual Incentive Plan (incorporated by reference to 10.5 of the Registrant’s Form 10-Q filed May 8, 2013 (File No. 001-08454))21.1Subsidiaries of the Registrant*23.1Consent of KPMG LLP*23.2Consent of BDO*24.1Power of attorney*31.1Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*31.2Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*32.1Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*99.1Pelikan-Artline Pty Ltd Financial Statements as of September 30, 2013*101The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2013 formatted in XBRL(eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2013 and 2012, (ii) the Consolidated Statementsof Income for the years ended December 31, 2013, 2012 and 2011, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the yearsended December 31, 2013, 2012 and 2011, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011,(v) Consolidated Statements of Stockholders Equity (Deficit) for the years ended December 31, 2013, 2012 and 2011, and (vi) related notes to thosefinancial statements**Filed herewith.99SIGNATURESPursuant 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 CORPORATION By:/s/ Boris Elisman Boris Elisman President 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 accountingofficer)February 25, 2014Pursuant 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/ Boris Elisman President and Chief Executive Officer(principal executive officer)February 25, 2014Boris Elisman /s/ Neal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 25, 2014Neal V. Fenwick /s/ Thomas P. O’Neill, Jr. Senior Vice President, Finance andAccounting (principal accountingofficer) February 25, 2014Thomas P. O’Neill, Jr. /s/ Robert J. Keller* Executive Chairman of the Board ofDirectors February 25, 2014Robert J. Keller /s/ George V. Bayly* Director February 25, 2014George V. Bayly /s/ James A. Buzzard* Director February 25, 2014James A. Buzzard 100Signature Title Date /s/ Kathleen S. Dvorak* Director February 25, 2014Kathleen S. Dvorak /s/ G. Thomas Hargrove* Director February 25, 2014G. Thomas Hargrove /s/ Robert H. Jenkins* Director February 25, 2014Robert H. Jenkins /s/ Thomas Kroeger* Director February 25, 2014Thomas Kroeger /s/ Michael Norkus* Director February 25, 2014Michael Norkus /s/ E. Mark Rajkowski* Director February 25, 2014E. Mark Rajkowski /s/ Sheila G. Talton* Director February 25, 2014Sheila G. Talton /s/ Norman H. Wesley* Director February 25, 2014Norman H. Wesley /s/ Neal V. Fenwick * Neal V. Fenwick asAttorney-in-Fact 101ACCO Brands CorporationVALUATION AND QUALIFYING ACCOUNTS AND RESERVESSCHEDULE IIAllowances for Doubtful AccountsChanges in the allowances for doubtful accounts were as follows: Year Ended December 31,(in millions of dollars)2013 2012 2011Balance at beginning of year$6.5 $5.1 $5.2Additions charged to expense1.5 2.2 1.4Deductions - write offs(1.6) (3.0) (1.3)Mead C&OP acquisition— 2.1 —Foreign exchange changes(0.3) 0.1 (0.2)Balance at end of year$6.1 $6.5 $5.1Allowances for Sales Returns and DiscountsChanges in the allowances for sales returns and discounts were as follows: Year Ended December 31,(in millions of dollars)2013 2012 2011Balance at beginning of year$10.6 $7.7 $9.2Additions charged to expense41.3 41.0 41.6Deductions - returns(39.1) (41.6) (43.1)Mead C&OP acquisition— 2.8 —Foreign exchange changes0.1 0.7 —Balance at end of year$12.9 $10.6 $7.7Allowances for Cash DiscountsChanges in the allowances for cash discounts were as follows: Year Ended December 31,(in millions of dollars)2013 2012 2011Balance at beginning of year$2.2 $1.1 $1.2Additions charged to expense16.0 16.4 11.0Deductions - discounts taken(16.2) (16.0) (11.0)Mead C&OP acquisition— 0.6 —Foreign exchange changes0.2 0.1 (0.1)Balance at end of year$2.2 $2.2 $1.1102ACCO Brands CorporationVALUATION AND QUALIFYING ACCOUNTS AND RESERVESSCHEDULE II (Continued)Warranty ReservesChanges in the reserve for warranty claims were as follows: Year Ended December 31,(in millions of dollars)2013 2012 2011Balance at beginning of year$2.8 $2.7 $3.1Provision for warranties issued2.0 3.3 3.0Settlements made (in cash or in kind)(2.6) (3.2) (3.4)Balance at end of year$2.2 $2.8 $2.7Income Tax Valuation AllowanceChanges in the deferred tax valuation allowances were as follows: Year Ended December 31,(in millions of dollars)2013 2012 2011Balance at beginning of year$55.4 $204.3 $193.2(Credits) charges to expense(11.6) (145.1) 5.4(Credited) charged to other accounts(10.5) (4.3) 7.0Foreign exchange changes(0.3) 0.5 (1.3)Balance at end of year$33.0 $55.4 $204.3See accompanying report of independent registered public accounting firm.103Exhibit 10.15AMENDMENT OF THEACCO BRANDS CORPORATIONDEFERRED COMPENSATION PLANFOR NON-EMPLOYEE DIRECTORSThis Amendment of the ACCO Brands Corporation Deferred Compensation Plan for Non-Employee Directors (the “Plan”) isadopted this December 3, 2013 by ACCO Brands Corporation (the “Company”).W I T N E S S E T HWHEREAS, the Company sponsors the Plan, which it most recently amended and completely restated effective December 14,2009;WHEREAS, the Board may amend the Plan at any time in such manner that does not deprive any participant (or his or herbeneficiary) of a non-forfeitable accrued benefit under the Plan; andWHEREAS, the Board has determined it appropriate to amend the Plan to eliminate the Change of Control payment featurewith respect to all deferrals of compensation (and earnings thereon) occurring on and after January 1, 2014, in conformity with Section409A of the Internal Revenue Code.NOW, THEREFORE, the Company amends the Plan as follows:1.Capitalized terms not defined herein shall have the meaning of such term provided under the Plan.2.There is added to the Plan a new Section 29, to follow immediately after Section 28, that shall provide as follows:“Elimination of Change of Control Payments for Post-2013 Deferrals. Anything in the Plan to the contrarynotwithstanding, effective for deferrals of compensation pursuant to Section 4 occurring on and after January 1, 2014(together with all Dividend Equivalents, Fixed Income Account Interest Credits and Phantom Stock Unit Adjustmentsthereon) (“Post-2013 Deferrals”), all references in the Plan to a Change of Control, and the consequences of a Changeof Control under the Plan, shall be disregarded as if not stated in the Plan, including references to a Change of Control asa Participant payment event and to the definition of the term “Change of Control”. Accordingly, payment of such Post-2013 Deferrals to Participants shall be made only in accordance with the Plan provisions for payment upon a separationfrom service with the Company (including as a member of the Board) and all Affiliates.”3.The Plan is affirmed, ratified and continued, as amended hereby.WHEREFORE, the Company hereby adopts this Amendment the date and year first set forth above.ACCO BRANDS CORPORATIONBy: /s/ Pamela R. Schneider Its: Sr. Vice President, General Counsel and Corporate SecretaryExhibit 10.16 ACCO BRANDS CORPORATION2011 AMENDED AND RESTATED INCENTIVE PLANDIRECTORS RESTRICTED STOCK UNIT AWARD AGREEMENTTHIS AGREEMENT is made and entered into this __________ __, 20__ and effective ________ __, 20__ (the “GrantDate”) by and between ACCO Brands Corporation, a Delaware corporation (the “Company”) and ____________________(“Grantee”).WHEREAS, Grantee is a member of the Board of Directors (the “Board”) of the Company and in compensation for Grantee’sservices to be provided hereafter, the Board deems it advisable to award to Grantee a Director Award of Restricted Stock Unitsrepresenting shares of the Company’s Common Stock, pursuant to the ACCO Brands Corporation 2011 Amended and RestatedIncentive Plan (“Plan”), as set forth herein.NOW THEREFORE, subject to the terms and conditions set forth herein:1.Plan Governs; Capitalized Terms. This Agreement is made pursuant to the Plan, and the terms of the Plan are incorporated into thisAgreement, except as otherwise specifically stated herein. Capitalized terms used in this Agreement that are not defined in this Agreement shall have themeanings as used or defined in the Plan. References in this Agreement to any specific Plan provision shall not be construed as limiting the applicability of anyother Plan provision.2.Award of Restricted Stock Units. The Company hereby awards to Grantee on the Grant Date a Director Award of ______________Restricted Stock Units. Each Restricted Stock Unit constitutes an