ACCO Brands Annual Report 2014

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 ___________________________________________________________Form 10-KþANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the Fiscal Year Ended December 31, 2014¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For 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 þIndicate 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 þIndicate 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 þ No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data Filerequired to 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 wasrequired to submit and post such files). Yes þ 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. þIndicate 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 þ 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 þAs of June 30, 2014, the aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $557.7million. As of February 9, 2015, the registrant had outstanding 112,168,657 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 12, 2015 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 the SecuritiesExchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statementscontained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking these safe harbor provisions.These forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of ACCO BrandsCorporation (the "Company"), are generally identifiable by use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast,""project," "plan," or similar expressions. In particular, our business outlook is based on certain assumptions which we believe to be reasonable under thecircumstances. These include, without limitation, assumptions regarding changes in the macro environment, fluctuations in foreign currency rates, changesin the competitive landscape and consumer behavior and the effect of consolidation in the office products industry, as well as other factors. Some of thefactors that could affect our results or cause plans, actions and results to differ materially from current expectations are detailed in "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 andAnalysis of Financial Condition and Results of Operations" and from time to time in our other SEC filings.Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from thosepredicted by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company’ssecurities. Our forward-looking statements are made as of the date hereof and we undertake no obligation to update these forward-looking statements in thefuture.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 pursuant toSection 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 Ethics appliesto all of our directors, officers (including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer) and employees. You mayobtain a copy of any of the foregoing documents, free of charge, if you submit a written request to ACCO Brands Corporation, Four Corporate Drive, LakeZurich, IL. 60047, Attn: Investor Relations.TABLE OF CONTENTSPART I ITEM 1.Business1ITEM 1A.Risk Factors6ITEM 1B.Unresolved Staff Comments14ITEM 2.Properties15ITEM 3.Legal Proceedings15ITEM 4.Mine Safety Disclosures16PART II ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities17ITEM 6.Selected Financial Data19ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations22ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk39ITEM 8.Financial Statements and Supplementary Data41ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure93ITEM 9A.Controls and Procedures93ITEM 9B.Other Information94PART III ITEM 10.Directors, Executive Officers and Corporate Governance95ITEM 11.Executive Compensation95ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters95ITEM 13.Certain Relationships and Related Transactions, and Director Independence96ITEM 14.Principal Accountant Fees and Services96PART IV ITEM 15.Exhibits and Financial Statement Schedules97 Signatures102PART IITEM 1. BUSINESSAs used in this Annual Report on Form 10-K for the fiscal year ended December 31, 2014, the terms "ACCO Brands," "ACCO," the "Company," "we,""us," and "our" refer to ACCO Brands 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. Weseek to develop new products that meet the needs of our consumers and commercial end-users. We compete through a balance of product innovation,category management, a low-cost operating model and an efficient supply chain. We sell our products to consumers and commercial end-users primarilythrough resellers, including traditional office supply resellers, wholesalers, and retailers, including on-line retailers. Our products are sold primarily tomarkets located in the U.S., Northern Europe, Brazil, Canada, Australia, and Mexico. For the year ended December 31, 2014, approximately 45% of our saleswere outside the U.S.The majority of our revenue is concentrated in geographies where demand for our product categories is in mature stages, but we see opportunities togrow sales through share gains, channel expansion and new products. We expect to derive growth in faster growing emerging geographies where demand inthe product categories in which we compete is strong, such as in Latin America and parts of Asia, the Middle East and Eastern Europe. We plan to growthrough organic growth supplemented by strategic acquisitions in both core and adjacent categories. Historically, key drivers of demand for office and schoolproducts have included trends in white collar employment levels, education enrollment levels, gross domestic product (GDP), growth in the number of smallbusinesses and home offices, as well 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.We currently manufacture approximately half of our products locally where we operate, and source the remaining half primarily from China.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.Reportable SegmentsACCO Brands is organized into three business segments: ACCO Brands North America, ACCO Brands International and Computer Products Group. Ourthree 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, primarily NorthernEurope, Brazil, Australia and Mexico.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 and are soldbased on end-user preference in each 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 traditional office supply resellers, wholesalers andother retailers, including on-line retailers. We also supply some of our products directly to large commercial and industrial end-users, and provide businessmachine maintenance and certain repair services. We also supply private label products within the office products sector.1Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily throughmass merchandisers, and other retailers, such as grocery, drug and office superstores as well as on-line retailers. We also supply private label products withinthe school products sector.Our calendar products are sold throughout all channels where we sell office or school products, as well as directly to consumers both on-line andthrough direct mail.Computer Products GroupOur Computer Products Group designs, sources, distributes, markets and sells accessories for laptop and desktop computers and tablets. Theseaccessories primarily include security products, input devices such as mice, laptop computer carrying cases, hubs, docking stations, power adapters, tabletaccessories and charging racks and ergonomic devices. We sell these products mostly under the Kensington®, Microsaver® and ClickSafe® brand names, withthe majority of revenue coming from the U.S. and Northern Europe. Our computer products are manufactured by third-party suppliers, principally in Asia, andare distributed from our regional facilities. Our computer products are sold primarily to consumer electronics retailers, information technology value-addedresellers, original equipment manufacturers, office products retailers, as well as directly to consumers on-line.For further information on our business segments see "Note 16. Information on Business Segments" to the consolidated financial statements containedin Part II, Item 8. of this report.Customers/CompetitionOur sales are generated principally in the U.S., Northern Europe, Brazil, Canada, Australia and Mexico. For the year ended December 31, 2014,approximately 45% of our net sales were outside the U.S. Our top ten customers accounted for 53% of net sales for the year ended December 31, 2014. Salesto Staples, our largest customer, amounted to approximately 13% of net sales for each of the years ended 2014, 2013 and 2012. Sales for Office Depot, oursecond largest customer, amounted to approximately 11% of our 2014 net sales. See "Item 1A. Risk Factors - Our business serves a limited number of largeand sophisticated customers, and a substantial reduction in sales to one or more of these customers could significantly impact our operating results," and"Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."The customer base to which we sell our products is primarily made up of large global and regional resellers of our products including traditional officesupply resellers, wholesalers and other retailers, including on-line retailers. Mass merchandisers and retail channels primarily sell to individual consumers butalso to small businesses. We also sell to commercial contract dealers, wholesalers, distributors and independent dealers who primarily serve business end-users. Over half of our product sales by our customers are to business end-users, who generally seek premium products that have added value or ease-of-usefeatures and a reputation for reliability, performance and professional appearance. Some of our binding and laminating equipment products are sold directlyto high-volume end-users and commercial reprographic centers. We also sell calendar and computer products directly to consumers.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 merger. Since the merger, the combined company has taken actions to harmonize pricing from its suppliers, close retail outletsand rationalize their supply chain, which have negatively impacted, and will continue to negatively impact, our sales and margins. Additionally, our largestcustomer, Staples, recently announced an agreement to acquire Office Depot. Together these customers accounted for 25% of our 2014 net sales.Historically, office product superstores have maintained a significant market share in office, school and dated goods. More recently, new outlets,including mass merchandisers, drug store chains and on-line retailers, have surfaced as meaningful competitors to the office products superstores and aresuccessfully taking market share from office product superstores in many of our product categories.Other current trends among our customers include fostering high levels of competition among suppliers, demanding innovative new products andrequiring suppliers to maintain or reduce product prices and deliver products with shorter lead times and in smaller quantities. Other trends are for retailers toimport products directly from foreign sources and sell those products, which compete with our products, under the retailer's own private-label brands. Ourincreased focus on the mass channel and sales growth with on-line retailers has helped to partially offset declines in the office superstore channel due toconsolidation and channel shifts. The combination of these market influences, along with a continuing trend of consolidation among resellers, has created anintensely competitive environment in which our principal customers continuously evaluate which product suppliers they use. This results in pricingpressures, the need for stronger end-user brands, broader product penetration within categories, the ongoing introduction of innovative new products andcontinuing improvements in customer service. See also "Item 1A. Risk Factors - Our2customers may further consolidate, which could adversely impact our sales and margins," "- Shifts in the channels of distribution for our products couldadversely impact our business," "- Challenges related to the highly competitive business segments in which we operate could have an adverse effect on ourongoing business, results of operation and financial position," "- Our success depends on our ability to continue to develop innovative products that meetend-user demands (including price expectations) and expand our business into adjacent categories which are experiencing higher growth rates," and "- Themarket for products sold by our Computer Products 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, RR Donnelley, Smead, Spiral Binding andnumerous private label suppliers and importers. Competitors of the Computer Products Group include 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 Part II, 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 $20.2 million, $22.5 million and $20.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. As a percentage of sales,research and development expenses were 1.2%, 1.3% and 1.2% for the years ended December 31, 2014, 2013 and 2012, respectively. See also "Item 1A. RiskFactors - Our success depends on our ability to continue to invest in and develop innovative products that meet end-user demands (including priceexpectations) and expand our business into adjacent categories which are experiencing higher growth rates."We consistently review our businesses and product offerings, assess their strategic fit and seek opportunities to divest nonstrategic businesses andrationalize our product offerings. The criteria we use in assessing the strategic fit include: the ability to increase sales for the business; the ability to createstrong, differentiated brands; the importance of the business to key customers; the business's relationship with existing product lines; the impact of thebusiness to the market; and the business's actual and potential impact on our operating performance. As a result of this review process, during 2014, we madea business decision that resulted in the loss of low-margin retail bindery business related to a large customer in the North America segment and repositionedthe Computer Products Group by shifting our focus away from commoditized tablet accessories. These decisions will continue to impact us in 2015.Raw MaterialsThe primary materials used in the manufacturing of many of our products are paper, plastics, resin, polyester and polypropylene substrates, 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 for any ofthese materials. Based on our experience, we believe that adequate quantities of these materials will be available in the foreseeable future. See also "Item 1A.Risk Factors - Risks associated with currency volatility could adversely affect our sales, profitability, cash flow and results of operations," and "- Rawmaterials, labor and transportation costs are subject to price increases and decreases that could adversely affect our sales and profitability."SupplyOur products are either manufactured or sourced to ensure that we supply our customers with appropriate customer service, quality products, innovativesolutions and attractive pricing. We have built a customer-focused business model with a flexible supply chain to ensure that these factors are appropriatelybalanced. Using a combination of manufacturing and third-party sourcing also enables us to reduce our costs and effectively manage our production assets bylowering capital investment and working capital requirements. Our strategy is to manufacture locally those products that would incur a relatively high freightand/or duty expense or have high service needs and source those products that have a high proportion of direct labor cost. We currently manufactureapproximately half of our products locally where we operate, and source the remaining half. Low-cost sourcing primarily comes from China, but we alsosource from other Far Eastern countries and Eastern Europe.3SeasonalityHistorically, our business has experienced higher sales in the third and fourth quarters of the calendar year. Two principal factors contribute to thisseasonality: (1) the office products industry, its customers and ACCO Brands specifically are major suppliers of products related to the "back-to-school"season, which occurs principally from June through September for our North American business and from November through February for our Australian andBrazilian businesses; and (2) several products we sell 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 quarterdriven by traditionally strong fourth-quarter sales of personal computers and tablets. As a result, we have generated, and expect to continue to generate, mostof our earnings in the second half of the year and much of our cash flow in the first, third and fourth quarters as the associated receivables are collected.Sales Percentages by Fiscal Quarter 2014 20131st Quarter 20% 20%2nd Quarter 25% 25%3rd Quarter 28% 27%4th Quarter 27% 28% 100% 100%See also "Item 1A. Risk Factors - Our business is subject to risks associated with seasonality, which could adversely affect our cash flow, results ofoperations 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 individual patentor license, however, would not be material to us taken as a whole. Many of ACCO Brands' trademarks are only important in particular geographic markets orregions. 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®. See also "Item 1A. Risk Factors - Our inability to secure, protect andmaintain rights to intellectual property could have an adverse impact on our business."Environmental MattersWe are subject to federal, state and local laws and regulations concerning the discharge of materials into the environment and the handling, disposaland clean-up of waste materials and otherwise relating to the protection of the environment. It is not possible to quantify with certainty the potential impactof actions 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, and results of operations or competitive position. See also "Item 1A. Risk Factors -We are subject to global environmental regulation and environmental risks, product content and product safety laws and regulations as well as laws,regulations and self-regulatory requirements relating to privacy and data security."EmployeesAs of December 31, 2014, we had approximately 5,240 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.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 23, 2015 (ages are as of December 31, 2014).Mark C. Anderson, age 52•2007 - present, Senior Vice President, Corporate Development•Joined the Company in 2007Boris Elisman, age 52•2013 - present, President and Chief Executive Officer•2010 - 2013, President and Chief Operating Officer•2008 - 2010, President, ACCO Brands Americas•2008, President, Global Office Products Group•2004 - 2008, President, Computer Products Group•Joined the Company in 2004Neal V. Fenwick, age 53•2005 - present, Executive Vice President and Chief FinancialOfficer•1999 - 2005, Vice President Finance and Administration, ACCOWorld•1994 - 1999 Vice President Finance, ACCO Europe•Joined the Company in 1984Christopher M. Franey, age 58•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 62•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 61•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 51•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 58•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 61•2008 - March 2015, Senior Vice President, Finance and Accountingand Principal Accounting Officer•2005 - 2008, Vice President, Finance and Accounting•Joined the Company in 2005Kathleen D. Schnaedter, age 45•Effective April 2015, Senior Vice President, Corporate Controllerand Chief Accounting Officer•2008 - 2015, Vice President and Corporate Controller•Joined the Company in 1994Pamela R. Schneider, age 55•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 44•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 the documentsincorporated by reference herein, could materially and adversely affect the Company’s business, results of operations and financial condition.Our business serves a limited number of large and sophisticated customers, and a substantial reduction in sales to one or more of these customerscould 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 53% of our net salesfor the fiscal year ended December 31, 2014. Sales to Staples, our largest customer, amounted to approximately 13% of our 2014 net sales and sales to OfficeDepot, our second largest customer, amounted to approximately 11% of our 2014 net sales.Our large customers may seek to leverage their size to obtain favorable pricing and other terms. In addition, they have the ability to directly source theirown private label products and to create and support new and competing suppliers. The loss of, or a significant reduction in sales to, one or more of our topcustomers, or significant changes to the terms on which we sell our products to our top customers, could have a material adverse effect on our business, resultsof 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 merger. Since the merger, the combined company has taken actions to harmonize pricing from its suppliers, close retail outletsand rationalize their supply chain, which have negatively impacted, and will continue to negatively impact, our sales and margins. We believe theseactivities will continue for some time and that the adverse effects and future actions will take several years to be fully realized. Additionally, our largestcustomer, Staples, announced in early 2015 an agreement to acquire Office Depot, our second largest customer. Together these customers accounted for 25%of our 2014 net sales. If the acquisition is completed we expect Staples to take similar actions which we expect to adversely impact our sales and margins.The impact of this further industry consolidation will take a number of years to be fully realized.There can be no assurance that following consolidation these and other large customers will continue to buy from us across our different productsegments or geographic regions or at the same levels as prior to consolidation, which could adversely impact our financial results. Further, continued industryconsolidation appears likely, which may result in further reductions in our sales and margins and have an adverse effect on our business, results of operationsand financial condition.See also "Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."Shifts in the channels of distribution for our products could adversely impact our business.Our customers operate in a very competitive environment. Historically, office product superstores have maintained a significant market share in office,school and dated goods. More recently, new outlets, including mass merchandisers, drug store chains and on-line retailers, have surfaced as meaningfulcompetitors to the office products superstores and are successfully taking market share from office product superstores in many of our product categories. Theloss of market share by one or more of our top customers or the continued shift of market share away from the traditional office product superstores towardsmass merchandisers, online merchants and other competitors (with whom we currently do a smaller volume of business) could reduce our sales and adverselyaffect our margins. Additionally, if we are unable to grow sales and gain market share with customers operating in these newer channels of distribution or ifthe margins we realize in these channels are lower, our business, results of operations and financial condition could be adversely affected.Challenges related to the highly competitive business segments in which we operate could have an adverse effect on our ongoing business, results ofoperations and financial condition.We operate in highly competitive business environment which presents a number of challenges, including:•low barriers to entry;•sophisticated and large customers who have the ability to source their own private label products;•limited retail space which constrains our ability to offer certain products;•competitors with strong brands;•imports from a range of countries, including countries with lower production costs; and6•competition from a range of products and services, including electronic, digital or web-based products that can replace or render obsolete or lessdesirable some of the products we sell.As a result, our business is likely to be affected by: (1) decisions and actions of our top customers to increase their purchases of private label products orotherwise change product assortments; (2) decisions of current and potential suppliers of competing products to take advantage of low entry barriers toexpand their production or lower prices; and (3) decisions of end-users of our products to expand their use of lower priced, substitute or alternative products.Any such decisions could result in lower sales and margins and adversely affect our business, results of operations and financial condition.Our success depends on our ability to continue to develop innovative products that meet end-user demands (including price expectations) and expandour business into adjacent categories which are experiencing higher growth rates.Our competitive position depends on continued investment in innovation and product development, manufacturing and sourcing, quality standards,marketing and customer service and support. Our success will depend, in part, on our ability to anticipate and offer products that appeal to the changingneeds and preferences of our customers and end-users in a market where many of our product categories are affected by continuing improvements intechnology and shortened product lifecycles and others are experiencing secular declines. We may not have sufficient resources to make the investments thatmay be necessary to anticipate or react to the changing needs, and we may not identify, develop and market products successfully or otherwise be able tomaintain our competitive position.In addition, the market for certain of the products we sell is declining. See also "- Continued declines in the use of certain of our products, especiallypaper-based dated and time management and productivity tools, could adversely affect our business." Part of our strategy to deal with this decline is toexpand our product assortment into new and adjacent product categories with a higher growth profile. There can be no assurance that we will successfullyexecute these strategies. If we are unable to take market share or to successfully expand our product assortment, our business, results of operations andfinancial condition could be adversely affected.The market for products sold by our Computer Products Group is rapidly changing and highly competitive.Our Computer Products Group operates in a market that is characterized by rapid technological changes, short product life cycles and a dependency onthe introduction by third party manufacturers of new products and devices, which drives demand for accessories sold by the Company. To competesuccessfully, we need to anticipate and bring to market innovative new accessories in a timely and effective way, which requires significant skills andinvestment. We may not have sufficient market intelligence, talent or resources to successfully meet these challenges. Additionally, the short product lifecycles increase the risk that our products will become commoditized or obsolete and that we could be left with an excess of old and slow-moving inventory.Rapid changes in technology, shifting demand for personal computers, laptops, tablets and mobile devices, as well as delays in the introduction of newtechnology and our ability to anticipate and respond to these changes and delays, could adversely affect the demand for our products and have an adverseeffect on the business, results of operations and financial condition of our Computer Products Group. Recently, rapid changes in technology lead to thecommoditization of many of our tablet accessories resulting in increased competition and a degradation in sales and margins. In 2014, we decided to shift ourfocus away from these commoditized products resulting in a reduction in sales and profitability. See "Part II, Item 7. Management's Discussion and Analysisof Financial Condition and Results of Operations."Sales of our products may be adversely affected by issues that affect business, commercial and consumer spending decisions during periods ofeconomic uncertainty or weakness.Demand for our products, especially business machines and other durable goods, can be very sensitive to uncertain or weak economic conditions. Inaddition, during periods of economic uncertainty or weakness, we tend to see the demand for our products decrease, increased competition from private labeland other branded and/or generic products that compete on price and quality and our reseller customers reduce inventories. In addition end-users tend topurchase more lower-cost, private label or other economy brands, more readily switch to electronic, digital or web-based products serving similar functions,or forgo certain purchases altogether. As a result, adverse changes in economic conditions or sustained periods of economic uncertainty or weakness couldnegatively affect our earnings and have an adverse effect on our business, results of operations, cash flow and financial position.7We rely extensively on information technology systems to operate, transact and otherwise manage our business. Any material failure, inadequacy,interruption or security breach of that technology or its supporting infrastructure could adversely affect our business, results of operations or financialcondition.We rely extensively on our information technology systems, most of which are outsourced to third-party service providers. We depend on these systemsand our third-party service providers to effectively manage our business and execute the production, distribution and sale of our products as well as tomanage and report our financial results and run other support functions. Although we have implemented service level agreements and have establishedmonitoring controls, if our outsourcing vendors fail to perform their obligations in a timely manner or at satisfactory levels, our business could suffer. Thefailure 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, damage our reputation,and adversely affect our business, 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. In 2014, we had a material weakness in our information technology general controls which has been remediated. Failure to successfully executeour information technology general controls could adversely impact the effectiveness of our internal control over financial reporting and our disclosurecontrols and procedures and impair our ability to accurately report our financial results in a timely manner.If services to our customers are negatively impacted by the failure or breach of our information systems, or if we are unable to accurately report ourfinancial results in a timely manner or to conclude that our internal control over financial reporting and disclosure controls and procedures are effective,investor, supplier and customer confidence in our reported financial information as well as market perception of our Company and/or the trading price of ourcommon stock could be adversely affected. The occurrence of any of these events could have an adverse impact on our business, results of operations andfinancial condition.Growth in emerging market geographies may be difficult to achieve and exposes us to certain risks, including economic volatility, unstable politicalconditions and civil unrest.An increasing percentage of our sales are derived from emerging markets such as Latin America and parts of Asia, the Middle East and Eastern Europe.Moreover, the profitable growth of our business in emerging markets, through both organic investments and through acquisitions, is a key element to ourlong-term growth strategy.Emerging markets generally involve more financial and operational risks than more mature markets. In some cases, emerging markets have greaterpolitical and economic volatility, greater vulnerability to infrastructure and labor disruptions, are more susceptible to corruption, and are in locations whereit may be more difficult to impose corporate standards and procedures and the extraterritorial laws of the United States. Negative or uncertain politicalclimates and military disruptions in developing and emerging markets could also adversely affect us. Further, weak legal systems may affect our ability toenforce our intellectual property, contractual and other rights.As we grow our business in these emerging markets, we increase our exposure to financial, legal and other risks including currency transfer restrictions,hyperinflation or devaluation, the lack of well-established or reliable legal systems, corruption, adverse economic conditions, political actions or instability,import and export restrictions, terrorism and civil unrest. Likewise, our cost of doing business increases due to costs of compliance with complex andnumerous foreign and U.S. laws and regulations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, and regulations on the transfer offunds to and from foreign countries, which, from time to time, result in significant cash balances in foreign countries due to limitations on the repatriation offunds. See also "- Material disruptions resulting from telecommunication failures, power and/or water shortages, acts of God, war, terrorism and othergeopolitical incidents and other circumstances outside our control could adversely impact our business, results of operations and financial condition."If we are unable to successfully expand our businesses in emerging markets, achieve the return on capital we expect as a result of our investments, oreffectively manage the risks inherent in our growth strategy in these markets, our business, results of operations and financial condition could be adverselyaffected.Our strategy is partially based on growth through acquisitions. Failure to properly identify, value, manage and integrate any of the acquisitions mayimpact our business, results of operations and financial condition.A key element of our long-term growth strategy involves acquisitions. We are particularly focused on acquiring companies that have the potential toaccelerate our growth in emerging markets or our entry into adjacent product categories.8We may not be successful in identifying suitable acquisition opportunities, prevailing against competing potential acquirers, negotiating appropriateacquisition terms, obtaining financing, completing proposed acquisitions, integrating acquired businesses or expanding in new markets or productcategories. In addition, an acquisition may not perform as planned, be accretive to earnings, or prove to be beneficial to our operations and cash flow. If wefail to effectively identify, value, consummate, manage and integrate any acquired company we may not realize the potential growth opportunities or achievethe synergies or financial results anticipated at the time of its acquisition, which could adversely affect our growth prospects, business and results ofoperations. An acquisition could also adversely impact our operating performance as a result of the issuance of acquisition-related debt, pre-acquisitionpotential liabilities, acquisition expense and the amortization of acquisition assets or possible future impairments of goodwill or intangible assets associatedwith the acquisition.In addition, to the extent these acquisitions increase our exposure to emerging markets, the risks associated with doing business in these markets willincrease. See also "- Growth in emerging market geographies may be difficult to achieve and exposes us to certain risks, including economic volatility,unstable political conditions and civil unrest."Our failure to comply with customer contracts may lead to fines or loss of business which could adversely impact our revenue and results ofoperations.Our contracts with our customers include specific performance requirements. In addition, some of our contracts with governmental customers are subjectto various procurement regulations, contract provisions and other requirements. If we fail to comply with the specific provisions of our customer contracts orviolate government contracting regulations, we could become subject to fines, suffer a loss of business or incur other penalties which, in the case ofgovernment contracts, could include suspension from further government contract opportunities. If our customer contracts are terminated, if we fail to meetour contractual obligations, are suspended or disbarred from government work, or if our ability to compete for new contracts is adversely affected, we couldsuffer a reduction in expected revenue and margins.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, includingTilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued atax assessment (the "Brazilian Tax Assessment") against Tilibra, which challenged the tax deduction of goodwill from Tilibra's taxable income for the year2007. A second assessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD inOctober 2013.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 challengethe FRD's tax assessments, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take anumber of 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 receiveadditional tax assessments regarding the goodwill for one or both of those years. With respect to the years 2008 to 2012 we have accrued R102.7 million($38.7 million based on December 31, 2014 exchange rates) of tax, penalties and interest. If the FRD's initial position is ultimately sustained, the amountassessed would materially and 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, we consider the outcome ofthis 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 the amount of$44.5 million (at December 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to thepurchase price and which included the 2008-2012 tax years plus interest and penalties through December 2012. In addition, we will continue to accrueinterest related to this contingency until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During2014, 2013 and 2012, we accrued additional interest as a charge to current tax expense of $3.2 million, $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 (other than theBrazilian Tax Assessment) the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations orcash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matterwill not affect our results of operations, financial condition or cash flow.9Risks associated with outsourcing the production of certain of our products and our information technology systems and other administrativefunctions could adversely affect our business, results of operations and financial condition.We outsource certain manufacturing functions to suppliers in China and other Far Eastern countries and Eastern Europe. Outsourcing of product designand production creates a number of risks, including decreased control over the engineering and manufacturing processes resulting in unforeseen productiondelays or interruptions, inferior product quality, loss or misappropriation of trade secrets and other performance issues which could result in cost overruns,delayed deliveries or shortages. Additionally, our suppliers must comply with our design and product content specifications, and all applicable laws,including product safety, security, labor and environmental laws. In addition, we expect our suppliers to conform to our and our customers' expectations withrespect to product safety, product quality and social responsibility, be responsive to our audits and otherwise be certified as meeting our and our customers'supplier codes of conduct. Failure to meet any of these requirements may result in our having to cease doing business with a supplier or cease production at aparticular facility. Substitute suppliers might not be available or, if available, might be unwilling or unable to offer products on acceptable terms or in atimely manner. Any of these circumstances could result in unforeseen production delays and increased costs and negatively affect our ability to deliverproducts and services to our customers, all of which could adversely affect our business, results of operations and financial condition.Moreover, if one or more of our suppliers is unable or unwilling to continue to provide products of acceptable quality, at acceptable cost or in a timelymanner due to financial difficulties, insolvency or otherwise, or if customer demand for our products increases, we may be unable to secure sufficientadditional capacity from our current suppliers, or others, in a timely manner or on acceptable terms. Any of these events could result in unforeseen productiondelays and increased costs and negatively affect our ability to deliver our products and services to our customers, all of which could adversely affect ourbusiness, results of operations and financial condition.We also outsource important portions of our information technology infrastructure and systems support to third party service providers. Outsourcing ofinformation technology services creates risks to our business which are similar to those created by our product production outsourcing. If one or more of ourinformation technology suppliers is unable or unwilling to continue to provide services at acceptable cost due to financial difficulties, insolvency orotherwise, or if our third party service providers experience a security breach or disruptions in service, our business could be adversely affected. See also "-We rely extensively on information technology systems to operate, transact and otherwise manage our business. Any material failure, inadequacy,interruption or security breach of that technology or its supporting infrastructure could adversely affect our business, results of operation or financialcondition."In addition, we outsource certain administrative functions, such as payroll processing, benefit plan administration and accounts payable to third partyservice providers and may outsource other functions in the future to achieve cost savings and efficiencies. If the service providers to which we outsourcethese functions do not perform effectively, we may not be able to achieve the expected cost savings and may have to incur additional costs to correct errorsmade by such service providers. Depending on the function involved, such errors may lead to business disruption, processing inefficiencies or loss of, ordamage to intellectual property, or harm employee morale.Continued declines in the use of certain of our products, especially paper-based dated and time management and productivity tools, could adverselyaffect our business.A number of our products and brands consist of paper-based dated and time management and productivity tools that historically have tended to behigher-margin products. However, consumer preference for technology-based solutions for time management and planning continues to grow worldwide.Many consumers use or have access to electronic tools that may serve as substitutes for traditional paper-based time management and productivity tools.Accordingly, the continued introduction of new digital software applications and web-based services by companies offering time management andproductivity solutions could adversely impact the revenue and profitability of our largely paper-based portfolio of dated and time management products.Additionally, the markets for other product categories, such as decorative calendars, ring binders and mechanical binding equipment, are also declining.A continued decline in the overall size of the market for the products we sell could adversely impact our business, results of operations and financialcondition.Our significant indebtedness requires us to dedicate a substantial portion of our cash flow to debt payments and limits our ability to engage incertain activities. If we are unable to meet our obligations under our debt agreements or are contractually restricted from pursuing activities ortransactions that we believe are in our long-term best interests, our business, results of operations and financial condition could be adversely affected.As of December 31, 