unfunded and unsecured promise of the Company to deliver (or cause to be delivered) toGrantee, subject to the terms and conditions of this Agreement, one (1) share of Common Stock (“Shares”). Each Restricted Stock Unit shall be fully vestedand nonforfeitable, and payable in accordance with Section 3, below. The Company shall hold the Restricted Stock Units in book-entry form. The Granteeshall have no direct or secured claim in any specific assets of the Company or the Shares to be issued to Grantee under Section 3 hereof, and shall have thestatus of a general unsecured creditor of the Company. THIS DIRECTOR AWARD IS CONDITIONED ON GRANTEE SIGNING THIS AGREEMENTAND RETURNING IT TO THE COMPANY BY ________ __, 200__, AND IS SUBJECT TO ALL TERMS, CONDITIONS AND PROVISIONS OFTHE PLAN AND THIS AGREEMENT, WHICH GRANTEE ACCEPTS UPON SIGNING AND DELIVERING THIS AGREEMENT TO THECOMPANY.3.Delivery of Shares. As a condition to the award of this Director Award, Grantee hereby agrees to defer payment of the Restricted StockUnits until the date in which Grantee ceases to be a member of the Board (and constituting a separation from service) as so provided under the ACCO BrandsCorporation Deferred Compensation Plan for Non-Employee Directors as in effect from time to time (“Directors Deferred Compensation Plan”). As of thedate on which the Restricted Stock Units shall be payable under the Directors Deferred Compensation Plan, the Company shall cause its transfer agent for theCommon Stock to register Shares in book-entry form in the name of the Grantee (or, in the discretion of the Committee, issue to Grantee a stock certificate)representing a number of Shares equal to the number of Restricted Stock Units then payable; provided, such Shares shall not be paid to the Grantee earlierthan or later than is permitted under Section 409A of the Code.4.No Transfer or Assignment of Restricted Stock Units; Restrictions on Sale. Except as otherwise provided in this Agreement, theRestricted Stock Units and the rights and privileges conferred thereby shall not be sold, pledged or otherwise transferred (whether by operation of law orotherwise) and shall not be subject to sale under execution, attachment, levy or similar process until the Shares represented by the Restricted Stock Units aredelivered to Grantee or his designated representative. The Grantee shall not sell any Shares at any time when applicable laws or Company policies prohibit asale. This restriction shall apply as long as Grantee is a Director of the Company or an Affiliate of the Company.5. Legality of Initial Issuance. No Shares shall be issued unless and until the Company has determined that (a) any applicable listingrequirement of any stock exchange or other securities market on which the Common Stock is listed has been satisfied; and (b) all other applicable provisionsof state or federal law have been satisfied.6.Miscellaneous Provisions.(a)Rights as a Stockholder. Neither Grantee nor Grantee’s representative shall have any rights as a stockholder with respect to anyShares underlying the Restricted Stock Units until the date that the Company is obligated to deliver such Shares to Grantee or Grantee’s representative.(b)Dividend Equivalents. As of each dividend date with respect to Shares, a fully vested dividend equivalent shall be awarded toGrantee in the dollar amount equal to the amount of the dividend that would have been paid on the number of Shares equal to the number of Restricted StockUnits held by Grantee as of the close of business on the record date for such dividend. Such dividend equivalent amount shall be converted into a number ofRestricted Stock Units equal to the number of whole and fractional Shares that could have been purchased at the closing price on the dividend payment datewith such dollar amount. In the case of any dividend declared on Shares which is payable in Shares, Grantee shall be awarded a fully vested dividendequivalent of an additional number of Restricted Stock Units equal to the product of (x) the number of his Restricted Stock Units then held on the relateddividend record date multiplied by the (y) the number of Shares (including any fraction thereof) distributable as a dividend on a Share. All such dividendequivalents credited to Grantee shall be added to and in all respects thereafter be treated as Restricted Stock Units hereunder.(c)Inconsistency. To the extent any terms and conditions herein conflict with the terms and conditions of the Plan, the terms andconditions of the Plan shall control.(d)Notices. Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective uponpersonal delivery, upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid or upon deposit with areputable overnight courier. Notice shall be addressed to the Company at its principal executive office and to Grantee at the address that he most recentlyprovided to the Company.(e)Entire Agreement; Amendment; Waiver. This Agreement constitutes the entire agreement between the parties hereto with regard tothe subject matter hereof. This Agreement supersedes any other agreements, representations or understandings (whether oral or written and whether express orimplied) which relate to the subject matter hereof. No alteration or modification of this Agreement shall be valid except by a subsequent written instrumentexecuted by the parties hereto. No provision of this Agreement may be waived except by a writing executed and delivered by the party sought to be charged. Anysuch written waiver will be effective only with respect to the event or circumstance described therein and not with respect to any other event or circumstance,unless such waiver expressly provides to the contrary.(f)Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois, assuch laws are applied to contracts entered into and performed in such State, without giving effect to the choice of law provisions thereof.(g)Successors.(i)This Agreement is personal to Grantee and, except as otherwise provided in Section 4 above, shall not be assignable by Grantee otherwise than by willor the laws of descent and distribution, without the written consent of the Company. This Agreement shall inure to the benefit of and be enforceable byGrantee’s legal representatives.(ii)This Agreement shall inure to the benefit of and be binding upon Company and its successors.(h)Severability. If any provision of this Agreement for any reason should be found by any court of competent jurisdiction to beinvalid, illegal or unenforceable, in whole or in part, such declaration shall not affect the validity, legality or enforceability of any remaining provision orportion thereof, which remaining provision or portion thereof shall remain in full force and effect as if this Agreement had been adopted with the invalid, illegalor unenforceable provision or portion thereof eliminated.(i)Headings. The headings, captions and arrangements utilized in this Agreement shall not be construed to limit or modify theterms or meaning of this Agreement.(j)Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed anoriginal, but all of which shall constitute but one and the same instrument.IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above. ACCO BRANDS CORPORATION By: Name: Its: Grantee Name Grantee Signature Exhibit 21.1SUBSIDIARIESACCO Brands Corporation, a Delaware corporation, had the domestic and international subsidiaries shown below as of December 31, 2013. Certain domesticand international subsidiaries are not named because they were not significant in the aggregate. ACCO Brands Corporation has no parent. Name of SubsidiaryJurisdiction of Organization U.S. Subsidiaries: ACCO Brands International, Inc.DelawareACCO Brands USA LLCDelawareACCO Europe Finance Holdings, LLCDelawareACCO Europe International Holdings, LLCDelawareACCO International Holdings, Inc.DelawareGeneral Binding LLCDelawareGBC International, Inc.Nevada International Subsidiaries: ACCO Australia Pty. Ltd.AustraliaACCO Brands Australia Holding Pty. Ltd.AustraliaACCO Brands Australia Pty. Ltd.AustraliaTilibra Produtos de Papelaria LtdaBrazilACCO Brands C&OP Inc.CanadaACCO Brands Canada Inc.CanadaACCO Brands Canada LPCanadaACCO Brands CDA Ltd.CanadaACCO Brands Europe Holding LPEnglandACCO Brands Europe Ltd.EnglandACCO Europe Finance LPEnglandACCO Europe Ltd.EnglandACCO-Rexel Group Services LimitedEnglandACCO UK LimitedEnglandACCO Deutschland Beteiligungsgesellschaft mbhGermanyACCO-Rexel