2014, we had $800.7 million of outstanding debt. Our debt service obligations require us to dedicate a10substantial portion of our cash flow from operating activities to payments on our indebtedness, which reduces the availability of our cash flow to fundworking capital, capital expenditures, research and product development efforts, potential acquisitions and for other general corporate purposes. Oursignificant indebtedness also may increase our vulnerability to economic downturns and changing market conditions and place us at a competitivedisadvantage relative to competitors that have less debt. In addition, approximately $299 million of our outstanding debt is subject to floating interest rates,which increases our exposure to fluctuations in interest rates.The terms of our debt agreements also limit our ability to engage in certain activities and transactions that may be in our long-term interest. Amongother things, the covenants and financial ratios and tests contained in our debt agreements restrict or limit our ability to incur additional indebtedness, incurcertain liens on our assets, issue preferred stock or certain disqualified stock, make restricted payments, including investments, sell our assets or merge withother companies, and enter into certain transactions with affiliates. We are also required to maintain specified financial ratios under certain circumstances andsatisfy financial condition tests. Our ability to comply with these covenants and financial ratios and tests may be affected by events beyond our control, andwe may not be able to continue to meet those covenants, ratios and tests.Our ability to meet our debt obligations, including our financial covenants and to refinance our existing indebtedness upon maturity, will depend uponour future operating performance, which will be affected by general economic, financial, competitive, regulatory, business and other factors. Breach of any ofthe covenants, ratios and tests contained in the agreements governing our indebtedness, or our inability to pay interest on, or principal of, our outstandingdebt as it becomes due, could result in an event of default, in which case our lenders could declare all amounts outstanding to be immediately due andpayable. If our lenders accelerate our indebtedness or we are not able to refinance our debts at maturity, our assets may not be sufficient to repay in full suchindebtedness and any other indebtedness that would become due as a result of such acceleration. If we then are unable to obtain replacement financing or anysuch replacement financing is on terms that are less favorable than the indebtedness being replaced, our liquidity, results of operations and financialcondition would be adversely affected.Should any of the risks associated with our substantial indebtedness be realized, our business, results of operations and financial condition could beadversely affected. See also "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity andCapital Resources."Our business is subject to risks associated with seasonality, which could adversely affect our cash flow, results of operations and financial condition.Historically, our business has experienced higher sales in the third and fourth quarters of the calendar year. Two principal factors contribute to thisseasonality: (1) the office products industry, its customers and ACCO Brands specifically are major suppliers of products related to the "back-to-school"season, which occurs principally from June through September for our North American business and from November through February for our Australian andBrazilian businesses; and (2) several products we sell 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 quarterdriven by traditionally strong fourth-quarter sales of personal computers and tablets. As a result, we have generated, and expect to continue to generate, mostof 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 typicalseasonal increases in sales of certain portions of our product line do not materialize, it may have an outsized impact on our business, which could adverselyaffect our cash flow, results of operations and financial condition.Risks associated with currency volatility could adversely affect our sales, profitability, cash flow and results of operations.With approximately 45% of our sales for the fiscal year ended December 31, 2014 arising from foreign sales, fluctuations in currency exchange rates canhave a material impact on our results of operations. Our risk exposure is primarily related to the Brazilian real, the Canadian dollar, the Euro, the Australiandollar, the British pound, the Mexican peso and the Japanese yen. Currency fluctuations impact the results of our non-U.S. operations that are reported in U.S.dollars. As a result, a strong U.S. dollar reduces the dollar-denominated sales contributions from foreign operations and a weak U.S. dollar benefits us in theform of higher reported sales.Additionally approximately half of the products we sell are sourced from China and other Far Eastern countries and Eastern Europe and are paid for inU.S. dollars based on prevailing currency exchange rates. Thus, for our non-U.S. businesses, movements in the value of local currencies relative to the U.S.dollar affect our cost of goods sold where we source products from Asia, with a weaker dollar decreasing costs of goods sold and a stronger dollar increasingcosts of goods sold relative to the local selling price.11We cannot predict the rate at which the U.S. dollar will trade against other currencies in the future. As the reporting currency of the Company is the U.S.dollar, if the U.S. dollar were to strengthen, making the dollar more valuable relative to other currencies in the global market, it would negatively impact theU.S dollar value of our international sales, profits and cash flow and it could adversely impact our ability to compete or competitively price our products inthose markets, and therefore, adversely affect our sales, profitability, cash flow and results of operations. Additionally, as we increase the size of our businessin emerging markets, our exposure to the risks associated with currency volatility increases. See also "- Growth in emerging market geographies may bedifficult to achieve and exposes us to certain risks, including economic volatility, unstable political conditions and civil unrest."During the fourth quarter of 2014, the U.S. dollar strengthened significantly relative to other currencies which reduced our sales and adversely impactedour financial results. We expect this trend to continue into 2015. See "Part II, Item 7. Management's Discussion and Analysis of Financial Condition andResults of Operations."Raw materials, labor and transportation costs are subject to price increases and decreases that could adversely affect our sales and profitability.The primary materials used in the manufacturing of many of our products are paper, plastics, resin, polyester and polypropylene substrates, 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 materials. We attemptto reduce our exposure to increases in these costs through a variety of measures, including obtaining price increases from our customers when appropriate aswell as executing periodic purchases, future delivery contracts, longer-term price contracts and holding our own inventory. Likewise, we attempt to takeadvantage of price decreases by negotiating cost reductions with our suppliers to ensure that our customer pricing remains competitive. There can be noassurances that we will successfully negotiate price increases or decreases or that the other measures we take to manage the risk of fluctuation in raw materialcosts will be effective in avoiding a negative impact in our sales and profitability. See also "Note 13. Derivative Financial Instruments" to the consolidatedfinancial statements contained in Part II, Item 8. of this report.Inflationary and other substantial increases and decreases in costs of materials, labor and transportation have occurred in the past and may recur, and rawmaterials may not continue to be available in adequate supply in the future. Shortages in the supply of any of the raw materials we use in our products andservices, or the availability of international shipping capacity could result in price increases or decreases that could have an adverse effect on our business,results of operations and financial condition.Some of our suppliers are dependent upon other industries for raw materials as well as the other products and services necessary to produce the productsthey supply to us. Any adverse impacts to those industries could have a ripple effect on our suppliers, which could adversely impact their ability to supply usat levels or costs we consider necessary or appropriate for our business, or at all. Any such disruptions could negatively impact our ability to deliver productsand services to our customers, which in turn could have an adverse impact on our business, results of operations and financial condition.Our pension costs and cash contributions could substantially increase as a result of volatility in the equity markets, changes in interest rates or otherfactors.Our defined benefit pension plans are not fully funded and the funding status of our plans is a significant factor in determining the net periodic benefitcosts of our pension plans and the ongoing funding requirements of those plans. Changes in interest rates and the market value of plan assets impact thefunded status of these plans and cause volatility in the net periodic benefit cost and future plan funding requirements. Our cash contributions to pension anddefined benefit plans totaled $12.4 million in 2014; however the exact amount of cash contributions made to pension plans in any year is dependent upon anumber of factors, including the investment returns on pension plan assets and laws relating to pension funding requirements. A significant increase in ourpension funding requirements could have an adverse impact on our cash flow, results from operations and financial condition. See also "Part II, Item 7.Critical Accounting Policies - Employee Benefit Plans" and "Note 5. Pension and Other Retiree Benefits" to the consolidated financial statements containedin Part II, Item 8. of this report for more information about these plans.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 due to our acquisition of Mead C&OP. Asa result, the fair values of certain indefinite-lived trade names are not significantly above their carrying values. Future events may occur that could adverselyaffect the reported value of our assets and require impairment charges, which could negatively affect our financial results. Such events may include, but arenot limited to, a sustained decline in our stock price or our sales of one or more of our branded product lines, or strategic decisions we may choose to makeregarding how we use our brands in various global markets.12Should one of our customers or suppliers experience financial difficulties or file for bankruptcy our cash flow, results of operations and financialcondition could be adversely affected.Our concentrated customer base increases our customer credit risk. Were any of our customers to face liquidity issues, become insolvent or file forbankruptcy, we could be adversely impacted due to not only a reduction in future sales but also delays in payment and/or losses associated with the inabilityto collect any outstanding accounts receivable from that customer. Such a result could adversely impact our cash flow, results of operations and financialcondition.In addition, should one of our suppliers or third party service providers experience financial difficulties our business, results of operations and financialcondition could be adversely affected. See also "- Risks associated with outsourcing the production of certain of our products and our informationtechnology systems and other administrative functions could adversely affect our business, results of operations and financial condition."We are subject to global environmental regulation and environmental risks, product content and product safety laws and regulations as well as laws,regulations and self-regulatory requirements relating to privacy and data security.Our business is subject to national, state, provincial and/or local environmental laws and regulations in both the U.S. and abroad which govern thedischarge and emission of certain materials and waste, and establish standards for their use, disposal and management. We are also subject to laws regulatingthe content of toxic chemicals and materials in the products we sell as well as laws and directives related to the safety of our products, and self-regulatoryrequirements regarding privacy and data security. There has also been a sharp increase in laws and regulations in Europe, the U.S. and elsewhere, imposingrequirements on our handling of personal data, including data of employees, consumers and business contacts.All of these laws, regulations and self-regulatory frameworks are complex and may change frequently. Capital and operating expenses required tocomply with environmental, product content and product safety laws and regulations and information security and privacy obligations can be significant,and violations may result in substantial fines, penalties and civil damages as well as reputational damage. Any significant increase in our costs of complyingwith applicable environmental and product content and safety laws and obligations relating to privacy and data security as well as claims or liability arisingfrom noncompliance with such laws, regulations and self-regulatory frameworks, could have an adverse effect on our results of operations and financialcondition.In addition, as we expand our business into emerging and new markets, we increase the number of laws and regulations we are required to comply withwhich increases the complexity and costs of compliance as well as the risks of noncompliance. See also "- Growth in emerging market geographies may bedifficult to achieve and exposes us to certain risks, including economic volatility, unstable political conditions and civil unrest."Our inability to secure, protect and maintain rights to intellectual property could have an adverse impact on our business.We own and license many patents, trademarks, brand names, trade names, and proprietary content that are, in the aggregate, important to our business.In particular, key products such as our computer security products and our office machines contain patented technology, our school and dated goods businessoperates under strong consumer brands and our school and calendar businesses license content from third parties. If third parties challenge the validity orenforceability of our intellectual property rights and we cannot successfully defend these challenges, or our intellectual property is invalidated or our patentsexpire, or if our licenses are terminated due to breach by us, or if licenses expire or are not renewed, our business, results of operations and financial conditioncould be adversely impacted. The loss, expiration or non-renewal of any individual trademark, patent or license may not be material to us, but the loss of anumber of patents or trademarks, or the expiration or non-renewal of a significant number of licenses that relate to principal portions of our business couldnegatively impact our competitive position in the market and have an 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. If our brandsbecome diluted, if our patents are infringed, or if our competitors introduce brands and products that cause confusion with our brands in the marketplace, thevalue of our brands may become diminished, which could adversely impact our sales and profitability.We may also become involved in defending intellectual property infringement claims being asserted against us that could cause us to incur substantialcosts, divert the efforts of our management, and require us to pay substantial damages or require us to obtain a license, which might not be available onreasonable terms, if at all.13Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our end-user brands.Claims for losses or injuries purportedly caused by some of our products, arise in the ordinary course of our business. In addition to the risk ofsubstantial monetary judgments and penalties which could have an adverse affect on our results of operations and financial condition, product liabilityclaims or regulatory actions could result in negative publicity that could harm our reputation in the marketplace or the value of our end-user brands. We alsocould be required to recall and possibly discontinue the sale of possible defective or unsafe products, which could result in adverse publicity and significantexpenses.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 personnel. We rely to asignificant degree on compensating our executive officers and key employees with performance-based 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 thetargeted amount, as has occurred in prior years, it may motivate certain executive officers and key employees to seek other opportunities. The loss of keymanagement personnel or other key employees or our potential inability to attract such personnel may adversely affect our ability to manage our overalloperations and successfully implement our business strategy.Our stock price has been volatile historically and may continue to be volatile in the future.The market price for our common stock has been volatile historically. Our results are significantly affected by factors including those describedelsewhere in this "Part I, Item 1A. Risk Factors" as well as the following:•quarterly fluctuations in our operating results compared to market expectations;•fluctuations in the stock market prices and volumes;•changes in financial estimates by us or securities analysts and recommendations by securities analysts;•actual or anticipated negative earnings or other announcements by us or our top customers; and•the composition of our shareholders, particularly the presence of "short sellers" trading in our stockVolatility in our stock price could adversely affect our business and financing opportunities and force us to increase our cash compensation to ouremployees or grant larger stock awards, which could hurt our operating results and reduce the percentage ownership of our existing stockholders.Material disruptions resulting from telecommunication failures, power and/or water shortages, acts of God, war, terrorism, other geopoliticalincidents or other circumstances outside our control could adversely impact our business, results of operations and financial condition.A disruption at one of our or at one of our supplier's or third-party service providers’ facilities (especially facilities in China and other Asia-Pacificcountries as well as Latin America) could adversely impact production, and customer deliveries or otherwise negatively impact the operation of our businessand result in increased costs. Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, laborstoppages, transportation failures affecting the supply and shipment of materials and finished goods, the unavailability of raw materials, severe weatherconditions, natural disasters, civil unrest, war or terrorism and disruptions in utility and other services. Any such disruptions could adversely impact ourbusiness, results of operations or financial condition.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.14ITEM 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 facilities by segment as of December 31,2014:LocationFunctional Use Owned/LeasedNorth America: Ontario, CaliforniaDistribution/Manufacturing LeasedBooneville, MississippiDistribution/Manufacturing OwnedOgdensburg, New YorkDistribution/Manufacturing Owned/LeasedSidney, New YorkDistribution/Manufacturing OwnedAlexandria, PennsylvaniaDistribution/Manufacturing OwnedPleasant Prairie, WisconsinDistribution/Manufacturing LeasedMississauga, CanadaDistribution/Manufacturing/Office LeasedInternational: Sydney, AustraliaDistribution/Manufacturing OwnedBauru, BrazilDistribution/Manufacturing/Office OwnedAylesbury, EnglandOffice LeasedHalesowen, EnglandDistribution OwnedLillyhall, EnglandManufacturing LeasedTornaco, ItalyDistribution OwnedLerma, MexicoManufacturing/Office OwnedBorn, NetherlandsDistribution LeasedWellington, New ZealandDistribution/Office OwnedArcos de Valdevez, PortugalManufacturing OwnedComputer Products Group: Redwood Shores, CaliforniaOffice LeasedThe Computer Products Group also utilizes many of the distributions centers listed above. We believe that the properties are suitable to the respectivebusinesses 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 includingTilibra. In December of 2012, the FRD issued a tax assessment against Tilibra, which challenged the tax deduction of goodwill from Tilibra's taxable incomefor the year 2007. A second assessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued byFRD in October 2013.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 challengethe FRD's tax assessments, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take anumber of 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 receiveadditional tax assessments regarding the goodwill for one or both of those years. With respect to the years 2008 to 2012 we have accrued R102.7 million($38.7 million based on December 31, 2014 exchange rates) of tax, penalties and interest. If the FRD's initial position is ultimately sustained, the amountassessed would materially and 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, we consider the outcome ofthis 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 the amount of$44.5 million (at December 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to thepurchase price and which included the 2008-2012 tax years plus interest and penalties through December 2012. In addition, we will continue to accrueinterest related to this15contingency until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During 2014, 2013 and 2012,we accrued additional interest as a charge to current tax expense of $3.2 million, $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 (other than theBrazilian Tax Assessment) the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results ofoperations or cash flow. However, we can make no assurances that we will ultimately be successful in our defense of any of these matters.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.16PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIESCommon Stock InformationOur 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 2013 and 2014: High Low2013 First Quarter$9.16 $6.55Second Quarter$7.63 $5.97Third Quarter$7.44 $6.08Fourth Quarter$7.26 $5.562014 First Quarter$7.25 $5.47Second Quarter$6.56 $5.77Third Quarter$7.97 $5.99Fourth Quarter$9.45 $6.48As of February 9, 2015, we had approximately 16,900 registered holders of our common stock.Stock 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, 2009 through December 31, 2014. Cumulative Total Return 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14ACCO Brands Corporation.$100.00 $117.03 $132.55 $100.82 $92.31 $123.76Russell 2000100.00 126.86 121.56 141.43 196.34 205.95S&P Office Services and Supplies(SuperCap1500)100.00 122.41 105.80 102.55 163.73 171.5117Common Stock PurchasesThe following table provides information about our purchases of equity securities during the year ended December 31, 2014:Period Total Number ofShares Purchased Average Price Paidper Share Total Number of SharesPurchased as Part ofPublicly Announced Planor Program(1) Approximate Dollar Valueof Shares that May Yet BePurchased Under theProgram(1)August 1, 2014 to August 31, 2014 — $— — $100,000,000September 1, 2014 to September 30, 2014 810,972 7.14 810,972 94,207,668October 1, 2014 to October 31, 2014 1,839,051 6.93 1,839,051 81,459,732November 1, 2014 to November 30, 2014 105,619 8.41 105,619 80,571,795December 1, 2014 to December 31, 2014 — — — 80,571,795Total 2,755,642 $7.05 2,755,642 $80,571,795(1) On August 21, 2014, the Company announced that its Board of Directors had approved the repurchase of up to $100 million in shares of its commonstock.The number of shares to be purchased and the timing of purchases will depend on the Company's stock price, leverage ratios, cash balances, generalbusiness and market conditions, and other factors, including alternative investment opportunities and working capital needs. The Company may repurchaseits shares, from time to time, through a variety of methods, including open-market purchases, privately negotiated transactions and block trades or pursuant torepurchase plans designed to comply with the Rule 10b5-1 of the Securities Exchange Act of 1934. In connection with the share repurchase authorization,the Company has entered into a written trading plan under Rule 10b5-1 for the purchase of a portion of the common stock authorized for repurchase, and mayenter into additional Rule 10b5-1 plans in the future. Stock repurchases will be subject to market conditions, SEC regulations and other considerations andmay be commenced or suspended at any time or from time to time, without prior notice. Accordingly, there is no guarantee as to the number of shares that willbe repurchased or the timing of such repurchases.Dividend PolicyWe have not paid any dividends on our common stock since becoming a public company. We intend to retain any 2015 earnings to reduce ourindebtedness and repurchase our shares, absent a value-creating acquisition. Any determination as to the declaration of dividends is at our Board of Directors’sole discretion based on factors it deems relevant at that time.18ITEM 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, 2014 are derived from our consolidated financial statements. The data should be read in conjunction with the consolidated financial statementsand related notes contained in Item 8. in this report. Year Ended December 31, 2014 2013 2012(1) 2011 2010(in millions of dollars, except per share data) Income Statement Data: Net sales$1,689.2 $1,765.1 $1,758.5 $1,318.4 $1,284.6Operating income(2)173.6 145.8 139.3 115.2 109.7Interest expense49.5 59.0 91.3 78.1 79.0Interest income(5.6) (4.3) (2.0) (0.9) (0.7)Other expense, net(3)0.8 7.6 61.3 3.6 1.2Income from continuing operations(4)91.6 77.3 117.0 18.6 7.8Per common share: Income from continuing operations(4) Basic$0.81 $0.68 $1.24 $0.34 $0.14Diluted$0.79 $0.67 $1.22 $0.32 $0.14Balance Sheet Data (at year end): Total assets$2,226.4 $2,382.9 $2,507.7 $1,116.7 $1,149.6External debt800.6 920.9 1,072.1 669.0 727.6Total stockholders’ equity (deficit)681.0 702.3 639.2 (61.9) (79.8)Other Data: Cash provided (used) by operating activities$171.7 $194.5 $(7.5) $61.8 $54.9Cash (used) provided by investing activities(25.8) (33.3) (423.2) 40.0 (14.9)Cash (used) provided by financing activities(142.0) (155.5) 360.1 (63.1) (0.1)(1)On May 1, 2012, we completed the Merger. Accordingly, the results of Mead C&OP are included in the Company's consolidated financial statementsfrom the date of the Merger. For further information on the Merger, see "Note 3. Acquisitions" to the consolidated financial statements contained inItem 8. of this report.(2)Operating income for the years 2014, 2013, 2012, 2011 and 2010 was impacted by restructuring charges (income) of $5.5 million, $30.1 million, $24.3million, $(0.7) million and $(0.5) 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 the refinancingscompleted in 2013 and 2012. For further information on our refinancing, see "Note 4. Long-term Debt and Short-term Borrowings" to the consolidatedfinancial statements contained in Item 8. of this report.(4)Due to the Merger, we analyzed our need to maintain valuation allowances against our U.S. deferred taxes, which were established in 2009. Based onour analysis 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 alsoreleased $11.6 million and $19.0 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.19SUPPLEMENTAL NON-GAAP FINANCIAL MEASURESTo supplement our consolidated financial statements presented in accordance with generally accepted accounting principles in the United States("GAAP"), we provide investors with certain non-GAAP measures. See below for an explanation of how we calculate and use these non-GAAP financialmeasures and for a reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures.We believe these non-GAAP financial measures are appropriate to enhance an overall understanding of our past financial performance and also ourprospects for the future, as well as to facilitate comparisons with our historical operating results. Adjustments to our GAAP results are made with the intent ofproviding both management and investors a more complete understanding of our underlying operational results and trends. For example, the non-GAAPmeasures are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our coreoperating results. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for our planning andforecasting of future periods . Additionally, senior management’s incentive compensation is derived, in part, using certain of these non-GAAP financialmeasures.There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generallyaccepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures arelimited in value because they exclude certain items that may have a material impact upon our reported financial results; such as unusual tax items,restructuring and integration charges, goodwill or other intangible asset impairment charges, foreign currency fluctuation, and other one-time or non-recurring items. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparablefinancial measures prepared in accordance with GAAP. Investors should review the reconciliations of the non-GAAP financial measures to their most directlycomparable GAAP financial measures as provided in the tables below as well as our consolidated financial statements and related notes included elsewhere inthis report.Net Sales at Constant CurrencyWe provide net sales at constant currency in order to facilitate comparisons of our historical sales results as well as highlight the underlying sales trendsin our business. We calculate net sales at constant currency by translating the current period foreign operation net sales at prior year periodic currency rates.The following table provides a reconciliation of GAAP net sales as reported to Non-GAAP net sales at constant currency: Year Ended December 31, 2014 Year EndedDecember 31, 2013 (in millions of dollars)GAAP ReportedNet Sales CurrencyTranslation Non-GAAP Net Salesat Constant Currency GAAP ReportedNet Sales % Change atConstantCurrencyACCO Brands North America$1,006.0 $9.8 $1,015.8 $1,041.4 (2)%ACCO Brands International546.9 24.1 571.0 566.6 1 %Computer Products Group136.3 1.3 137.6 157.1 (12)%Total$1,689.2 $35.2 $1,724.4 $1,765.1 (2)%Adjusted Operating IncomeWe provide adjusted operating income in order to facilitate comparisons of our historical operating results by excluding one-time gains, losses andother charges, such as restructuring charges.20The following table provides a reconciliation of GAAP operating income as reported to Non-GAAP adjusted operating income: Year Ended December 31, 2014(in millions of dollars)GAAP ReportedOperating Income Adjustments(1) Non-GAAP AdjustedOperating IncomeACCO Brands North America$140.7 $3.3 $144.0ACCO Brands International62.9 1.1 64.0Computer Products Group8.2 1.1 9.3Corporate(38.2) — (38.2)Total$173.6 $5.5 $179.1(1) Represents restructuring charges.Free Cash FlowWe provide free cash flow in order to show the cash available to pay down debt, buy back common shares and fund acquisitions. Free cash flowrepresents cash flow from operating activities less additions to property, plant and equipment, net of proceeds from the disposition of assets.The following table sets forth a reconciliation of GAAP net cash provided by operating activities as reported to Non-GAAP free cash flow:(in millions of dollars)Year Ended December 31,2014Net cash provided by operating activities$171.7Net cash provided (used) by: Additions to property, plant and equipment(29.6) Proceeds from the disposition of assets3.8Free cash flow$145.921ITEM 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 consolidatedfinancial statements of ACCO Brands Corporation and the accompanying notes contained in Item 8. of this report. Unless otherwise noted, the followingdiscussion pertains only to our continuing operations.Overview of the CompanyACCO 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. Weseek to develop new products that meet the needs of our consumers and commercial end-users. We compete through a balance of product innovation,category management, a low-cost operating model and an efficient supply chain. We sell our products to consumers and commercial end-users primarilythrough resellers, including traditional office supply resellers, wholesalers, and retailers, including on-line retailers. Our products are sold primarily tomarkets located in the U.S., Northern Europe, Brazil, Canada, Australia, and Mexico. For the year ended December 31, 2014, approximately 45% of our saleswere outside the U.S.The majority of our revenue is concentrated in geographies where demand for our product categories is in mature stages, but we see opportunities togrow sales through share gains, channel expansion and new products. We expect to derive growth in faster growing emerging geographies where demand inthe product categories in which we compete is strong, such as in Latin America and parts of Asia, the Middle East and Eastern Europe. We plan to growthrough organic growth supplemented by strategic acquisitions in both core and adjacent categories. Historically, key drivers of demand for office and schoolproducts have included trends in white collar employment levels, education enrollment levels, gross domestic product (GDP), growth in the number of smallbusinesses and home offices, as well 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.We currently manufacture approximately half of our products locally where we operate, and source approximately the other half of our products, primarilyfrom China.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, primarily NorthernEurope, Brazil, Australia and Mexico.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 and are soldbased on end-user preference in each 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 traditional office supply resellers, wholesalers andother retailers, including on-line retailers. We also supply some of our products directly to large commercial and industrial end-users, and provide businessmachine maintenance and certain repair services. We also supply private label products within the office products sector.Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily throughmass merchandisers, and other retailers, such as grocery, drug and office superstores as well as on-line retailers. We also supply private label products withinthe school products sector.Our calendar products are sold throughout all channels where we sell office or school products, as well as directly to consumers both on-line andthrough direct mail.Computer Products GroupOur Computer Products Group designs, sources, distributes, markets and sells accessories for laptop and desktop computers, and tablets. Theseaccessories primarily include security products, input devices such as mice, laptop computer carrying cases,22hubs, docking stations, power adapters, tablet accessories and charging racks and ergonomic devices. We sell these products mostly under the Kensington®,Microsaver® and ClickSafe® brand names, with the majority of revenue coming from the U.S. and Northern Europe. Our computer products are manufacturedby third-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, as well as directly to consumers on-line.In 2014 we repositioned the Computer Products Group by shifting our focus away from commoditized tablet accessories. We expect the repositioning ofthis business to be complete by the second half of 2015. The sales of laptop and desktop computers, which help drive the sales our accessories, had a changein trend in 2014, with sales increasing slightly after two years of declining sales.Overview of 2014 Company PerformanceIn 2014, net sales decreased 4% to $1,689.2 million from $1,765.1 million in the prior year. Foreign currency adversely impacted sales by $35.2million, or 2%. The remaining decline was primarily in the North America segment, where sales fell largely as the result of the merger of Office Depot andOfficeMax, and in the Computer Products Group segment, primarily due to lower sales of tablet accessories. Despite the sales declines we were able toimprove our gross margin to 31.4% from 31.0%, and reduce our SG&A expenses by 5%. These improvements were largely the result of cost savings andproductivity initiatives. Operating income increased by $28 million, primarily due to lower restructuring charges in the current year. Underlying operatingincome declined primarily due to the decline in sales. However, operating income as a percent of sales increased as the lower sales, adverse foreign exchangeand a $10 million increase in management incentive compensation were all offset by cost savings and productivity improvements.Net income was $91.6 million, or $0.79 per diluted share, compared to net income of $77.1 million, or $0.67 per diluted share in the prior year. Thecompany generated significant free cash flow in 2014, $146 million (net cash provided by operating activities of $172 million less net cash used in investingactivities of $26 million) and as a result we reduced our debt by $120 million and repurchased $22 million of our Company's common stock.See also "Item 6. Selected Financial Data - Supplemental Non-GAAP Financial Measures."Consolidation in Our IndustryOur results are dependent upon a number of factors, including pricing and competition. Current pricing and demand levels for office products reflectthe substantial consolidation among the global resellers of office products. This consolidation has led to multiple years of industry pricing pressure and moreefficient asset utilization by customers, resulting in lower sales and volume for suppliers of office products. In the fourth quarter of 2013, two of our largecustomers, Office Depot and OfficeMax, completed their merger. Since the merger the combined company has taken actions to harmonize pricing from theirsuppliers, close retail outlets and rationalize their supply chain which have negatively impacted and will continue to negatively impact, our sales andmargins. In 2014, sales to Office Depot globally declined by $40 million.We believe these activities will continue for some time and that these adverse effects and future effects will take several years to be fully realized.Additionally, Staples recently announced an agreement to acquire Office Depot. See "Part I, Item1A. Risk Factors - Our customers may further consolidate,which could adversely impact our salea and margins."Foreign CurrencyWith approximately 45% of our net sales for the fiscal year ended December 31, 2014 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 strong U.S. dollar reduces the dollar-denominated sales contributions from foreign operations and a weak U.S. dollar benefits us in the form ofhigher reported sales. 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 the value 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 operations sell in their local currencies and are exposed to their domestic currency movements against the U.S. dollar. The strongU.S. dollar decreased our 2014 reported sales by $35.2 million, or 2.0%, and adversely impacted our profitability.Fluctuations in the currency exchange rates can also have a material impact on our Consolidated Balance Sheets. For the year ended December 31, 2014the strengthening of the U.S. dollar has reduced the value our reported assets and liabilities by $76.4 million versus December 31, 2013. Therefore, ourreported shareholders' equity has decreased by this amount.23We expect additional adverse effects from the strong U.S. dollar to continue to impact us in 2015. See "Part I, Item1A. Risk Factors - Risks associatedwith currency volatility could adversely affect our sales, profitability, cash flow and results of operations" and "Note 13. Derivative Financial Instruments"to the consolidated financial statements contained in Item 8. of this report.RestructuringFollowing our merger with the Mead C&OP business in 2012, we have undertaken a series of restructuring actions to reduce our operating costs. Theseactions were recorded as restructuring charges in the amount of $5.5 million, $30.1 million and $24.3 million for the years ended December 31, 2014, 2013and 2012, respectively. The cost savings associated with these actions were realized in the form of lower operating costs reported in cost of products sold andadvertising, selling, general and administrative expenses. In 2014, cost savings were substantially related to charges taken in 2013. In 2015, we expect torealize additional cost savings related to the charges taken in 2014. Also in 2015, we expect to pay substantially all of the $8.4 million accrued restructuringliability that remains as of December 31, 2014. For additional details concerning these charges and associated actions taken in each year, see "Note 10.Restructuring" 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. The results of Mead C&OP are included inthe Company's consolidated financial statements from the date of the Merger. For further information see "Note 3. Acquisitions" to the consolidated financialstatements contained in Item 8. of this report.Debt Amendment and RefinancingOn June 26, 2014, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement (the "2014 Amendment"). The 2014Amendment relates to and amends the Company’s Amended and Restated Credit Agreement, dated as of May 13, 2013 (the "2013 Restated CreditAgreement") among the Company, certain of its subsidiaries, the lenders party thereto, the administrative agent and other parties named therein.On May 13, 2013, the Company entered into the 2013 Restated Credit Agreement that amended and restated the Company's prior credit agreement,dated as of March 26, 2012, as amended (the "2012 Credit Agreement"), that had been entered into in connection with the Merger.For further information on our refinancing and amendment see "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financialstatements contained in Item 8. of this report.24Fiscal 2014 versus Fiscal 2013The following table presents the Company’s results for the years ended December 31, 2014, and 2013. Year Ended December 31, Amount of Change (in millions of dollars)2014 2013 $ % Net sales$1,689.2 $1,765.1 $(75.9) (4)% Cost of products sold1,159.3 1,217.2 (57.9) (5)% Gross profit529.9 547.9 (18.0) (3)% Gross profit margin31.4% 31.0% 0.4pts Advertising, selling, general and administrative expenses328.6 347.3 (18.7) (5)% Amortization of intangibles22.2 24.7 (2.5) (10)% Restructuring charges5.5 30.1 (24.6) (82)% Operating income173.6 145.8 27.8 19 % Operating income margin10.3% 8.3% 2.0pts Interest expense49.5 59.0 (9.5) (16)% Interest income(5.6) (4.3) (1.3) 30 % Equity in earnings of joint ventures(8.1) (8.2) 0.1 (1)% Other expense, net0.8 7.6 (6.8) (89)% Income tax expense45.4 14.4 31.0 215 % Effective tax rate33.1% 15.7% 17.4pts Income from continuing operations91.6 77.3 14.3 18 % Loss from discontinued operations, net of income taxes— (0.2) 0.2 100 % Net income91.6 77.1 14.5 19 % Net SalesNet sales decreased $75.9 million, or 4%, to $1,689.2 million from $1,765.1 million in the prior-year period. Foreign currency translation reduced salesby $35.2 million, or 2%. The underlying sales decline was principally in the North America segment which experienced a significant reduction in sales toOffice Depot following the merger with OfficeMax, and in the Computer Products Group segment as result of our strategic decision to shift focus away fromcommoditized tablet accessories.