LimitedIrelandACCO Brands Italia S.r.L.ItalyACCO Brands Japan K.K.JapanACCO Mexicana S.A. de C.V.MexicoACCO Brands Benelux B.V.NetherlandsACCO Nederland Holding B.V.NetherlandsGBC Europe ABSwedenEXHIBIT 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, 333-176247, and 333-181430) of ACCO Brands Corporation of our report dated February 25, 2014, with respect to theconsolidated balance sheets of ACCO Brands Corporation and subsidiaries as of December 31, 2013 and 2012, and the related consolidated statements ofincome, comprehensive income, cash flows, and stockholders’ equity (deficit), for each of the years in the three-year period ended December 31, 2013, therelated financial statement schedule, and the effectiveness of internal control over financial reporting, which report is included in the December 31, 2013annual report on Form 10-K of ACCO Brands Corporation.Our report dated February 25, 2014 on the effectiveness of internal control over financial reporting as of December 31, 2013, expresses our opinion that ACCOBrands Corporation did not maintain effective internal control over financial reporting as of December 31, 2013 because of the effect of a material weaknesseson the achievement of the objectives of the control criteria and contains an explanatory paragraph that states a material weakness related to U.S. and Canadianinformation technology general controls related to the configuration set-up of the system, user access and change management controls for the Mead C&OPbusiness has been identified and included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A(c) of the December31, 2013 annual report on Form 10-K of ACCO Brands Corporation./s/ KPMG LLPChicago, IllinoisFebruary 25, 2014EXHIBIT 23.2CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the inclusion of our audit report dated December 19, 2012 relating to our audit of the Financial Statements of Pelikan Artline Joint Venture forthe year ended September 30, 2012, which is included in this Form 10-K of ACCO Brands Corporation./s/ BDOBDO East Coast PartnershipSydney, AustraliaFebruary 21, 2014Exhibit 24.1LIMITED POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Boris Elisman, Neal V. Fenwick, andThomas 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 without the others and with full power ofsubstitution and re-substitution, to do any and all acts and things and to execute any and all instruments which said attorneys and agents and each of them may deem necessary ordesirable 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. Securitiesand Exchange Commission thereunder in connection with the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “Annual Report”),including specifically, but without limiting the generality of the foregoing, power and authority to sign the name of the registrant and the name of the undersigned, individually andin his or her capacity as a director or officer of the registrant, to the Annual Report as filed with the United States Securities and Exchange Commission, to any and allamendments thereto, and to any and all instruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and confirms all thatsaid attorneys and agents and each of them shall so or cause to be done by virtue hereof.Signature Title Date /s/ Boris Elisman President and Chief ExecutiveOfficer (principal executiveofficer) February 25, 2014Boris Elisman /s/ Neal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 25, 2014Neal V. Fenwick /s/ Thomas P. O’Neill, Jr. Senior Vice President, Financeand Accounting (principalaccounting officer) February 25, 2014Thomas P. O’Neill, Jr. /s/ Robert J. Keller Executive Chairman of the Board February 25, 2014Robert J. Keller /s/ George V. Bayly Director February 25, 2014George V. Bayly /s/ James A. Buzzard Director February 25, 2014James A. Buzzard /s/ Kathleen S. Dvorak Director February 25, 2014Kathleen S. Dvorak /s/ G. Thomas Hargrove Director February 25, 2014G. Thomas Hargrove /s/ Robert H. Jenkins Director February 25, 2014Robert H. Jenkins /s/ Thomas Kroeger Director February 25, 2014Thomas Kroeger /s/ Michael Norkus Director February 25, 2014Michael Norkus /s/ E. Mark Rajkowski Director February 25, 2014E. Mark Rajkowski /s/ Sheila G. Talton Director February 25, 2014Sheila G. Talton /s/ Norman H. Wesley Director February 25, 2014Norman H. Wesley Exhibit 31.1CERTIFICATIONSI, Boris Elisman, 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 thisreport;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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, 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 forexternal purposes 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; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.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 arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. By:/s/ Boris Elisman Boris Elisman President andChief Executive OfficerDate: February 25, 2014Exhibit 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 thisreport;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 oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, 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 forexternal purposes 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; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant’s internal control over financial reporting; and5.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 arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. By:/s/ Neal V. Fenwick Neal V. Fenwick Executive Vice President and Chief Financial OfficerDate: February 25, 2014Exhibit 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, 2013 as filed with the Securitiesand Exchange Commission on the date hereof, (the “Report”), I, Boris Elisman, 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 ofACCO Brands Corporation. By:/s/ Boris Elisman Boris Elisman President andChief Executive OfficerDate: February 25, 2014Exhibit 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, 2013 as filed with the Securitiesand Exchange Commission on the date hereof, (the “Report”), I, Neal V. Fenwick, 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 ofACCO Brands Corporation. By:/s/ Neal V. Fenwick Neal V. Fenwick Executive Vice President andChief Financial OfficerDate: February 25, 2014Exhibit 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 of ACCOBrands Corporation ("ACCO"), are being provided pursuant to Rule 3-09 of the Securities and Exchange Commission's ("SEC") Regulation S-X. Thesefinancial statements are prepared in accordance with accounting principles generally accepted rules in Australia and as permitted by the SEC Regulations.PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesA.B.N. 51 084 958 556FINANCIAL REPORT - 30 SEPTEMBER 2013CONTENTS Independent Auditor's Report1 Directors' Declaration2 Statement of Profit or Loss and OtherComprehensive Income3 Statement of Financial Position4 Statement of Changes in Equity5 Statement of Cash Flows6 Notes to the Financial Statements7The accompanying special purpose financial report has been prepared for the exclusive use of the directors and joint venture partners. This financial report isnot to be used by any other party unless accompanied with additional information concerning the parent entity’s and the consolidated entity’s financialpositions.Independent Auditors' ReportTo the members of Pelikan Artline Joint VentureWe have audited the accompanying consolidated statements of financial position of Pelikan Artline Joint Venture and controlled entities as of September 30,2012 and 2011 and the related consolidated statements of comprehensive income, statements of changes in equity and statement of cash flows for the yearsthen ended. We have also audited the statements of financial position of Pelikan Artline Joint Venture, Parent entity only, as of September 30, 2012 and 2011,and the related statements of comprehensive income, statements of changes in equity and statements of cash flows for the years then ended.We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration ofinternal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Joint Venture's internal control over financial reporting. Accordingly, we express no such opinion. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide areasonable basis for our opinion.In our opinion, the consolidated financial statements of Pelikan Artline Joint Venture and controlled entities and the financial statements of Pelikan Artline JointVenture, Parent entity only, referred to above present fairly, in all material respects, the financial position of Pelikan Artline Joint Venture and controlled entitiesand the financial position of Pelikan Artline Joint Venture, Parent entity only, at September 30, 2012 and 2011, and the results of those entities' operations andits cash flowsfor the years then ended in conformity with accounting principles generally accepted in Australia on the basis as described in note 1./s/ BDOBDO East Coast Partnership (formerly PKF East Coast Practice)Sydney, AustraliaDecember 19, 20121PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesFINANCIAL REPORT - 30 SEPTEMBER 2013DIRECTORS' DECLARATIONThe directors of Pelikan Artline Pty Limited, the agent for the Joint Venture, have determined that the Pelikan Artline Joint Venture is not a reporting entity andthat this special purpose financial report should be prepared in accordance with the accounting policies described in Note 1 to the financial statements.The directors declare that:1.The financial statements, which comprise the statement of profit or loss and other comprehensive income, statement of financial position, statementof changes in equity, statement of cash flows and notes to the financial statements:a)comply with Australian Accounting Standards as described in Note 1 to the financial statements; andb)give a true and fair view of the financial position as at 30 September 2013 and of the performance for the year ended on that date of the jointventure 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: /s/ A.G. KaldorA.G. KaldorDirector /s/ B.R. HaynesB.R. HaynesDirectorSydney, 18 December 20132PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 Note$ $ $ $Revenue2121,164,408 124,828,860 125,248,330 133,983,288 121,164,408 124,828,860 125,248,330 133,983,288 Expenses Purchases, distribution & selling (70,971,638) (75,069,342) (70,971,638) (75,069,342)Marketing (14,420,294) (14,376,829) (14,420,294) (14,376,829)Administration, IT & other expenses (10,587,675) (10,130,573) (24,937,623) (24,463,587)Finance costs (882,237) (1,151,633) (3,795,577) (3,652,813) (96,861,844) (100,728,377) (114,125,132) (117,562,571) Profit before income tax expense 24,302,564 24,100,483 11,123,198 16,420,717 Income tax expense1,5(5,028,536) (4,964,522) — — Profit after income tax expense for the yearattributable to the owners of the Pelikan Artline JointVenture 19,274,028 19,135,961 11,123,198 16,420,717 Other Comprehensive Income Items that may be reclassified subsequently to profit orloss: Fair value gains on available-for-sale financial assets, net oftax 48,411 17,914 — — Other comprehensive income for the year, net of tax 48,411 17,914 — — Comprehensive income for the year attributable to theowners of the Pelikan Artline Joint Venture 19,322,439 19,153,875 11,123,198 16,420,717 Profit after income tax expense for the year attributable to: Owners of the parent entity 17,228,841 17,103,612 11,123,198 16,420,717 Non controlling interest 2,045,187 2,032,349 — — 19,274,028 19,135,961 11,123,198 16,420,717 Total comprehensive income for the year attributable to: Owners of the parent entity 17,267,654 17,117,974 11,123,198 16,420,717 Non controlling interest 2,054,785 2,035,901 — — 19,322,439 19,153,875 11,123,198 16,420,717The above statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes3PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF FINANCIAL POSITIONAS AT 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 Note$ $ $ $ASSETS Current Assets Cash and cash equivalents626,250,928 16,628,595 10,984,155 2,893,698 Trade and other receivables732,622,617 34,974,822 32,491,514 34,849,424 Inventories820,436,444 19,753,344 20,436,444 19,753,344 Prepayments 609,290 902,198 573,954 833,018 Total current assets 79,919,279 72,258,959 64,486,067 58,329,484 Non-Current Assets Receivables9— — 12,409,836 11,539,398 Financial assets10590,001 520,844 40,853,792 40,853,792 Property, plant and equipment111,638,794 1,294,330 1,467,494 1,055,576 Deferred tax assets12617,859 645,019 — — Intangible assets1333,618,807 30,569,955 3,099,647 50,795 Total non-current assets 36,465,461 33,030,148 57,830,769 53,499,561 Total assets 116,384,740 105,289,107 122,316,836 111,829,045 LIABILITIES Current Liabilities Trade and other payables1429,848,558 23,266,206 40,005,620 32,166,345 Provisions152,133,260 1,675,543 1,405,260 1,009,524 Short-term borrowings164,021,592 4,000,000 4,021,592 4,000,000 Current tax liabilities 1,792,789 2,541,554 — — Total current liabilities 37,796,199 31,483,303 45,432,472 37,175,869 Non-Current Liabilities Trade and other payables17— — 44,573,179 39,964,138 Long-term borrowings186,101,144 10,000,000 6,101,144 10,000,000 Deferred tax liabilities19152,839 122,711 — — Provisions201,265,724 267,844 1,179,724 69,863 Total non-current liabilities 7,519,707 10,390,555 51,854,047 50,034,001 Total liabilities 45,315,906 41,873,858 97,286,519 87,209,870 Net assets 71,068,834 63,415,249 25,030,317 24,619,175 EQUITY Capital introduced211,652,804 1,652,804 1,652,804 1,652,804 Available for sale reserves22220,868 182,055 — — Retained earnings2358,682,786 52,166,001 23,377,513 22,966,371 Non controlling interest2410,512,376 9,414,389 — — Total equity 71,068,834 63,415,249 25,030,317 24,619,175The above statement of financial position should be read in conjunction with the accompanying notes4PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 SEPTEMBER 2013 CapitalintroducedAvailable forsale reservesRetainedEarningsNoncontrollinginterestTotal equityConsolidated$$$$$Balance at 1 October 20111,652,804167,69357,674,7599,600,71069,095,966 Profit after income tax expense for the year——17,103,6122,032,34919,135,961Other comprehensive income for the year, net of tax—14,362—3,55217,914Total comprehensive income for the year, net of tax—14,36217,103,6122,035,90119,153,875 Transactions with owners in their capacity as owners: Distributions of profit during the year——(22,612,370)—(22,612,370)Dividends paid (note 4)———(2,222,222)(2,222,222) ——(22,612,370)(2,222,222)(24,834,592)Balance at 30 September 20121,652,804182,05552,166,0019,414,38963,415,249 Balance at 1 October 20121,652,804182,05552,166,0019,414,38963,415,249 Profit after income tax expense for the year0—17,228,8412,045,18719,274,028Other comprehensive income for the year, net of tax038,813—9,59848,411Total comprehensive income for the year, net of tax—38,81317,228,8412,054,78519,322,439 Transactions with owners in their capacity as owners: Distributions of profit during the year——(10,712,056)—(10,712,056)Dividends paid (note 4)———(956,798)(956,798) ——(10,712,056)(956,798)(11,668,854)Balance at 30 September 2013 (unaudited)1,652,804220,86858,682,78610,512,37671,068,834 Parent Balance at 1 October 20111,652,804—29,158,024—30,810,828 Profit after income tax expense for the year——16,420,717—16,420,717Other comprehensive income for the year, net of tax—————Total comprehensive income for the year, net of tax——16,420,717—16,420,717 Transactions with owners in their capacity as owners: Distributions of profit during the year——(22,612,370)—(22,612,370)Balance at 30 September 20121,652,804—22,966,371—24,619,175 Balance at 1 October 20121,652,804—22,966,371—24,619,175 Profit after income tax expense for the year——11,123,198—11,123,198Other comprehensive income for the year, net of tax—————Total comprehensive income for the year, net of tax——11,123,198—11,123,198 Transactions with owners in their capacity as owners: Distributions of profit during the year——(10,712,056)—(10,712,056)Balance at 30 September 2013 (unaudited)1,652,804—23,377,513—25,030,317The above statement of changes of equity should be read in conjunction with the accompanying notes5PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 Note$ $ $ $Cash Flows From Operating Activities Receipts from customers (inclusive of GST) 135,946,128 140,669,241 135,668,524 138,380,023 Payments to suppliers and employees (inclusive of GST) (102,133,367) (115,633,973) (116,635,239) (127,580,141) Dividend received 4,700 4,630 3,869,034 8,986,069 Interest received 518,268 1,224,211 197,912 280,988 Finance costs (809,190) (1,395,997) (3,722,530) (3,897,177) Income tax paid (5,711,500) (5,107,383) — —Net cash from operating activities2927,815,039 19,760,729 19,377,701 16,169,762 Cash Flows From Investing Activities Purchase of property, plant and equipment (836,323) (397,995) (836,323) (397,995) Proceeds from sale of property, plant and equipment 153,084 37,500 153,084 37,500 Purchase of intangibles (1,828,852) (100,000) (1,828,852) —Net cash used in investing activities (2,512,091) (460,495) (2,512,091) (360,495) Cash Flows From Financing Activities Repayment of borrowings (4,000,000) (4,000,000) (4,000,000) (4,000,000) Loans from related parties (net) — — 5,948,664 10,577,508 Lease payments (11,761) — (11,761) — Profit distributions paid (10,712,056) (22,612,370) (10,712,056) (22,612,370) Dividends paid (956,798) (2,222,222) — —Net cash used in financing activities (15,680,615) (28,834,592) (8,775,153) (16,034,862) Net increase (decrease) in cash and cash and cash equivalents 9,622,333 (9,534,358) 8,090,457 (225,595) Cash and cash equivalents at the beginning of the financial year 16,628,595 26,162,953 2,893,698 3,119,293 Cash and cash equivalents at the end of the financial year1, 626,250,928 16,628,595 10,984,155 2,893,698The above statement of cash flows should be read in conjunction with the accompanying notes6PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIESThis financial report is a special 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 directors have determined that the jointventure is not a reporting entity.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 18 December 2013.Adoption of new and revised Accounting Standards and InterpretationsThe consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian AccountingStandards Board ('AASB') that are mandatory for the current reporting period.Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.New Accounting Standards for application in future periodsAustralian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory have not been early adopted by theconsolidated entity for the annual reporting period ended 30 September 2013. The joint venture has not yet assessed the impact of these new or amendedAccounting Standards and Interpretations.Basis of preparationThese financial statements have been prepared in accordance with the recognition and measurement requirements specified by the Australian AccountingStandards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the disclosure requirements of AASB 101 'Presentation ofFinancial Statements', AASB 107 'Statement of Cash Flows', AASB 108 'Accounting Policies, Changes in Accounting Estimates and Errors', AASB 1031'Materiality', AASB 1048 'Interpretation and Application of Standards’ and AASB 1054 'Australian Additional Disclosure’ as appropriate for profit-orientedentities. These financial statements do not conform with International Financial Reporting Standards as issued by the International Accounting StandardsBoard ('IASB').Historical 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.7PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Principles of Consolidation (continued)The financial statements of controlled entities are included from the date control commences to the date control ceases.Inter-entity transactions and balances 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.The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction,adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for priorperiods, where applicable.Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities aresettled, based on those tax rates that are enacted or substantively enacted, except for:•When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a businesscombination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or•When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of thereversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferredtax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity's which intendto settle simultaneously.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 RecognitionRevenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue ismeasured at the fair value of the consideration received or receivable.Sale of goods revenueRevenue from the sale of goods is recognised upon the delivery of goods to customers, when the risks and rewards are transferred to the customer and there is avalid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts.8PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Revenue Recognition (continued)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.Other revenueOther revenue is recognised when it is received or when the right to receive payment is 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 profit or loss. Exchange difference arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognisedin profit or loss.Cash and Cash EquivalentsFor the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks or financial institutionsand other short term, highly liquid investments with maturities from balance sheet date of 4 months or less, net of bank overdrafts.Trade and Other 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 profit or loss.Other receivables are recognised at amortised cost, less any provision for impairment.9PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)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 AssetsInvestments and other financial assets are initially measured at fair value. They are subsequently measured at either amortised cost or fair value depending ontheir classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. Forunlisted investments, the consolidated entity establishes fair value by using valuation techniques. These include the use of recent arm's length transactions anddiscounted cash flow analysis.Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets, principally equity securities that are either designated as available-for-sale or notclassified as any other category. After initial recognition, fair value movements are recognised in other comprehensive income through the available-for-salereserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when the asset is derecognised orimpaired.Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequentlymeasured 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 reporting period,which will be classified as non-current assets.Financial liabilitiesNon-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.Impairment of Financial AssetsThe 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 thedifference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss ‑ isremoved from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit orloss.For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value ofestimated 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.10PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)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 profit or loss during the financial period in which they are incurred.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 RatePlant and equipment 7.50% - 66.77%Motor vehicles 15.00% - 20.00%The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting 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 profit or loss.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.11PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)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. Impairment losses ongoodwill are taken to profit or loss and are not subsequently reversed.Goodwill is tested annually for impairment and carried at a cost less accumulated impairment losses.Impairment of Non-Financial AssetsGoodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or morefrequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever eventsor changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset'scarrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For thepurposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).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 profit or loss over the period of the borrowings using the effectiveinterest method. Fees paid on the establishment of the loan facilities are recognised in profit or loss when 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 and annual leave expected to be settled within 12 months of the reporting date arerecognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilitiesare settled. Liabilities for non‑accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.12PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Employee Benefits (continued)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.