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 and inventory valuationadjustments. Cost of products sold decreased $57.9 million, or 5%, to $1,159.3 million, from $1,217.2 million in the prior-year period. Foreign currencytranslation reduced cost of products sold by $25.6 million. Costs of products sold also decreased due to cost savings and productivity improvements, mostlyin the North America segment, and lower sales volume.Gross ProfitManagement believes that gross profit and gross profit margin provide enhanced shareholder appreciation of underlying profit drivers. Gross profitdecreased $18.0 million, or 3%, to $529.9 million, from $547.9 million in the prior-year period. Foreign currency translation reduced gross profit by $9.6million. The underlying decrease was due to lower sales and higher costs, which was partially offset by cost savings, productivity improvements and higherpricing.Gross profit margin increased to 31.4% from 31.0%. The improvement was primarily due to cost savings and productivity improvements, which morethan offset the adverse impact of sales deleveraging, adverse sales mix, increased management incentives and increased inventory write-offs.25Advertising, 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 $18.7 million, or 5%, to $328.6 million from $347.3 million in the prior-year period. Foreign currency translation reduced SG&A by $4.5 million.The underlying decrease was driven primarily by savings related to cost reduction activities in addition to $7 million in lower pension expense. Alsocontributing to the improvement were the absence of $4.4 million of Mead C&OP information technology integration charges, which were included in theprior year. Partially offsetting the reduction in SG&A were higher management incentives and various strategic initiatives expenses. The prior year alsoincluded a $2.5 million gain on the sale of a facility.As a percentage of sales, SG&A decreased to 19.5% from 19.7% in the prior-year period primarily due to the cost reductions mentioned above. Lowersales volume somewhat offset the favorable impact.Restructuring ChargesRestructuring charges were $5.5 million compared to $30.1 million in the prior-year period, as there were fewer restructuring initiatives in 2014.Operating IncomeOperating income increased $27.8 million, or 19%, to $173.6 million, from $145.8 million in the prior-year period including a $4.9 million reductiondue to foreign currency translation. The underlying improvement was primarily due to lower restructuring charges and SG&A expenses offset by lower grossprofit.Interest Expense and Other Expense, NetInterest expense decreased by $9.5 million, or 16%, to $49.5 million from $59.0 million in the prior-year period. The decrease was primarily due tolower interest rates resulting from the refinancing of our debt in the second quarter of 2013 and lower debt outstanding compared to the prior year.Other expense, net of other income decreased by $6.8 million to $0.8 million from $7.6 million in the prior-year period. The reduction was due to theabsence of a $9.4 million write-off of debt origination costs related to the second quarter of 2013 debt refinancing and a $2.0 million gain related to a bargainpurchase on an acquisition completed in the fourth quarter of 2013. For a further discussion of our debt refinancing completed in the second quarter of 2013see "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 $45.4 million on income from continuing operations before taxes of $137.0 million, with aneffective tax rate of 33.1%. For the prior-year period, we reported income tax expense from continuing operations of $14.4 million on income fromcontinuing operations before taxes of $91.7 million, with an effective tax rate of 15.7%. The low effective tax rate in the prior year was primarily due to therelease of valuation allowances for certain foreign jurisdictions in the amount of $11.6 million.26Segment Discussion Year Ended December 31, 2014 Amount of Change Net Sales SegmentOperatingIncome (A) OperatingIncomeMargin Net Sales Net Sales SegmentOperatingIncome SegmentOperatingIncome MarginPoints (in millions of dollars) $ % $ % ACCO Brands North America$1,006.0 $140.7 14.0% $(35.4) (3)% $42.5 43 % 460ACCO Brands International546.9 62.9 11.5% (19.7) (3)% (3.6) (5)% (20)Computer Products Group136.3 8.2 6.0% (20.8) (13)% (5.5) (40)% (270)Total$1,689.2 $211.8 $(75.9) $33.4 Year Ended December 31, 2013 Net Sales SegmentOperatingIncome (A) OperatingIncomeMargin (in millions of dollars) ACCO Brands North America$1,041.4 $98.2 9.4% ACCO Brands International566.6 66.5 11.7% Computer Products Group157.1 13.7 8.7% Total$1,765.1 $178.4 (A) Segment operating income excludes corporate costs; Interest expense; Interest income; 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 Segmentoperating income to Income (loss) from continuing operations before income tax.ACCO Brands North AmericaACCO Brands North America net sales decreased $35.4 million, or 3%, to $1,006.0 million from $1,041.4 million in the prior-year period. Foreigncurrency translation reduced sales by $9.8 million, or 1%. The underlying sales decline was primarily with Office Depot, where 2014 sales declined $40million globally, the vast majority of which impacted North America. The decline with Office Depot was largely related to their merger with OfficeMax whichhas adversely impacted our sales through inventory reductions (including, the effects of supply chain rationalization and store closures), losses of productplacement and a change to a consignment sales model for certain calendar products. We expect inventory reductions and lost product placement due to themerger to continue to adversely impact our sales in 2015. North America sales also declined with wholesaler customers who reduced inventory, partiallyoffset by a strong back-to-school season in the mass merchandiser channel.ACCO Brands North America operating income increased $42.5 million, or 43%, to $140.7 million from $98.2 million in the prior-year period, andoperating income margin increased to 14.0% from 9.4%. The improvement was primarily due to a reduction in restructuring charges of $17.6 million as wellas cost savings from restructuring initiatives, other productivity improvements and lower pension expenses. Also contributing to the improvement were theabsence of $4.2 million of Mead C&OP information technology integration charges and $1.8 million of costs associated with our U.S and corporateheadquarters relocation, which were included in the prior year. The improvements were partially offset by lower sales volume and higher managementincentives expenses.ACCO Brands InternationalACCO Brands International net sales decreased $19.7 million, or 3%, to $546.9 million from $566.6 million in the prior-year period. Foreign currencytranslation reduced sales by $24.1 million, or 4%. The underlying sales improvement was primarily driven by price increases taken to offset the negativeeffect of inflation and the adverse impact of foreign exchange on our cost of goods. Sales gains in Latin America and Asia-Pacific were offset by lower salesprimarily in Europe and Australia. Brazil started the year strongly, with underlying sales 13% higher in the first six months; however sales growth moderatedsignificantly in the second half as the Brazilian economy weakened. Brazilian sales for the year increased 7%, principally due to price increases on flatvolume. We expect the soft macroeconomic trends in Brazil will continue into 2015.ACCO Brands International operating income decreased $3.6 million, or 5%, to $62.9 million from $66.5 million in the prior-year period, andoperating income margin decreased to 11.5% from 11.7%. Foreign currency translation reduced operating27income by $3.8 million, or 6%. The benefit of $5.4 million in lower restructuring charges and lower pension expenses was offset by investment in sales andmarketing and the absence of a $2.5 million gain on the sale of a building in 2013.Computer Products GroupComputer Products Group net sales decreased $20.8 million, or 13%, to $136.3 million from $157.1 million in the prior-year period. The decline wasdue to reduced volume and pricing of tablet accessories resulting from our strategic decision to shift focus away from commoditized tablet accessories. Weexpect the adverse impact from this decision to be completed in the first half of 2015. Sales of our security and laptop accessory products (over 80% of sales)were up slightly from the prior year as a result of stabilization in demand for personal computers and laptops.Computer Products Group operating income decreased $5.5 million, or 40%, to $8.2 million from $13.7 million in the prior-year period, and operatingmargin decreased to 6.0% from 8.7%. The declines in operating income and margin were primarily due to substantially lower sales and margins in the tabletaccessory business, including price discounting to sell remaining inventory, partially offset by lower SG&A expenses.Fiscal 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 sold1,217.2 1,221.4 (4.2) (0.3)% Gross profit547.9 537.1 10.8 2 % Gross profit margin31.0% 30.5% 0.5pts Advertising, selling, general and administrative expenses347.3 353.6 (6.3) (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 expense59.0 91.3 (32.3) (35)% Interest income(4.3) (2.0) (2.3) 115 % 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 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 $1,765.1 million from $1,758.5 million 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 inthe prior year. The underlying decline of approximately $118 million includes an unfavorable currency translation of $27.5 million, or 2%. The remainingsales decline was primarily in the North America segment and resulted from soft demand, consumers purchasing more lower-priced products, lost placementsand the exit from unprofitable business. Additionally, the Computer Products Group segment declined primarily due to increased competition in the tabletand smartphone categories.28Cost of Products SoldCost of products sold decreased $4.2 million, or 0.3%, to $1,217.2 million from $1,221.4 million in the prior-year period. Foreign currency translationreduced cost of products sold by $18.7 million. The underlying decrease was due to lower sales demand, together with synergies and productivity savingsand 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 theacquisition of Mead C&OP.Gross ProfitGross profit increased $10.8 million, or 2%, to $547.9 million from $537.1 million in the prior-year period. Foreign currency translation reduced grossprofit by $8.8 million. The underlying increase was due to the full year results from the acquisition of Mead C&OP, together with synergies and productivitysavings, which was 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.Gross profit margin increased to 31.0% from 30.5%. 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 expensesSG&A decreased $6.3 million, or 2%, to $347.3 million from $353.6 million in the prior-year period. Foreign currency translation reduced SG&A by$4.7 million. 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 19.7% from 20.1% in the prior-year period primarily due to a reduction in transaction and integrationcharges.Amortization of IntangiblesAmortization of intangibles increased to $24.7 million from $19.9 million in the prior-year period. The increase was driven by incremental amortizationas 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 to 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 quarterof 2013 we committed to restructuring actions that were primarily focused on streamlining our North American school, office and computer productsoperations.Operating IncomeOperating income increased $6.5 million, or 5%, to $145.8 million from $139.3 million in the prior-year period, including a $3.5 million reduction dueto foreign currency translation. The increase was primarily due to synergies and productivity savings and a reduction in transaction and integration charges,which were partially offset by a less profitable sales mix.Interest Expense, Equity in Earnings of Joint Ventures and Other Expense, NetInterest expense decreased to $59.0 million from $91.3 million in the prior-year period, due to the absence of $16.4 million of costs, primarily Merger-related, for the committed financing in the prior-year period and substantially lower effective interest rates as a result of the May 2013 refinancing. Reduceddebt outstanding and higher interest income also contributed to the decline.Equity in earnings of joint ventures increased to $8.2 million from $6.9 million in the prior-year period. During 2012 we took an impairment charge of$1.9 million related our Neschen GBC Graphics Films, LLC joint venture.29Other 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 abargain purchase on an acquisition completed in the fourth quarter of 2013. For a further discussion of our debt refinancing completed in the second quarterof 2013 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 taxrate of 15.7% is primarily due to the reversal of valuation allowances for certain foreign jurisdictions in the amount of $11.6 million. For the prior-yearperiod, we reported an income tax benefit from continuing operations of $121.4 million on a loss from continuing operations before taxes of $4.4 million,primarily due to the release of certain valuation allowances for the U.S. and certain foreign jurisdictions 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) OperatingIncomeMargin Net Sales Net Sales SegmentOperatingIncome SegmentOperatingIncome MarginPoints (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$1,765.1 $178.4 $6.6 $(5.7) Year Ended December 31, 2012 Net Sales SegmentOperatingIncome (A) OperatingIncomeMargin (in millions of dollars) ACCO Brands North America1,028.2 86.2 8.4% ACCO Brands International551.2 62.0 11.2% Computer Products Group179.1 35.9 20.0% Total$1,758.5 $184.1 (A) Segment operating income excludes corporate costs; Interest expense; Interest income; 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 Segmentoperating income to Income (loss) from continuing operations before income tax.ACCO Brands North AmericaACCO Brands North America net sales increased $13.2 million, or 1%, to $1,041.4 million from $1,028.2 million in the prior-year period. The Mergercontributed incremental sales of approximately $88 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 $75 million included unfavorable currency translation of $4.2 million. The decline was driven by softconsumer demand, consumers purchasing more lower-priced products, and lost placements with some customers. These factors impacted both the acquiredMead 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 from $86.2 million in the prior-year period, andoperating income margin increased to 9.4% from 8.4% in the prior-year period. The improvement was due to synergies and productivity savings and theabsence of $11.5 million of amortization of step-up in inventory value due to the Merger. Partially offsetting the improvement were lower sales volume,unfavorable customer/product mix, higher amortization of intangibles of $5.1 million and $1.8 million of costs related to the relocation of our corporate andU.S. headquarters.30ACCO Brands InternationalACCO Brands International net sales increased $15.4 million, or 3%, to $566.6 million from $551.2 million in the prior-year period. The Mergercontributed incremental sales of $37.3 million, with twelve months of results included in the current year and only eight months of results in the prior year.The underlying decline of $21.9 million included unfavorable currency translation of $23.5 million, or 4%. Excluding the effect of the Merger and currencytranslation, sales increased $1.7 million with growth in Brazil due to higher pricing and volume. Partially offsetting the increase were lower sales in otherregions, 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 from $62.0 million in the prior-year period, and operatingincome margin increased to 11.7% from 11.2% in the prior-year period. Foreign currency translation negatively impacted results by $3.7 million, or 6%. Theunderlying improvement (exclusive of currency translation) reflected productivity savings, lower pension expenses, a $2.5 million gain on the sale of afacility and the absence of $1.8 million of amortization of step-up in inventory value due to the Merger. This was partially offset by higher restructuringcharges of $3.1 million.Computer Products GroupComputer Products Group net sales decreased $22.0 million, or 12%, to $157.1 million from $179.1 million in the prior-year period. Volume decreased9% primarily due to increased competition in the tablet and smartphone categories resulting in market share loss and lower sales and pricing. In addition, weexperienced a continuation of the decline in sales of PC accessory and security products due to the ongoing contraction of worldwide PC unit sales volumes.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 from $35.9 million in the prior-year period, andoperating 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, lowerpricing (including royalties), higher inventory obsolescence expenses and increased restructuring charges.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 flow from operating activities, cash and cash equivalents held and seasonal borrowings under our $250.0 millionRevolving Facility. As of December 31, 2014, there were no borrowings under our Revolving Facility and the amount available for borrowings was $238.3million (allowing for $11.7 million of letters of credit outstanding on that date). We maintain adequate financing arrangements at market rates. Because of theseasonality of our business, we typically generate much of our cash flow in the first, third and fourth quarters as receivables are collected. Our Brazilianbusiness is highly seasonal due to the combined impact of the back-to-school season coinciding with the calendar year-end in the fourth quarter. Due tovarious tax laws, it is costly to transfer short-term working capital in and out of Brazil. Therefore, our normal practice is to hold seasonal cash requirementswithin Brazil, invested in Brazilian government securities. Consolidated cash and cash equivalents was $53.2 million as of December 31, 2014, of whichapproximately $10 million was held in Brazil. Our priorities for all other cash flow use over the near term, after funding internal growth, are debt reduction,stock repurchases and acquisition funding.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 $565million and $549 million as of December 31, 2014 and 2013, respectively, of which approximately $43 million and $46 million was cash held at foreignsubsidiaries as of December 31, 2014 and 2013, respectively. If these amounts were distributed to the U.S., in the form of a dividend or otherwise, we wouldbe subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable.Debt Amendment and RefinancingOn June 26, 2014, the Company entered into the Second Amendment to the Amended and Restated Credit Agreement (the "2014 Amendment"). The2014 Amendment relates to and amends the 2013 Restated Credit Agreement and increases the Company’s flexibility to pay dividends and repurchase itsshares based upon the Company’s Consolidated Leverage Ratio (as defined in the 2013 Restated Credit Agreement) and subject to certain other conditionsspecified in the Amendment.31On May 13, 2013, the Company entered into the 2013 Restated Credit Agreement and on May 1, 2012 we entered into the 2012 Credit Agreement inconjunction with the Merger.For further information on our refinancing and amendment see "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financialstatements contained in Item 8. of this report.Loan CovenantsThe 2013 Restated Credit Agreement contains customary affirmative and negative covenants as well as events of default, including payment defaults,breach of 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 2013 Restated Credit Agreement, we are required to meet certain financial tests, including a maximum Consolidated Leverage Ratio asdetermined by reference to the following ratios:Period Maximum Consolidated LeverageRatio(1)July 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 Consolidated Leverage Ratio is computed by dividing the Company's net funded indebtedness by the cumulative four-quarter-trailing EBITDA,which excludes transaction costs, restructuring and other charges up to certain limits as well as other adjustments defined in the 2013 Restated CreditAgreement.The 2013 Restated Credit Agreement also requires the Company to maintain a consolidated fixed charge coverage ratio (as defined in the 2013Restated Credit Agreement, the "Fixed Charge Coverage Ratio") as of the end of any fiscal quarter at or above 1.25 to 1.00.