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.Issued capitalOrdinary shares are classified as equity.DividendsDividends are recognised when declared during the financial year and no longer at the discretion of the company.Business combinationsThe acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired.The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by theacquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination, the non-controllinginterest in the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed asincurred to profit or loss.13PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Business combinations (continued)On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate classification anddesignation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or accounting policies and other pertinentconditions in existence at the acquisition-date.Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair value of contingentconsideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as equity is not remeasured and itssubsequent settlement is accounted for within equity.The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree and the fair valueof the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred andthe pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognisedas a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement of the net assetsacquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and alsorecognises additional assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed atthe acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all theinformation possible to determine fair value.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.The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year arediscussed below.Provision for impairment of receivablesThe provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking intoaccount the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position.Provision for impairment of inventoriesThe provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of the provision is assessed by taking intoaccount the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.14PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Critical Accounting Estimates and Assumptions (continued)Estimation of useful lives of assetsThe consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite lifeintangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating unitshave been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates based on thecurrent cost of capital and growth rates of the estimated future cash flows.Impairment of non-financial assets other than goodwill and other indefinite life intangible assetsThe consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date byevaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverableamount of the asset is determined. This involves fair value less costs to sell or value-in-use calculations, which incorporate a number of key estimates andassumptions.Income taxThe consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision forincome tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination isuncertain. The consolidated entity recognises liabilities for anticipated tax audit issues based on the consolidated entity’s current understanding of the tax law.Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in theperiod in which such determination is made.Long service leave provisionAs discussed in note 1, the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made inrespect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotionand inflation have been taken into account.Business combinationsAs discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingentliabilities assumed are initially estimated by the consolidated entity taking into consideration all available information at the reporting date. Fair valueadjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period the combination occurred and mayhave an impact on the assets and liabilities, depreciation and amortisation reported.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$31,542,155 or trademark licences amounting to $2,076,652 for the year ended 30 September 2013.15PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 2 Revenue Revenue Sales net of discounts and rebates allowed 120,222,220 123,785,950 120,222,220 123,785,950 Other revenue Dividend received 4,700 4,630 3,869,034 8,986,069 Interest received 571,158 886,128 1,068,350 1,118,991 Other operating revenue 366,330 152,152 88,726 92,278 942,188 1,042,910 5,026,110 10,197,338 Total revenue 121,164,408 124,828,860 125,248,330 133,983,288 Note 3 Expenses Depreciation - property, plant & equipment 473,222 483,561 405,768 362,571 Bad and doubtful debts expense Bad debts 74,895 44,004 74,895 44,004 Provision for impairment 4,521 (18,385) 4,521 (18,385) Total bad and doubtful debts 79,416 25,619 79,416 25,619 Foreign currency translation losses (gains) (277,604) 39,874 — — Loss on disposal of property, plant and equipment 23,184 154,160 23,184 57,180 Rental expenses relating to operating leases 3,128,580 2,908,864 3,128,580 2,908,864 Note 4 Dividends Fully franked dividends - franked at tax rate of 30% 956,798 2,222,222 — — Balance of franking account at year end adjusted forfranking credits arising from payment of provision forincome tax, franking debits arising from payment ofdividends recognised as a liability at reporting date andfranking credits arising from receipt of dividendsrecognised as receivable at reporting date. 26,752,858 23,870,799 — —16PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 5 - Income tax (a) The components of income tax expense comprise Current income tax 4,988,799 5,044,021 n/a n/a Deferred income tax - other items 39,737 (79,504) n/a n/a Under provision in respect of prior years — 5 n/a n/a Total income tax expense 5,028,536 4,964,522 n/a n/a Deferred income tax expense included in income tax expensecomprises:- Decrease in deferred tax assets (note 12) 30,356 38,661 n/a n/a Increase (decrease) in deferred tax liabilities (note 19) 9,381 (118,165) n/a n/a 39,737 (79,504) n/a n/a (b) Income tax reconciliation The prima facie tax on profit before income tax expense is reconciledto the income tax expense as follows:- Prima facie tax payable on profit before income tax expense at 30%(Australia) & 28% (New Zealand) 7,279,554 7,223,688 n/a n/a Add (less) tax effect of:- Non allowable items 2,849 76 n/a n/a Non assessable items (77,765) (28,765) n/a n/a Over (under) provision in respect of prior years — 5 n/a n/a Increase (decrease) in tax losses not recognised 147 (88) n/a n/a Income tax not payable by parent entity - non taxable entity (2,176,249) (2,230,394) n/a n/a Income tax expense 5,028,536 4,964,522 n/a n/a The applicable weighted average effective tax rates are as follows: 21% 21% n/a n/a Tax effect relating to other comprehensive income: Deferred tax 20,747 7,678 n/a n/a Note 6 Current Assets - Cash and Cash Equivalents Cash at bank 8,588,687 10,245,830 2,936,307 2,528,353 Cash on deposit 17,662,241 6,382,765 8,047,848 365,345 26,250,928 16,628,595 10,984,155 2,893,698 Note 7 Current Assets - Trade and Other Receivables Trade receivables 31,318,675 33,651,723 31,318,675 33,651,723 Less provision for impairment (23,259) (18,738) (23,259) (18,738) 31,295,416 33,632,985 31,295,416 33,632,985 Current tax assets — 29,260 — — Other receivables 1,327,201 1,312,577 1,196,098 1,216,439 32,622,617 34,974,822 32,491,514 34,849,42417PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 8 Current Assets - Inventories Stock on hand (note 1) 20,436,444 19,753,344 20,436,444 19,753,344 Note 9 Non-Current Assets - Receivables Loan to controlled entity - unsecured — — 12,409,836 11,539,398 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) - available for sale 590,001 520,844 — — 590,001 520,844 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 sharecapital of Geoff Penney (Australia) Pty Limited, which is also the100% holding company of Custom Xstamper Australia PtyLimited and Pelikan Artline Limited. On 14 January 2009 the joint venture acquired 100% of the sharecapital of Spirax Holdings Pty Limited, which is also the 100%holding company of Spirax Industries Pty Limited, Spirax OfficeProducts Pty Limited, Spirax Holdings NZ Limited and SpiraxNew Zealand Limited. Consolidated Entity - Shares in unlisted corporations Shares in other corporations represent an investment inShachihata (Malaysia) Sdn. Bhd., a private companyincorporated in Malaysia that manufactures certain products soldby the Consolidated Entity. The percentage owned is 2.38% and iscarried at fair value. 18PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 11 Non-Current Assets - Property, Plant and Equipment Plant and equipment (at cost) 4,723,047 3,943,897 3,694,510 2,885,111 Less accumulated depreciation (3,084,253) (2,649,567) (2,227,016) (1,829,535) Total property, plant and equipment 1,638,794 1,294,330 1,467,494 1,055,576 Movements in carrying amounts Plant andequipment Total Consolidated Entity $ $ At 1 October 2012 Cost 3,943,897 3,943,897 Accumulated depreciation and impairment (2,649,567) (2,649,567) Net carrying amount 1,294,330 1,294,330 Year ended 30 September 2013 (unaudited) Net carrying amount at 1 October 2012 1,294,330 1,294,330 Additions 979,717 979,717 Disposals (162,031) (162,031) Depreciation and amortisation charge (473,222) (473,222) Net carrying amount at 30 September 2013 1,638,794 1,638,794 At 30 September 2013 (unaudited) Cost 4,723,047 4,723,047 Accumulated depreciation and impairment (3,084,253) (3,084,253) Net carrying amount 1,638,794 1,638,794 Plant andequipment Total Parent Entity $ $ At 1 October 2012 Cost 2,885,111 2,885,111 Accumulated depreciation and impairment (1,829,535) (1,829,535) Net carrying amount 1,055,576 1,055,576 Year ended 30 September 2013 (unaudited) Net carrying amount at 1 October 2012 1,055,576 1,055,576 Additions 979,717 979,717 Disposals (162,031) (162,031) Depreciation and amortisation charge (405,768) (405,768) Net carrying amount at 30 September 2013 1,467,494 1,467,494 At 30 September 2013 (unaudited) Cost 3,694,510 3,694,510 Accumulated depreciation and impairment (2,227,016) (2,227,016) Net carrying amount 1,467,494 1,467,49419PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 12 Non-Current Assets - Deferred Tax Assets Deferred tax assets 617,859 645,019 n/a n/a Deferred tax assets - movement Balance at the beginning of the year 645,019 683,237 n/a n/a Unrealised currency gains and losses 3,151 419 n/a n/a Provisions (14,194) (300) n/a n/a Accruals (17,116) (41,639) n/a n/a Property, plant and equipment 999 3,302 n/a n/a Balance at the end of the year 617,859 645,019 n/a n/a Deferred tax assets comprise Provisions 271,931 259,200 n/a n/a Accruals 314,552 355,442 n/a n/a Property, plant and equipment 31,376 30,377 n/a n/a 617,859 645,019 n/a n/a20PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $ Note 13 Non-Current Assets - Intangible Assets Trademark licence (at cost) 2,076,652 2,076,652 — — Goodwill (at cost) 31,542,155 28,493,303 3,099,647 50,795 33,618,807 30,569,955 3,099,647 50,795 Movements in carrying amounts Trademarklicence Goodwill Goodwill Consolidated Entity $ $ $ At 1 October 2012 Cost 2,076,652 28,493,303 30,569,955 Accumulated amortisation and impairment — — — Net carrying amount 2,076,652 28,493,303 30,569,955 Year ended 30 September 2013 (unaudited) Net carrying amount at 1 October 2012 2,076,652 28,493,303 30,569,955 Additions — 3,043,246 3,043,246 Currency fluctuations — 5,606 5,606 Net carrying amount at 30 September 2013 2,076,652 31,542,155 33,618,807 At 30 September 2013 (unaudited) Cost 2,076,652 31,542,155 33,618,807 Accumulated amortisation and impairment — — — Net carrying amount 2,076,652 31,542,155 33,618,807 Trademarklicence Goodwill Goodwill Parent Entity $ $ $ At 1 October 2012 Cost — 50,795 50,795 Accumulated amortisation and impairment — — — Net carrying amount — 50,795 50,795 Year ended 30 September 2013 (unaudited) Net carrying amount at 1 October 2012 — 50,795 50,795 Acquisitions during the year — 3,043,246 3,043,246 Currency fluctuations — 5,606 5,606 Net carrying amount at 30 September 2013 — 3,099,647 3,099,647 At 30 September 2013 (unaudited) Cost — 3,099,647 3,099,647 Accumulated amortisation and impairment — — — Net carrying amount — 3,099,647 3,099,64721PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 14 Current Liabilities - Trade and Other Payables Trade payables 7,408,837 8,315,979 7,808,218 9,155,515 Liabilities to employees 5,929,384 4,642,005 5,018,063 3,713,511 Other payables 16,510,337 10,308,222 16,199,783 9,657,386 Loans - unsecured — — 10,979,556 9,639,933 29,848,558 23,266,206 40,005,620 32,166,345 Note 15 Current Liabilities - Provisions Deferred purchase price 220,000 — 220,000 — Employee benefits - long service leave 1,913,260 1,675,543 1,185,260 1,009,524 2,133,260 1,675,543 1,405,260 1,009,524 Note 16 Current Liabilities - Short-term Borrowings Lease liabilities (note 25) 21,592 — 21,592 — Loans - Westpac (secured) 4,000,000 4,000,000 4,000,000 4,000,000 4,021,592 4,000,000 4,021,592 4,000,000 Note 17 Non-Current Liabilities - Trade and Other Payables Loans - unsecured — — 44,573,179 39,964,138 Note 18 Non-Current Liabilities - Long-term Borrowings Lease liabilities (note 25) 101,144 — 101,144 — Loans - Westpac (secured) 6,000,000 10,000,000 6,000,000 10,000,000 6,101,144 10,000,000 6,101,144 10,000,000 Note 19 Non-Current Liabilities - Deferred Tax Liabilities Deferred tax liabilities 152,839 122,711 n/a n/a Deferred tax liabilities - movement Balance at the beginning of the year 122,711 233,199 n/a n/a Receivables 15,703 (104,706) n/a n/a Prepayments (6,322) (13,460) n/a n/a Revaluation of available for sale financial assets charged directly to other comprehensive income 20,747 7,678 n/a n/a Balance at the end of the year 152,839 122,711 n/a n/a Deferred tax liabilities comprise Receivables 27,122 15,230 n/a n/a Prepayments 6,876 10,162 n/a n/a Revaluation of available for sale financial assets 118,841 97,319 n/a n/a 152,839 122,711 n/a n/a 22PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 20 Non-Current Liabilities - Provisions Deferred purchase price 1,000,000 — 1,000,000 — Employee benefits - long service leave 265,724 267,844 179,724 69,863 1,265,724 267,844 1,179,724 69,863 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 26,083,000 28,837,379 11,483,186 14,579,012 Share of joint venture profits - current year 8,614,421 8,551,806 5,561,599 8,210,359 Share of transfers to reserves - prior year 91,028 83,847 — — Share of transfers to reserves - current year 19,407 7,181 — — Distribution of profit (5,356,028) (11,306,185) (5,356,028) (11,306,185) Joint venture interest at the end of the year 30,278,229 27,000,430 12,515,159 12,309,588 ACCO Brands Australia Pty Ltd Capital introduced 826,402 826,402 826,402 826,402 Share of joint venture profits - prior years 26,083,000 28,837,379 11,483,186 14,579,012 Share of joint venture profits - current year 8,614,421 8,551,806 5,561,599 8,210,359 Share of transfers to reserves - prior year 91,028 83,847 — — Share of transfers to reserves - current year 19,407 7,181 — — Distribution of profit (5,356,028) (11,306,185) (5,356,028) (11,306,185) Joint venture interest at the end of the year 30,278,229 2,700,430 12,515,159 12,309,588 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 52,166,000 57,674,758 22,966,371 29,158,024 Share of joint venture profits - current year 17,228,842 17,103,612 11,123,198 16,420,717 Share of transfers to reserves - prior year 182,055 167,694 — — Share of transfers to reserves - current year 38,813 14,362 — — Distribution of profit (10,712,056) (22,612,370) (10,712,056) (22,612,370) Joint venture interest at the end of the year 60,556,458 54,000,860 25,030,317 24,619,175 Outside equity interests in controlled entities (note 24) 10,512,376 9,414,389 — — Total equity as per the statement of financial position 71,068,834 63,415,249 25,030,317 24,619,175 Note 22 Available For Sale Reserves Available for sale financial assets revaluation reserve Balance at the beginning of the financial year 182,055 167,693 — — Movement during the year 38,813 14,362 — — Balance at the end of the year 220,868 182,055 — — The available for sale financial assets revaluation reserve recordsrevaluations of available for sale financial assets. 23PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $ Note 23 Retained Earnings Movements in retained earnings were as follows: Balance at the beginning of the year 52,166,001 57,674,759 22,966,371 29,158,024 Profit attributable to owners of the parent for the year 17,228,841 17,103,612 11,123,198 16,420,717 Distribution of profit during the year (10,712,056) (22,612,370) (10,712,056) (22,612,370) Dividends paid or provided (956,798) (2,222,222) — — Dividends attributable to outside equity interest 956,798 2,222,222 — — Balance at the end of the year 58,682,786 52,166,001 23,377,513 22,966,371 Distribution to joint venture partners Columbia Pelikan Pty Ltd 29,341,393 26,083,001 11,688,757 11,483,186 ACCO Brands Australia Pty Ltd 29,341,393 26,083,001 11,688,757 11,483,186 58,682,786 52,166,001 23,377,513 22,966,371 Note 24 Non Controlling Interest Non controlling interest comprises: Share capital 141,562 141,562 — — Available for sale reserves 667,142 657,544 — — Retained earnings 9,703,672 8,615,283 — — 10,512,376 9,414,389 — — Note 25 Commitments and Contingent Liabilities (a)Finance lease commitments Payable: Not later than 1 year 28,227 — 28,227 — Later than 1 year but not later than 5 years 111,921 — 111,921 — Minimum lease payments 140,148 — 140,148 — Less future finance charges (17,412) — (17,412) — Present value of minimum lease payments 122,736 — 122,736 — Recorded in the financial report as: Current liability (refer note 16) 21,592 — 21,592 — Non-current liabilty (refer note 18) 101,144 — 101,144 — 122,736 — 122,736 — Finance lease commitments relate to one motor vehicle financelease entered into by the parent entity during the year, having aterm of four years. The lease provides the parent entity with aright to acquire the vehicle at the end of the lease. Leasepayments comprise a base monthly amount plus one residualpayment. 24PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 25 Commitments and Contingent Liabilities (continued) (b)Operating lease commitments Aggregate amount contracted for but not capitalised in thefinancial statements and payable: Not later than 1 year 3,045,325 2,268,287 3,045,325 2,042,113 Later than 1 year but not later than 5 years 2,989,320 2,758,275 2,989,320 2,758,275 6,034,645 5,026,562 6,034,645 4,800,388 Operating lease commitments relate to parent entity leasedproperty, equipment and motor vehicles under operating leasesexpiring from one to five years. Leases generally providecontrolled entities with a right of renewal at which all terms arenegotiated. Lease payments comprise a base amount plus anincremental contingent rental. Contingent rentals are based oneither movements in the Consumer Price Index or operatingcriteria. (c)Contingent liabilities There were no contingent liabilities at year end (2012: Nil). Note 26 Assets Pledged as Security The parent entity has a bank overdraft, letter of credit, billfacilities and bank loan which are secured by a registeredmortgage by Pelikan Artline Pty Limited over all its assets anduncalled capital and over all the assets of the joint venture and theconsolidated entity. The overdraft was unused at 30 September2013 but an interest rate of 9.53% was chargeable on overdrawnbalances. The carrying amounts of assets pledged as security for theregistered mortgage debenture are: Cash and cash equivalents assets 26,250,928 16,628,595 10,984,155 2,893,698 Trade and other receivables 32,622,617 34,974,822 32,491,514 34,849,424 Inventories 20,436,444 19,753,344 20,436,444 19,753,344 Prepayments 609,290 902,198 573,954 833,018 Receivables — — 12,409,836 11,539,398 Financial assets 590,001 520,844 40,853,792 40,853,792 Property, Plant & Equipment 1,638,794 1,294,330 1,467,494 1,055,576 Deferred tax assets 617,859 645,019 — — Intangible assets 33,618,807 30,569,955 3,099,647 50,795 Total assets 116,384,740 105,289,107 122,316,836 111,829,04525PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $Note 27 Economic Dependence A significant portion of the consolidated entity’s trading products are supplied by Shachihata, Inc., Japan. Note 28 Events after Balance Date Since the end of the year cash distributions of $1,169,416 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 may significantlyaffect the operations of the joint venture, the results of those operations or the state of affairs of the joint venture in future financial years. Note 29 Cash Flow Information Reconciliation of profit after income tax to net cash inflow fromoperating activities: Profit after income tax expense for the year 19,274,028 19,135,961 11,123,198 16,420,717 Adjustments for: Interest received - non-cash — — (870,438) (838,003) Depreciation 473,222 483,561 405,768 362,571 Net loss on disposal of plant and equipment 23,184 154,160 23,184 57,180 Impairment provision - receivables 4,521 (18,385) 4,521 (18,385) Employee benefits - provision 235,597 57,809 285,597 58,809 Lease interest 8,363 — 8,363 — Changes in assets and liabilities: Decrease (increase) in trade and other receivables 2,286,927 1,839,502 2,321,892 1,534,462 Decrease (increase) in current tax assets 29,260 17,833 — — Decrease (increase) in inventories (683,100) 2,746,558 (683,100) 2,746,558 Decrease (increase) in prepayments 292,908 20,028 259,064 9,984 Decrease (increase) in deferred tax assets 27,160 38,218 — — Increase (decrease) in trade and other payables 6,582,353 (4,515,604) 6,499,652 (4,164,131) Increase (decrease) in current tax liabilities (748,765) (80,746) — — Increase (decrease) in deferred tax liabilities 9,381 (118,166) — — Net cash from operating activities 27,815,039 19,760,729 19,377,701 16,169,76226PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $ Note 30 Related Party Transactions Parent and controlled entities The consolidated entity consists of the parent entity, Pelikan ArtlineJoint Venture and its controlled entities Spirax Holdings Pty Limited,Spirax Industries Pty Limited, Spirax Office Products Pty Limited,Spirax Holdings NZ Limited, Spirax New Zealand Limited, GeoffPenney (Australia) Pty Limited, Custom Xstamper Australia PtyLimited and Pelikan Artline Limited. Loans from related parties Aggregate amounts payable to related parties at reporting date:- Loans unsecured (current) - controlled entities 10,979,556 9,639,933 Loans unsecured (non-current) - controlled entities 44,573,179 39,964,138 55,552,735 49,604,071 Loans to related parties Aggregate amounts receivable from related parties at reporting date:- Loans unsecured (non-current) - controlled entities 12,409,836 11,539,398 12,409,836 11,539,398 Transactions with related parties Transactions between related parties are on normal commercial termsand conditions no more favourable than those available to other partiesunless otherwise stated. Transactions between the parent entity and its controlled entitiesduring the year consisted of:- Payment of interest on the above loans (2,913,340) (2,501,180) Receipt of interest on the above loans 870,438 838,002 Receipt of dividends 3,869,034 8,986,069 Recovery of overheads (6,572,313) (7,621,094) Distribution fee (14,304,807) (14,268,341) Purchase of inventory from joint venture partner related parties (1,459,542) (1,816,720) Recovery of administration and accounting services provided to a jointventure partner 60,000 60,000 Guarantees provided to related parties Refer to note 26 for assets pledged as security by related parties 27PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2013 Consolidated Parent (Unaudited) (Unaudited) 2013 2012 2013 2012 $ $ $ $ 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 (note 6) 26,250,928 16,628,595 10,984,155 2,893,698 Trade and other receivables (note 7) 32,622,617 34,974,822 44,901,350 46,388,822 Other financial assets (note 10) 590,001 520,844 40,853,792 40,853,792 59,463,546 52,124,261 96,739,297 90,136,312 Financial Liabilities Trade and other payables (note 14 & 17) 29,848,558 23,266,206 84,578,799 72,130,483 Other loans and borrowings (note 16 & 18) 10,122,736 14,000,000 10,122,736 14,000,000 39,971,294 37,266,206 94,701,535 86,130,483 Note 32 - Controlled Entities The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accountingpolicy described in note 1: Controlled Entities Consolidated Country of Percentage Owned (%) Incorporation 2013 2012 Parent Entity Pelikan Artline Joint Venture Australia n/a n/a Controlled Entities Geoff Penney (Australia) Pty Limited Australia 80.17% 80.17% Custom Xstamper Australia Pty Limited Australia 80.17% 80.17% Pelikan Artline Limited New Zealand 80.17% 80.17% Spirax Holdings Pty Limited Australia 100.00% 100.00% Spirax Industries Pty Limited Australia 100.00% 100.00% Spirax Office Products Pty Limited Australia 100.00% 100.00% Spirax Holdings NZ Limited New Zealand 100.00% 100.00% Spirax New Zealand Limited New Zealand 100.00% 100.00% 28

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