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, 2014, our Consolidated Leverage Ratio was approximately 2.9 to 1 and our Fixed Charge Coverage Ratio was approximately 4.5 to1.As of and for the period ended December 31, 2014, we were in compliance with all applicable loan covenants.Guarantees and SecurityGenerally, obligations under the 2013 Restated Credit Agreement are irrevocably and unconditionally guaranteed, jointly and severally, by certain ofthe Company'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.32The 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 are effectively subordinated to all of the existing and future secured indebtedness of the Company and the guarantors tothe extent of the value of the assets securing such indebtedness. The Senior Notes and the guarantees are and will be structurally subordinated to all existingand future liabilities, including trade payables, of each of the Company's subsidiaries that do not guarantee the notes.Cash FlowFiscal 2014 versus Fiscal 2013Cash Flow from Operating ActivitiesFor the year ended December 31, 2014, cash provided by operating activities was $171.7 million, compared to the cash provided by the prior-yearperiod of $194.5 million. Net income for 2014 was $91.6 million, compared to $77.1 million in 2013.During 2014, the net cash inflow of $171.7 million was generated from operating profit and by net working capital (accounts receivable, inventoriesand accounts payable) which was $21.9 million. Of this, $20.4 million was related to collections of customer accounts receivable, as lower fourth quartersales and improved year-end collections activity contributed additional cash. Cash generated by inventory of $11.6 million was due to continuous inventorysupply chain improvements and the timing of inventory purchases. Cash used by accounts payable of $10.1 million reflects the timing of raw materialspurchased and settled earlier than in the prior year, partially offset by the benefit of extended settlement terms. Partially offsetting the cash flow generated bynet working capital during 2014 were significant cash outflows related to the settlement of customer rebate program liabilities. Other significant cashpayments in 2014 included cash interest payments of $45.1 million, compared to $52.0 million in the prior-year period (which were reduced following ourmid-year 2013 refinancing). In addition, 2014 income tax payments of $28.9 million were lower than the $31.1 million paid in 2013, and cash contributionsto the Company's pension plans, which were $12.4 million in 2014, compared to the $14.7 million in 2013. Restructuring payments in 2014 of $16.9 million,principally associated with employee termination benefits, were lower than the $23.3 million paid during the 2013 year.The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2014 and 2013,respectively:(in millions of dollars) 2014 2013Accounts receivable $20.4 $0.5Inventories 11.6 6.5Accounts payable (10.1) 26.8Cash flow provided by net working capital $21.9 $33.8Cash Flow from Investing ActivitiesCash used by investing activities was $25.8 million and $33.3 million for the years ended December 31, 2014 and 2013, respectively. Gross capitalexpenditures were $29.6 million and $36.6 million for the years ended December 31, 2014 and 2013, respectively. The decrease in capital expenditures wasdue to significant investments associated with the Company's headquarters relocation in 2013. Proceeds from the sale of properties and other assets were $3.8million and $6.1 million for the years ended December 31, 2014 and 2013, respectively.Cash Flow from Financing ActivitiesCash used by financing activities for the year ended December 31, 2014 was $142.0 million. Cash used in 2014 includes repayments of long-term debttotaling $121.1 million and payments of $21.9 million to repurchase the Company's common stock. Cash used by financing activities in 2013 was $155.5million, and reflects repayments of the Company's debt facilities of $679.5 million and debt issuance payments of $4.3 million, which were partly offset byproceeds from the refinancing of long-term debt facilities of $530.0 million.33Fiscal 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.The 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 year-end 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:(in millions of dollars) 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,including integration-related spending in association with the relocation of our Day-Timer operations to other Company locations, investments in theCompany's new corporate 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 facilitiesof $530.0 million, offset by repayments of the Company's extinguished and new debt facilities of $679.5 million. In addition, debt issuance payments in2013 were $4.3 million. Cash provided by financing activities in 2012 was $360.1 million, representing 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.CapitalizationWe had approximately 111.9 million common shares outstanding as of December 31, 2014.Adequacy of Liquidity SourcesBased on our 2015 business plan and latest forecasts, we believe that cash flow from operations, our current cash balance and other sources of liquidity,including borrowings available under our Revolving Facility, will be adequate to support requirements for working capital, capital expenditures, and toservice indebtedness for the foreseeable future. Our future operating performance is dependent on many factors, some of which are beyond our control,including prevailing economic, financial and industry conditions. For more information on these risks see "Part I, Item1A. Risk Factors - Our significantindebtedness requires us to dedicate a substantial portion of our cash flow to debt payments and limits our ability to engage in certain activities."34Off-Balance-Sheet Arrangements and Contractual Financial ObligationsWe do not have any material off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financialcondition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.Our contractual obligations and related payments by period at December 31, 2014 were as follows:(in millions of dollars)2015 2016 - 2017 2018 -2019 Thereafter TotalDebt(1)$1.7 12.5 286.5 $500.0 $800.7Interest on debt(2)41.1 80.7 69.9 16.9 208.6Operating lease obligations23.0 36.3 26.9 35.0 121.2Purchase obligations(3)74.0 21.2 2.4 — 97.6Other long-term liabilities(4)8.1 — — — 8.1Total$147.9 $150.7 $385.7 $551.9 $1,236.2(1)The required 2015 principal cash payments on the Restated Term Loan A were made in 2014.(2)Interest calculated at December 31, 2014 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, 2014, we areunable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $45.9 million of unrecognizedtax benefits have been excluded from the contractual obligations table above. See "Note 11. Income Taxes" to the consolidated financial statementscontained in Item 8. of this report for a discussion on income taxes.Critical Accounting PoliciesOur financial statements are prepared in conformity with accounting principles generally accepted in the U.S ("GAAP"). Preparation of our financialstatements requires us to make judgments, estimates and assumptions that affect the amounts of actual assets, liabilities, revenues and expenses presented foreach reporting 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 historicalbasis.35InventoriesInventories 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 futuredemand and 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.Long-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 flow. When such events occur, we compare the sum of the undiscounted cash flow 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 flow. 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 at least annually to determine whether the indefinite useful life isappropriate. In addition, amortizable intangible assets other than goodwill are amortized over their useful lives. Certain of our trade names have beenassigned an indefinite life as we currently anticipate that these trade names will contribute cash flows to ACCO Brands indefinitely.We review indefinite-lived intangibles for impairment at least annually, normally in the second quarter, and whenever market or business eventsindicate there may 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 impacton cash flows for each business in both the near and long term, as well as their impact on any identifiable intangible asset associated with the business. Basedon recent business results, consideration of significant external and internal factors, and the resulting business projections, indefinite-lived intangible assetsare reviewed to determine whether they are likely to remain indefinite-lived, or whether a finite life is more appropriate. In addition, based on events in theperiod and future expectations, management considers whether the potential for impairment exists. Finite lived intangibles are amortized over 10, 15, 23 or30 years.During 2013, we adopted ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.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 intangibleunit is less than its carrying amount as a basis for determining whether further impairment testing of indefinite-lived intangible assets is necessary.We performed our annual assessment in the second quarter of 2014 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.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 GAAP. Entities are not required to calculate the fair value of a reportingunit unless they determine that it is more likely than not that the fair value is less than the carrying amount.36We performed our annual assessment in the second quarter of 2014 and concluded that no impairment exists; however we did conclude it was necessaryto apply the traditional two-step fair value quantitative impairment test in ASC 350 to our reporting units in 2014 due to the Merger and the decline in sales.When applying a fair-value-based test, if it is determined to be required, the fair value of a reporting unit is compared to its carrying value. If the fair value ofa reporting unit exceeds the carrying value of the net assets assigned to a reporting unit, goodwill is considered not impaired and no further testing isrequired. If the carrying value of the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, the second step of the impairment test isperformed in order to determine the implied fair value of a reporting unit’s goodwill. Determining the implied fair value of goodwill requires valuation of areporting unit’s tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carryingvalue of a reporting unit’s goodwill exceeds its implied fair value, goodwill is deemed impaired and is written down to the extent of the difference. For theNorth America reporting unit, we determined that its fair value exceeded its carrying amount by 13%. Key financial assumptions utilized to determine the fairvalue of the North America reporting unit included annual sales growth rates in the range of (1.4)% to 0.2% and a 9.0% discount rate. For the Internationalreporting unit, we determined that its fair value exceeded its carrying amount by 52%. Key financial assumptions utilized to determine the fair value of theInternational reporting unit included annual sales growth rates in the range of 3.2% to 4.4% and a 10.5% discount rate. For the Computer Products Groupreporting unit we determined that its fair value exceeded its carrying amount by 33%. Key financial assumptions utilized to determine the fair value of theComputer Products Group reporting unit included annual sales growth rates in the range of (3.5)% to 2.5% and a 10.0% discount rate.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 2014 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 2015 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 GAAP, which include various actuarial assumptions, including discountrates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. Actuarial assumptions are reviewed on an annual basisand modifications to these assumptions are made based on current rates and trends when it is deemed appropriate. As required by GAAP, the effect of ourmodifications are generally recorded and amortized over future periods. We believe that the assumptions utilized in recording our obligations under the plansare reasonable based on our experience. The actuarial assumptions used to record our plan obligations could differ materially from actual results due tochanging economic and market conditions, higher or lower withdrawal rates or other factors which may impact the amount of retirement-related benefitexpense 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.At 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 (income) was $(0.2) million, $6.3 million and $8.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. The$6.5 million decrease in pension expense in 2014 compared to 2013 was due to lower amortization of actuarial losses due to lower discount rates at the endof 2013 and higher expected returns on the plans' assets because of a higher level of assets due to market performance. The $2.6 million decrease in pensionexpense 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 marketreturns and a37$1.0 million curtailment gain, which were partially offset by higher amortization of actuarial losses in the U.S. plans. Post-retirement expense (income) was$(0.5) million, $0.2 million and $(0.8) million for the years ended December 31, 2014, 2013 and 2012, respectively. The $1.0 million increase in post-retirement expense in 2013 compared to 2012 was due to reduced amortization of actuarial gains.The weighted average assumptions used to determine benefit obligations for the years ended December 31, 2014, 2013, and 2012 were as follows: Pension Benefits Post-retirement U.S. International 2014 2013 2012 2014 2013 2012 2014 2013 2012Discount rate4.2% 5.0% 4.2% 3.4% 4.3% 4.3% 3.7% 4.4% 4.0%Rate of compensationincreaseN/A N/A N/A 3.0% 3.3% 4.0% — — —The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2014, 2013 and 2012 were as follows: Pension Benefits Post-retirement U.S. International 2014 2013 2012 2014 2013 2012 2014 2013 2012Discount rate5.0% 4.2% 5.0% 4.3% 4.3% 4.7% 4.4% 4.0% 4.5%Expected long-term rate ofreturn8.2% 8.2% 8.2% 6.8% 6.8% 6.2% — — —Rate of compensationincreaseN/A N/A N/A 3.3% 4.0% 3.6% — — —In 2015, we expect pension income of approximately $5.2 million and post-retirement expense of approximately $0.2 million. The estimated $5.0million increase in pension income for 2015 compared to 2014 is due to reduced amortization of actuarial losses in the U.S. Effective in 2015 we will changethe amortization of our net actuarial loss included in accumulated other comprehensive income (loss) for the U.S. Salaried Plan from the average remainingservice period of active employees expected to receive benefits under the plan to the average remaining life expectancy of all participants. This change wasthe result of the Company's decision to permanently freeze the benefits under the plan. This change will reduce the net periodic benefit cost in the U.S. byapproximately $6.0 million for the year ended December 31, 2015 and will be partially offset by higher amortization of actuarial losses in our internationalplans.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 $0.1 million for 2015. 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 2015.Pension and post-retirement liabilities of $100.5 million as of December 31, 2014, increased from $61.7 million at December 31, 2013, due to lowerdiscount rates compared to prior year assumptions and the adoption of new mortality tables for the U.S. and Canadian 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 theabsence of a signed contract, estimates are based on historical or projected experience for each program type or customer. Management periodically reviewsaccruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in sales volume expectations orcustomer contracts).38Income 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 toan amount 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 realizecertain net operating losses and other deferred tax attributes.The amount of income taxes that we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcomeof any 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 $565 million and $549 million as of December 31, 2014 and 2013, 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.Recent Accounting PronouncementsFor information on recent accounting pronouncements see "Note 2. Significant Accounting Policies" to the consolidated financial statementscontained in 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 andasset reductions.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 our exposure to local currency movements is in Europe (both the Euro and the British pound), Brazil,Canada, Australia, Mexico and Japan. All of the existing foreign exchange contracts as of December 31, 2014 have maturity dates in 2015. Increases anddecreases in the fair market values of the forward agreements are expected to be offset by gains/losses in recognized net underlying foreign currencytransactions or loans. Notional amounts of outstanding foreign currency forward exchange contracts were $124.2 million and $144.2 million at December 31,2014 and 2013, respectively. The net fair value of these foreign currency contracts was $4.2 million and $0.9 million at December 31, 2014 and 2013,respectively. At December 31, 2014, a 10% unfavorable exchange rate movement in our portfolio of foreign currency forward contracts would have reducedour unrealized gains by $8.3 million. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses orgains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When takentogether, we believe these forward contracts 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. Derivative Financial Instruments" and "Note14. Fair Value of Financial Instruments" to the consolidated financial statements contained in Item 8. of this report.Interest Rate Risk ManagementAmounts outstanding under the 2013 Restated Credit Agreement bear interest (i) in the case of Eurodollar loans, at a rate39per annum equal to the Eurodollar rate (which is based on an average British Bankers Association Interest Settlement Rate) plus the applicable rate; (ii) in thecase 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 2013 Restated Credit Agreement) then in effect plus ½ of 1.00% and (c) the Eurodollar rate that would be payable on such day for aEurodollar loan with a one-month interest period plus 1.00%), at a rate per annum equal to the Base Rate plus the applicable rate; and (iii) in the case ofswing line loans, at a rate per annum equal to the Base Rate plus the applicable rate for the Revolving Facility. Separate base interest rate and applicable rateprovisions will apply for any Canadian or Australian currency denominated loans outstanding under the Revolving Facility.The applicable rate applied to outstanding Eurodollar loans and Base Rate loans is based on our consolidated Leverage Ratio as follows:ConsolidatedLeverage Ratio Eurodollar CreditSpread 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, 2014, including the principal cash payments andinterest rates.Debt Obligations Stated Maturity Date (in millions of dollars)2015 2016 2017 2018 2019 Thereafter Total Fair ValueLong term debt: Fixed rate Senior Unsecured Notes, dueApril 2020$— $— $— $— $— $500.0 $500.0 $531.2Average fixed interest rate6.75% 6.75% 6.75% 6.75% 6.75% 6.75% Variable rate U.S. Dollar Senior SecuredTerm Loan A, due May 2018(1)$— $6.1 $6.4 $286.5 $— $— $299.0 $299.0Average variable interest rate(2)2.24% 2.24% 2.24% 2.24% (1)The required 2015 principal cash payments were made in 2014.(2)Rates presented are as of December 31, 2014.40ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm42Consolidated Balance Sheets43Consolidated Statements of Income44Consolidated Statements of Comprehensive Income (Loss)45Consolidated Statements of Cash Flows46Consolidated Statements of Stockholders’ Equity (Deficit)47Notes to Consolidated Financial Statements4841Report of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders of ACCO Brands Corporation:We have audited the accompanying consolidated balance sheets of ACCO Brands Corporation and subsidiaries as of December 31, 2014 and 2013, and therelated consolidated statements of income, comprehensive income (loss), cash flows, and stockholders’ equity (deficit) for each of the years in the three-yearperiod ended December 31, 2014. In connection with our audits of the consolidated financial statements, we also audited the related consolidated financialstatement schedule, Schedule II - Valuation and Qualifying Accounts and Reserves. We also have audited ACCO Brands Corporation’s internal control overfinancial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). ACCO Brands Corporation’s management is responsible for these consolidated financialstatements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on these consolidated financial statements and financial statement schedule and an opinion on the Company’s internalcontrol 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 thatwe plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effectiveinternal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtainingan understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessaryin the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ACCO BrandsCorporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-yearperiod ended December 31, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statementschedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the informationset forth therein. Also in our opinion, ACCO Brands Corporation maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO)./s/ KPMG LLPChicago, IllinoisFebruary 25, 201542ACCO Brands Corporation and SubsidiariesConsolidated Balance Sheets December 31, 2014 December 31, 2013(in millions of dollars, except share data) Assets Current assets: Cash and cash equivalents$53.2 $53.5Accounts receivable less allowances for discounts, doubtful accounts and returns of $19.5 and $21.2,respectively420.5 471.9Inventories229.9 254.7Deferred income taxes39.4 33.5Other current assets35.8 28.1Total current assets778.8 841.7Total property, plant and equipment547.7 548.5Less accumulated depreciation(312.2) (295.2)Property, plant and equipment, net235.5 253.3Deferred income taxes31.7 37.3Goodwill544.9 568.3Identifiable intangibles, net of accumulated amortization of $166.3 and $147.8, respectively571.4 607.0Other non-current assets64.1 75.3Total assets$2,226.4 $2,382.9Liabilities and Stockholders' Equity Current liabilities: Notes payable$0.8 $—Current portion of long-term debt0.8 0.1Accounts payable159.1 177.9Accrued compensation36.6 32.0Accrued customer program liabilities111.8 123.6Accrued interest6.5 7.0Other current liabilities79.8 104.5Total current liabilities395.4 445.1Long-term debt799.0 920.8Deferred income taxes172.2 169.1Pension and post-retirement benefit obligations100.5 61.7Other non-current liabilities78.3 83.9Total liabilities1,545.4 1,680.6Stockholders' 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; 112,670,514 and 114,056,416 shares issued and111,911,290 and 113,663,856 outstanding, respectively1.1 1.1Treasury stock, 759,224 and 392,560 shares, respectively(5.9) (3.5)Paid-in capital2,031.5 2,035.0Accumulated other comprehensive loss(292.6) (185.6)Accumulated deficit(1,053.1) (1,144.7)Total stockholders' equity681.0 702.3Total liabilities and stockholders' equity$2,226.4 $2,382.9See notes to consolidated financial statements.43ACCO Brands Corporation and SubsidiariesConsolidated Statements of Income Year Ended December 31,(in millions of dollars, except per share data)2014 2013 2012Net sales$1,689.2 $1,765.1 $1,758.5Cost of products sold1,159.3 1,217.2 1,221.4Gross profit529.9 547.9 537.1Operating costs and expenses: Advertising, selling, general and administrative expenses328.6 347.3 353.6Amortization of intangibles22.2 24.7 19.9Restructuring charges5.5 30.1 24.3Total operating costs and expenses356.3 402.1 397.8Operating income173.6 145.8 139.3Non-operating expense (income): Interest expense49.5 59.0 91.3Interest income(5.6) (4.3) (2.0)Equity in earnings of joint ventures(8.1) (8.2) (6.9)Other expense, net0.8 7.6 61.3Income (loss) from continuing operations before income tax137.0 91.7 (4.4)Income tax expense (benefit)45.4 14.4 (121.4)Income from continuing operations91.6 77.3 117.0Loss from discontinued operations, net of income taxes— (0.2) (1.6)Net income$91.6 $77.1 $115.4Per share: Basic income per share: Income from continuing operations$0.81 $0.68 $1.24Loss from discontinued operations$— $— $(0.02)Basic income per share$0.81 $0.68 $1.23Diluted income per share: Income from continuing operations$0.79 $0.67 $1.22Loss from discontinued operations$— $— $(0.02)Diluted income per share$0.79 $0.67 $1.20Weighted average number of shares outstanding: Basic113.7 113.5 94.1Diluted116.3 115.7 96.1See notes to consolidated financial statements.44ACCO Brands Corporation and SubsidiariesConsolidated Statements of Comprehensive Income (Loss) Year Ended December 31,(in millions of dollars)2014 2013 2012Net income$91.6 $77.1 $115.4Other comprehensive income (loss), before tax: Unrealized gain (loss) on derivative financial instruments: Gain (loss) arising during the period6.9 3.7 (0.2)Reclassification of gain included in net income(3.5) (3.4) (1.9)Foreign currency translation: Foreign currency translation adjustments(76.4) (61.6) (10.9)Pension and other post-retirement plans: Actuarial (loss) gain arising during the period(60.2) 39.3 (21.1)Amortization of actuarial loss included in net income6.0 11.4 7.2Amortization of prior service cost included in net income0.3 0.1 —Other5.1 (2.1) (4.5)Other comprehensive loss, before tax(121.8) (12.6) (31.4)Income tax benefit (expense) related to items of other comprehensive loss14.8 (16.9) 6.3Comprehensive (loss) income$(15.4) $47.6 $90.3See notes to consolidated financial statements.45ACCO Brands Corporation and SubsidiariesConsolidated Statements of Cash Flows Year Ended December 31,(in millions of dollars)2014 2013 2012Operating activities Net income$91.6 $77.1 $115.4Amortization of inventory step-up— — 13.3Loss (gain) on disposal of assets0.8 (4.1) 2.0Deferred income tax provision20.6 (0.7) (9.9)Release of tax valuation allowance— (11.6) (145.1)Depreciation35.3 39.9 34.5Amortization of debt issuance costs4.6 6.2 9.9Amortization of intangibles22.2 24.7 19.9Stock-based compensation15.7 16.4 9.2Loss on debt extinguishment— 9.4 15.5Other non-cash charges0.7 1.2 2.3Equity in earnings of joint ventures, net of dividends received(2.4) (2.7) 3.0Changes in balance sheet items: Accounts receivable20.4 0.5 (153.8)Inventories11.6 6.5 61.8Other assets(6.1) 0.1 7.4Accounts payable(10.1) 26.8 (25.0)Accrued expenses and other liabilities(28.9) 9.0 30.1Accrued income taxes(4.3) (4.2) 2.0Net cash provided (used) by operating activities171.7 194.5 (7.5)Investing activities Additions to property, plant and equipment(29.6) (36.6) (30.3)(Payments) proceeds related to the sale of discontinued operations— (1.5) 1.5Proceeds from the disposition of assets3.8 6.1 3.1Cost of acquisitions, net of cash acquired— (1.3) (397.5)Net cash used by investing activities(25.8) (33.3) (423.2)Financing activities Proceeds from long-term borrowings— 530.0 1,270.0Repayments of long-term debt(121.1) (679.5) (872.0)Borrowings (repayments) of notes payable, net1.0 (0.7) 1.2Payments for debt issuance costs(0.3) (4.3) (38.5)Repurchases of common stock(19.4) — —Payments related to tax withholding for share-based compensation(2.5) (1.0) (0.8)Proceeds from the exercise of stock options0.3 — 0.2Net cash (used) provided by financing activities(142.0) (155.5) 360.1Effect of foreign exchange rate changes on cash and cash equivalents(4.2) (2.2) (0.6)Net (decrease) increase in cash and cash equivalents(0.3) 3.5 (71.2)Cash and cash equivalents Beginning of the period53.5 50.0 121.2End of the period$53.2 $53.5 $50.0Cash paid during the year for: Interest$45.1 $52.0 $94.9Income taxes$28.9 $31.1 $28.8 Year Ended December 31,(in millions of dollars)2014 2013 2012Significant non-cash transactions: Common stock issued in conjunction with the acquisition of Mead C&OP$— $— $602.3See notes to consolidated financial statements.46ACCO Brands Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity (Deficit)(in millions of dollars)CommonStock Paid-inCapital AccumulatedOtherComprehensiveIncome (Loss) TreasuryStock AccumulatedDeficit TotalBalance at December 31, 2011$0.6 $1,407.4 $(131.0) $(1.7) $(1,337.2) $(61.9)Net income— — — — $115.4 115.4Stock issuance - Mead C&OP acquisition0.5 601.8 — — — 602.3Loss on derivative financial instruments,net of tax— — (2.1) — — (2.1)Translation impact— — (10.9) — — (10.9)Pension and post-retirement adjustment,net of tax— — (12.1) — — (12.1)Stock-based compensation— 9.2 — — — 9.2Common stock issued, net of shareswithheld for employee taxes— 0.2 — (0.8) — (0.6)Other— (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-retirement adjustment,net of tax— — 31.9 — — 31.9Stock-based compensation— 16.4 — — — 16.4Common stock issued, net of shareswithheld for employee taxes— — — (1.0) — (1.0)Other— 0.1 — — — 0.1Balance at December 31, 20131.1 2,035.0 (185.6) (3.5) (1,144.7) 702.3Net income— — — — 91.6 91.6Income on derivative financialinstruments, net of tax— — 2.4 — — 2.4Translation impact— — (76.4) — — (76.4)Pension and post-retirement adjustment,net of tax— — (33.0) — — (33.0)Common stock repurchases— (19.4) — — — (19.4)Stock-based compensation— 15.7 — — — 15.7Common stock issued, net of shareswithheld for employee taxes— 0.3 — (2.5) — (2.2)Other— (0.1) — 0.1 — —Balance at December 31, 2014$1.1 $2,031.5 $(292.6) $(5.9) $(1,053.1) $681.0Shares of Capital Stock CommonStock TreasuryStock NetSharesShares at December 31, 201155,659,753 184,018 55,475,735Common stock issued, net of shares withheld for employee taxes654,263 76,462 577,801Stock issuance - Mead C&OP acquisition57,089,808 — 57,089,808Shares at December 31, 2012113,403,824 260,480 113,143,344Common stock issued, net of shares withheld for employee taxes652,592 132,080 520,512Shares at December 31, 2013114,056,416 392,560 113,663,856Common stock issued, net of shares withheld for employee taxes1,369,740 366,664 1,003,076Common stock repurchases(2,755,642) — (2,755,642)Shares at December 31, 2014112,670,514 759,224 111,911,290See notes to consolidated financial statements.47ACCO 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 forusing the 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 theConsolidated Statements of Income.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. Forfurther information on the Merger see "Note 3. Acquisitions."We reclassified certain costs from cost of products sold to SG&A to align classifications of certain expenses across our businesses. All prior periodshave been adjusted to make the results comparable. For the years ended December 31, 2013, and 2012 reclassified costs totaled $3.1 million, and $3.7million, respectively. These historical reclassifications were not material and have had no effect on net income.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 and tablets. We sell primarily to large resellers, and our subsidiaries operateprincipally in the United States, Northern Europe, Brazil, Canada, Australia and Mexico.Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the U.S ("GAAP") requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues 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 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 historicalbasis.48ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 futuredemand and 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 may not be recoverablefrom its undiscounted cash flow. When such events occur, we compare the sum of the undiscounted cash flow 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 flow. 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 indefinitelife as 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 for Impairment.ASU No. 2012-02 permits entities to first assess qualitative factors to determine if it is more likely than49ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 ofindefinite-lived intangible assets is necessary.We performed our annual assessment in the second quarter of 2014 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.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 netassets acquired. The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level.We have determined that our reporting units are ACCO Brands North America, ACCO Brands International and Computer Products Group segments. We testgoodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. During 2012,we adopted ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits entities to firstassess qualitative 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 fordetermining whether it is necessary to perform the two-step goodwill impairment test included in GAAP. Entities are not required to calculate the fair value ofa reporting 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 assessmentin the second quarter of 2014 and concluded that no impairment exists. We performed our assessment using the two-step fair value quantitative impairmenttest in ASC 350 to our reporting units in 2014 due to the Merger and the decline in sales. When applying a fair-value-based test, if it is determined to berequired, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unit exceeds the carrying value of the net assetsassigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carrying value of the net assets assigned to areporting 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 liabilitiesin a 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.We record annual amounts relating to these plans based on calculations, which include various actuarial assumptions, including discount rates, assumed ratesof return 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 toan amount 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 realizecertain net operating losses and other deferred tax attributes.The amount of income taxes that we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcomeof any uncertain tax position is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. We believe that we haveadequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorableadjustments to our estimated tax liabilities in the period the assessments are revised or resolved.Revenue RecognitionWe recognize revenue from product sales when earned, net of applicable provisions for discounts, 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 have50ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)passed to the customer, persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonablyassured. We also provide for our estimate of potential 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.).Advertising CostsAdvertising costs amounted to $130.8 million, $131.0 million and $125.7 million for the years ended December 31, 2014, 2013 and 2012, respectivelyand are principally expensed as incurred.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 recognize customer program costs as a deduction to gross sales at the time that the associated revenue is recognized. Certain customer incentivesthat do 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, sharedmedia and 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.Research and DevelopmentResearch and development expenses, which amounted to $20.2 million, $22.5 million and $20.8 million for the years ended December 31, 2014, 2013and 2012, respectively, are classified as general and administrative expenses and are charged to expense as incurred.51ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Stock-Based CompensationOur primary types of share-based compensation consist of stock options, restricted stock unit awards, and performance stock unit awards. Stock-basedcompensation 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. Whereawards are made with non-substantive vesting periods (for example, where a portion of the award vests upon retirement eligibility), we estimate and recognizeexpense 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 isdesignated as a fair value hedge and is effective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk arerecognized in earnings in the same period. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of thederivative are recorded in other comprehensive income (loss) and are recognized in the income statement when the hedged item affects earnings. Ineffectiveportions of changes in the fair 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 PronouncementsThere were no new accounting pronouncements that the Company adopted in 2014 that had a material impact on the Company’s consolidated financialstatements.In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). The standard provides companies with asingle model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, includingindustry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, asopposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. ASU 2014-09 is effective for annualreporting periods beginning after December 15, 2016. Early adoption is not permitted. The guidance permits companies to either apply the requirementsretrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The Company is in theprocess of evaluating the impact of adoption of ASU 2014-09 on its consolidated financial statements.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.52ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)ACCO’s management determined that ACCO is the accounting acquiror in this combination. Accordingly, the results of Mead C&OP are included inthe Company's consolidated financial statements from the date of the Merger.The purchase price, net of working capital adjustments and cash acquired, was $999.8 million. The consideration given included 57.1 million shares ofACCO 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. Thecalculation 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 given 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, 2012.53ACCO 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 ofacquisition:(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 connection with our acquisition of Mead C&OP we assumed all of the tax liabilities for the acquired foreign operations including Tilibra Produtos dePapelaria Ltda. ("Tilibra"). See "Note 11. Income Taxes - Income Tax Assessment" for details on tax assessments issued by the Federal Revenue Department ofthe Ministry of Finance of Brazil ("FRD") against Tilibra, which challenged the tax deduction of goodwill from Tilibra's taxable income for the years 2007through 2010.Acquisition-related costs of $14.5 million that were incurred during the year ended December 30, 2012 were classified as SG&A expenses.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, 2014 and 2013:(in millions of dollars)2014 2013U.S. Dollar Senior Secured Term Loan A, due May 2018 (floating interest rate of 2.24% at December 31, 2014and 2.49% at December 31, 2013)$299.0 $420.0Senior Unsecured Notes, due April 2020 (fixed interest rate of 6.75%)500.0 500.0Other borrowings1.7 0.9Total debt800.7 920.9Less: current portion(1.7) (0.1)Total long-term debt$799.0 $920.8On June 26, 2014, the Company entered into a Second Amendment to the Amended and Restated Credit Agreement (the "2014 Amendment"). The 2014Amendment relates to and amends the Company’s Amended and Restated Credit Agreement, dated54ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)as of May 13, 2013 (the "2013 Restated Credit Agreement") among the Company, certain of its subsidiaries, the lenders party thereto, the administrativeagent and other parties named therein.The 2014 Amendment increases the Company’s flexibility to pay dividends and repurchase its shares based upon the Company’s ConsolidatedLeverage Ratio (the "Leverage Ratio," as defined in the 2013 Restated Credit Agreement) and subject to certain other conditions specified in the 2014Amendment.Effective May 13, 2013 (the "Effective Date"), the Company entered into the 2013 Restated Credit Agreement that amended and restated the Company'sprior credit agreement, dated as of March 26, 2012, as amended (the “2012 Credit Agreement”), that had been entered into in connection with the Merger.The 2013 Restated Credit Agreement provides for a $780 million, five-year senior secured credit facility, which consists of a $250.0 million multi-currency revolving credit facility, due May 2018 (the "Revolving Facility") and a $530.0 million U.S. dollar denominated Senior Secured Term Loan A, dueMay 2018 (the "Restated Term Loan A"). Specifically, in connection with the 2013 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 2012 CreditAgreement, which had an aggregate principal amount of $310.2 million outstanding immediately prior to the Effective Date, using a portion of theproceeds from the Restated Term A Loan; and•replaced the $250.0 million revolving credit facility under the 2012 Credit Agreement with the Revolving Facility.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.During the year 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 2013 Restated CreditAgreement. Of these fees, $4.2 million were capitalized and are being amortized over the life of the Restated Term Loan A and the Revolving Facility.As of December 31, 2014, there were no borrowings under the Revolving Facility. The amount available for borrowings was $238.3 million (allowingfor $11.7 million of letters of credit outstanding on that date).The Revolving Facility is expected to be available for working capital and general corporate purposes. Undrawn amounts under the Revolving Facilityare subject to a commitment fee rate of 0.25% to 0.50% per annum, depending on the Company's Leverage Ratio. As of December 31, 2014, the commitmentfee rate was 0.375%.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 aggregateprincipal amount of such loan by June 30, 2016. Due to prepayments made during 2014, the next scheduled installment is due March 31, 2016.Interest ratesAmounts outstanding under the 2013 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 atthe 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 2013Restated Credit Agreement) then in effect55ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 period plus 1.00%), at a rateper 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 Base Rate plus theapplicable rate for the Revolving Facility. Separate base interest rate and applicable rate provisions will apply for any Canadian or Australian currencydenominated loans outstanding under the Revolving Facility.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 CreditSpread 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%As of December 31, 2014, the Eurodollar credit spread for the Restated Term Loan A and amounts drawn under the Revolving Credit Facility was 2.00%and the Base Rate credit spread was 1.00%.PrepaymentsSubject to certain conditions and exceptions, the 2013 Restated Credit Agreement requires the Company to prepay outstanding loans in certaincircumstances, 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 millionper 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 fiscalyear and (c) in an amount equal to 100% of the net cash proceeds from additional debt other than debt permitted under the 2013 Restated CreditAgreement. The Company also is required to prepay outstanding loans with specified percentages of excess cash flow based on its leverage. The 2013Restated Credit Agreement contains other customary 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 2013 Restated Credit Agreement. The covenants become more restrictive overtime and require us to maintain certain ratios related to the Leverage Ratio. We are also subject to certain customary restrictive covenants under the SeniorUnsecured Notes, due April 2020 (the "Senior Notes").The 2013 Restated Credit Agreement contains customary affirmative and negative covenants as well as events of default, including payment defaults,breach of 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 2013 Restated Credit Agreement, the Company is required to meet certain financial tests, including a maximum Leverage Ratio asdetermined by reference to the following ratios:Period Maximum Consolidated LeverageRatio(1)July 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 2013 Restated Credit Agreement.The 2013 Restated Credit Agreement also requires the Company to maintain a consolidated fixed charge coverage ratio (as defined in the 2013Restated Credit Agreement) as of the end of any fiscal quarter at or above 1.25 to 1.00.56ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The indenture governing the Senior Notes does not contain financial performance covenants. However, that indenture does contain covenants thatlimit, 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 2013 Restated Credit Agreement are irrevocably and unconditionally guaranteed, jointly and severally, by certain ofthe Company'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, 2014, we were in compliance with all applicable loan covenants.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.Several of these plans have been frozen and are no longer accruing additional service benefits. Cash contributions to the plans are made as necessary toensure legal funding requirements are satisfied.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.(the "U.S. Salaried Plan") effective March 7, 2009. During the fourth quarter of 2014, the U.S.Salaried Plan became permanently frozen. On September 30, 2012, our U.K. pension plan was frozen.The Merger added six additional pension and post-retirement plans in the U.S. and Canada. In the U.S. we added a pension plan for certain bargainedhourly employees of Mead C&OP. As of December 31, 2014, we have permanently frozen a portion of this plan. In Canada we added five pension and post-retirement plans, as of December 31, 2013. We permanently froze the Salaried and Supplemental Executive Retirement Plans in Canada.We also provide post-retirement health care and life insurance benefits to certain employee groups outside of the U.S and certain employees and retireesin the U.S., U.K. and Canada. All but one of these benefit plans have been frozen to new participants. Many employees and retirees outside of the U.S. arecovered by government health care programs.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)2014 2013 2014 2013 2014 2013Change in projected benefit obligation(PBO) Projected benefit obligation at beginning ofyear$177.4 $191.7 $371.4 $361.0 $13.3 $16.0Service cost2.1 2.0 0.8 1.6 0.2 0.2Interest cost8.6 7.9 15.7 14.7 0.5 0.6Actuarial loss (gain)34.2 (19.0) 48.3 1.9 (0.3) (2.8)Participants’ contributions— — 0.2 0.3 0.1 0.1Benefits paid(9.4) (8.9) (16.6) (13.9) (0.8) (0.7)Curtailment gain— — — (1.0) — —Plan amendments— 3.7 (0.2) — (0.4) —Foreign exchange rate changes— — (27.8) 6.8 (0.4) (0.1)Projected benefit obligation at end of year212.9 177.4 391.8 371.4 12.2 13.3Change in plan assets Fair value of plan assets at beginning of year156.3 135.4 342.8 311.9 — —Actual return on plan assets10.8 21.7 43.8 32.2 — —Employer contributions6.2 8.1 5.5 6.0 0.7 0.6Participants’ contributions— — 0.2 0.3 0.1 0.1Benefits paid(9.4) (8.9) (16.6) (13.9) (0.8) (0.7)Foreign exchange rate changes— — (24.5) 6.3 — —Fair value of plan assets at end of year163.9 156.3 351.2 342.8 — —Funded status (Fair value of plan assets lessPBO)$(49.0) $(21.1) $(40.6) $(28.6) $(12.2) $(13.3)Amounts recognized in the ConsolidatedBalance Sheets consist of: Other non-current assets$— $— $— $0.3 $— $—Other current liabilities— — 0.5 0.6 0.8 1.0Pension and post-retirement benefitobligations(1)49.0 21.1 40.1 28.3 11.4 12.3Components of accumulated othercomprehensive income, net of tax: Unrecognized actuarial loss (gain)51.9 33.3 78.1 63.6 (1.1) (2.9)Unrecognized prior service cost (credit)2.4 2.7 (0.4) (0.3) (1.5) (0.1)(1)Pension and post-retirement obligations of $100.5 million as of December 31, 2014, increased from $61.7 million as of December 31, 2013, due to lowerdiscount rates compared to prior year assumptions and the adoption of new mortality tables for the U.S. and Canadian 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 componentsof net periodic benefit cost (income) for the year ended December 31, 2015: Pension Benefits Post-retirement(in millions of dollars)U.S. International Actuarial loss (gain)$2.1 $2.5 $(0.2)Prior service cost (credit)0.4 — (0.2) $2.5 $2.5 $(0.4)Effective in 2015 we will change the amortization of our net actuarial loss included in accumulated other comprehensive income (loss) for the U.S.Salaried Plan from the average remaining service period of active employees expected to receive benefits under the plan to the average remaining lifeexpectancy of all participants. This change was the result of the Company's decision to permanently freeze the benefits under the plan.All of our plans have projected benefit obligations in excess of plan assets, except for one Canadian pension plan.The accumulated benefit obligation for all pension plans was $590.0 million and $533.5 million at December 31, 2014 and 2013, 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)2014 2013 2014 2013Projected benefit obligation$212.9 $177.4 $371.0 $331.2Accumulated benefit obligation209.1 173.0 360.9 321.7Fair value of plan assets163.9 156.3 331.1 302.8The components of net periodic benefit cost (income) for pension and post-retirement plans for the years ended December 31, 2014, 2013, and 2012,respectively, were as follows: Pension Benefits Post-retirement U.S. International (in millions of dollars)2014 2013 2012 2014 2013 2012 2014 2013 2012Service cost$2.1 $2.0 $1.2 $0.8 $1.6 $2.1 $0.2 $0.2 $0.2Interest cost8.6 7.9 8.4 15.7 14.7 14.3 0.5 0.6 0.6Expected return on plan assets(12.0) (10.4) (10.4) (22.8) (20.6) (16.2) — — —Amortization of net loss (gain)5.1 9.6 6.2 1.9 2.4 2.2 (1.1) (0.6) (1.6)Amortization of prior servicecost (credit)0.4 0.1 — — — 0.4 — — —Curtailment gain— — — — (1.0) — — — —Settlement loss (gain)— — 0.7 — — — (0.1) — —Net periodic benefit cost(income)$4.2 $9.2 $6.1 $(4.4) $(2.9) $2.8 $(0.5) $0.2 $(0.8)In 2013, we recognized a curtailment gain of $1.0 million related to freezing two of our Canadian pension plans.During 2012, due to the Merger, we settled the Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (the "SRP"). The SRPprovided that the accrued vested benefit of each participant be paid in an actuarial equivalent lump sum upon the occurrence of a change of control (asdefined in the SRP), which resulted in a settlement charge of $0.7 million.59ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Other changes in plan assets and benefit obligations that were recognized in other comprehensive income (loss) during the years ended December 31,2014, 2013, and 2012 were as follows: Pension Benefits Post-retirement U.S. International (in millions of dollars)2014 2013 2012 2014 2013 2012 2014 2013 2012Current year actuarial loss(gain)$35.4 $(30.2) $9.6 $27.3 $(10.0) $11.4 $(0.3) $(2.8) $0.1Amortization of actuarial(loss) gain(5.1) (9.6) (6.2) (1.9) (2.4) (2.2) 1.1 0.6 1.6Current year prior service cost(credit)— 3.7 0.8 (0.2) — (0.3) (0.3) — —Amortization of prior servicecost(0.4) (0.1) — — — (0.4) — — —Foreign exchange rate changes— — — (6.8) 2.1 4.1 0.1 — (0.1)Total recognized in othercomprehensive income (loss)$29.9 $(36.2) $4.2 $18.4 $(10.3) $12.6 $0.6 $(2.2) $1.6Total recognized in netperiodic benefit cost (credit)and other comprehensiveincome (loss)$34.1 $(27.0) $10.3 $14.0 $(13.2) $15.4 $0.1 $(2.0) $0.8AssumptionsThe weighted average assumptions used to determine benefit obligations for the years ended December 31, 2014, 2013, and 2012 were as follows: Pension Benefits Post-retirement U.S. International 2014 2013 2012 2014 2013 2012 2014 2013 2012Discount rate4.2% 5.0% 4.2% 3.4% 4.3% 4.3% 3.7% 4.4% 4.0%Rate of compensationincreaseN/A N/A N/A 3.0% 3.3% 4.0% — — —The weighted average assumptions used to determine net periodic benefit cost (income) for the years ended December 31, 2014, 2013, and 2012 wereas follows: Pension Benefits Post-retirement U.S. International 2014 2013 2012 2014 2013 2012 2014 2013 2012Discount rate5.0% 4.2% 5.0% 4.3% 4.3% 4.7% 4.4% 4.0% 4.5%Expected long-term rate ofreturn8.2% 8.2% 8.2% 6.8% 6.8% 6.2% — — —Rate of compensationincreaseN/A N/A N/A 3.3% 4.0% 3.6% — — —The weighted average health care cost trend rates used to determine post-retirement benefit obligations and net periodic benefit cost as of December 31,2014, 2013, and 2012 were as follows: Post-retirement Benefits 2014 2013 2012Health care cost trend rate assumed for next year8% 8% 7%Rate that the cost trend rate is assumed to decline (the ultimate trend rate)5% 5% 5%Year that the rate reaches the ultimate trend rate2023 2020 202060ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one-percentage-point change inassumed health care cost trend rates would have the following effects: 1-Percentage- 1-Percentage-(in millions of dollars)Point Increase Point DecreaseIncrease (decrease) on total of service and interest cost$0.2 $(0.1)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, 2014 and 2013 were as follows: 2014 2013 U.S. International U.S. InternationalAsset category Equity securities62% 45% 62% 48%Fixed income31 38 31 36Real estate— 3 — 3Other(1) 7 14 7 13Total100% 100% 100% 100%(1)Insurance contracts, multi-strategy hedge funds and cash and cash equivalents for certain of our plans.U.S. Pension Plan AssetsThe fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2014 were as follows:(in millions of dollars)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2014Common stocks$8.3 $— $— $8.3Mutual funds93.2 — — 93.2Common collective trust funds— 8.9 — 8.9Government debt securities— 2.2 — 2.2Corporate debt securities— 16.7 — 16.7Asset-backed securities— 9.8 — 9.8Multi-strategy hedge funds— 9.5 — 9.5Government mortgage-backed securities— 8.0 — 8.0Collateralized mortgage obligations, mortgage backed securities,and other— 7.3 — 7.3Total$101.5 $62.4 $— $163.9The fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2013 were as follows:61ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)(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 backedsecurities, and other— 5.5 — 5.5Total$97.2 $59.1 $— $156.3Mutual 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).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).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 activityand other relevant information, including market interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable (level 2inputs).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).International Pension Plans AssetsThe fair value measurements of our international pension plans assets by asset category as of December 31, 2014 were as follows:(in millions of dollars)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2014Cash and cash equivalents$6.1 $— $— $6.1Equity securities156.7 — — 156.7Corporate debt securities— 118.6 — 118.6Multi-strategy hedge funds— 25.1 — 25.1Insurance contracts— 18.4 — 18.4Other debt securities— 12.1 — 12.1Real estate— 9.7 0.9 10.6Government debt securities— 3.6 — 3.6Total$162.8 $187.5 $0.9 $351.262ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The 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 securities167.7 — — 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$169.9 $171.9 $1.0 $342.8Equity 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).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 2014 or 2013.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 $12.4 million to our pension and post-retirement plans in 2014 and expect to contribute $8.1 million in 2015.The following table presents estimated future benefit payments to participants for the next ten fiscal years: Pension Post-retirement(in millions of dollars)Benefits Benefits2015$23.7 $0.82016$24.3 $0.82017$25.0 $0.82018$25.9 $0.82019$26.4 $0.8Years 2020 — 2024$137.5 $3.663ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)We also sponsor a number of defined contribution plans. Contributions are determined under various formulas. Costs related to such plans amounted to$8.6 million, $8.4 million and $8.0 million for the years ended December 31, 2014, 2013, and 2012, respectively.6. Stock-Based CompensationThe 2011 Amended and Restated ACCO Brands Corporation Incentive Plan provides for stock based awards in the form of stock options, stock-settledappreciation rights ("SSARs"), restricted stock units ("RSUs") and performance stock units ("PSUs"), any of which may be granted alone or with other types ofawards and dividend equivalents. We have one share-based compensation plan under which a total of 15,665,000 shares may be issued under awards to keyemployees 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, 2014, 2013 and 2012.(in millions of dollars)2014 2013 2012Advertising, selling, general and administrative expense$15.7 $16.4 $9.2Income (loss) from continuing operations before income tax(15.7) (16.4) (9.2)Income tax expense (benefit)(5.7) (5.9) (3.3)Net income (loss)$(10.0) $(10.5) $(5.9)There was no capitalization of stock based compensation expense.Stock-based compensation expense by award type for the years ended December 31, 2014, 2013 and 2012 was as follows:(in millions of dollars)2014 2013 2012Stock option compensation expense$3.7 $3.0 $1.8SSAR compensation expense— — 0.1RSU compensation expense6.6 5.5 3.9PSU compensation expense5.4 7.9 3.4Total stock-based compensation expense$15.7 $16.4 $9.2Stock 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 cangenerally be exercised over a maximum term of up to seven years. Stock options/SSARs outstanding as of December 31, 2014 generally vest ratably overthree years. During 2014, 2013 and 2012, we granted only option awards. The fair value of each option grant is estimated on the date of grant using theBlack-Scholes option-pricing model using the weighted average assumptions as outlined in the following table: Year Ended December 31, 2014 2013 2012Weighted average expected lives4.5years 4.5years 4.5yearsWeighted average risk-free interest rate1.33% 0.75% 0.75%Weighted average expected volatility52.2% 55.3% 55.7%Expected dividend yield0.0% 0.0% 0.0%Weighted average grant date fair value$2.69 $3.43 $5.41 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 theoption/SSAR to determine volatility assumptions for stock-based compensation. Beginning in 2012 volatility was calculated using a combination of peercompanies (50%) and ACCO Brands' historic volatility (50%). In 2013, volatility was calculated using a combination of peer companies (25%) and ACCOBrands' historic volatility (75%). In 2014, volatility was calculated using ACCO Brands' historic volatility (100%). The weighted average expectedoption/SSAR term reflects the64ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)application of the simplified method, which defines the life as the average of the contractual term of the option/SSAR and the weighted average vestingperiod for all option tranches. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time ofgrant. Forfeitures are estimated at the time of grant in order to calculate the amount of share-based payment awards ultimately expected to vest. The forfeiturerate 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, 2014 arepresented below: NumberOutstanding WeightedAverageExercisePrice Weighted AverageRemainingContractual Term AggregateIntrinsicValueOutstanding at December 31, 20134,806,475 $8.30 Granted1,630,631 $6.14 Exercised(593,731) $1.35 Lapsed(869,989) $19.18 Outstanding at December 31, 20144,973,386 $7.02 4.2 years $13.0 millionOptions/SSARs vested or expected to vest4,852,670 $7.03 4.2 years $12.7 millionExercisable shares at December 31, 20142,427,221 $7.03 2.6 years $7.3 millionWe received cash of $0.3 million and $0.2 million from the exercise of stock options for the years ended December 31, 2014 and 2012, respectively.The aggregate intrinsic value of options exercised during the years ended December 31, 2014 and 2012, was not significant. No options were exercised in theyear ended December 31, 2013.The aggregate intrinsic value of SSARs exercised during the years ended December 31, 2014, 2013 and 2012 totaled $3.6 million, $0.7 million and$2.5 million, respectively.The fair value of options and SSARs vested during the years ended December 31, 2014, 2013 and 2012 was $3.2 million, $1.9 million and $1.0 million,respectively. As of December 31, 2014, we had unrecognized compensation expense related to stock options of $4.5 million, which will be recognized over aweighted-average period of 1.7 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, 2014, 2013 and 2012 includes $0.8 million, $0.9 million and $0.9 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 2,430,683 RSUs outstanding at December 31, 2014. All outstanding RSUs as of December 31, 2014 vest within four years of their date ofgrant. Also outstanding at December 31, 2014 were 2,837,162 PSUs. All outstanding PSUs as of December 31, 2014 vest at the end of their respectiveperformance periods subject to percentage achieved of the performance targets associated with such awards. Upon vesting, all of the remaining PSU awardswill be converted 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 usingthe fair value of the shares on the date of grant, and compensation expense is generally recognized over the period during which the employees provide therequisite service to the Company. We generally recognize compensation expense for our PSU awards ratably over the performance period based onmanagement’s judgment of the likelihood that performance measures will be attained. We generally recognize compensation expense for our RSU awardsratably over the service period.65ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)A summary of the changes in the RSUs outstanding under our equity compensation plans during 2014 are presented below: StockUnits WeightedAverageGrantDate FairValueOutstanding at December 31, 20132,021,123 $8.95Granted881,554 $6.12Vested and distributed(321,697) $8.45Vested and deferred distributed(43,428) $8.29Forfeited(106,869) $8.61Outstanding at December 31, 20142,430,683 $8.02Vested and deferred at December 31, 2014(1)175,504 $7.98(1)Included in outstanding at December 31, 2014. Vested and deferred RSUs are primarily related to deferred compensation for non-employeedirectors.For the years ended December 31, 2013 and 2012 we granted 791,349 and 671,941 shares of RSUs, respectively. The weighted-average grant date fairvalue of our RSUs was $6.12, $7.14, and $10.98 for the years ended December 31, 2014, 2013 and 2012, respectively. The fair value of stock unit awards thatvested during the years ended December 31, 2014, 2013 and 2012 was $3.2 million, $1.0 million and $5.9 million, respectively. As of December 31, 2014,we have unrecognized compensation expense related to RSUs of $4.8 million. The unrecognized compensation expense related to RSUs will be recognizedover a weighted-average period of 1.7 years.A summary of the changes in the PSUs outstanding under our equity compensation plans during 2014 are presented below: StockUnits WeightedAverageGrantDate FairValueOutstanding at December 31, 20132,294,792 $7.94Granted1,316,867 $6.14Vested(496,926) $8.91Forfeited and cancelled(136,411) $7.04Other - decrease due to performance of PSU's(141,160) $6.39Outstanding at December 31, 20142,837,162 $7.37For the years ended December 31, 2013 and 2012 we granted 1,174,465 and 864,838 shares of PSUs, respectively. For the years ended December 31,2014, 2013 and 2012 we paid out 496,926, 419,205 and 3,119 shares of PSUs, respectively. The weighted-average grant date fair value of our PSUs was$6.14, $7.59, and $8.53 for the years ended December 31, 2014, 2013 and 2012, respectively. The fair value of PSUs that vested during the years endedDecember 31, 2014, and 2013 was $4.4 million, and $3.0 million, respectively. The fair value of PSUs that vested during the year ended December 31, 2012were immaterial. As of December 31, 2014, we have unrecognized compensation expense related to PSUs of $7.0 million. The unrecognized compensationexpense related to PSUs will be recognized over a weighted-average period of 1.6 years.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)2014 2013Raw materials$36.7 $36.1Work in process2.0 2.4Finished goods191.2 216.2Total inventories$229.9 $254.7 8. Property, Plant and Equipment, NetThe components of net property, plant and equipment were as follows: December 31,(in millions of dollars)2014 2013Land and improvements$21.5 $23.3Buildings and improvements to leaseholds129.0 133.3Machinery and equipment374.2 352.4Construction in progress23.0 39.5 547.7 548.5Less: accumulated depreciation(312.2) (295.2)Property, plant and equipment, net(1)$235.5 $253.3(1)Net property, plant and equipment as of December 31, 2014 and 2013 contained $37.0 million and $32.6 million of computer software assets, whichare classified within machinery and equipment and construction in progress. Amortization of software costs was $7.4 million, $6.7 million and $8.4million for the years ended December 31, 2014, 2013 and 2012, 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, 2012$396.3 $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, 2013393.1 168.4 6.8 568.3 Translation(5.5) (17.9) — (23.4) Balance at December 31, 2014$387.6 $150.5 $6.8 $544.9 Goodwill$518.5 $234.7 $6.8 $760.0 Accumulated impairment losses(130.9) (84.2) — (215.1) Balance at December 31, 2014$387.6 $150.5 $6.8 $544.9The 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 at least annually and whenever events or circumstances67ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)make it more likely than not that an impairment may have occurred. We performed this annual assessment in the second quarter of 2014 and concluded thatno impairment existed. For the North America reporting unit, we determined that its fair value exceeded its carrying amount by 13%. Key financialassumptions utilized to determine the fair value of the North America reporting unit included annual sales growth rates in the range of (1.4)% to 0.2% and a9.0% discount rate. For the International reporting unit, we determined that its fair value exceeded its carrying amount by 52%. Key financial assumptionsutilized to determine the fair value of the International reporting unit included annual sales growth rates in the range of 3.2% to 4.4% and a 10.5% discountrate. For the Computer Products Group reporting unit we determined that its fair value exceeded its carrying amount by 33%. Key financial assumptionsutilized to determine the fair value of the Computer Products Group reporting unit included annual sales growth rates in the range of (3.5)% to 2.5% and a10.0% discount rate.A considerable amount of management judgment and assumptions are required in performing the impairment tests, principally in determining the fairvalue of each reporting unit and the indefinite lived intangible assets. While we believe our judgments and assumptions are reasonable, different assumptionscould change the estimated fair values and, therefore, impairment charges could be required. Significant negative industry or economic trends, disruptions toour business, loss of significant customers, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in theuse of the assets or in entity structure and divestitures may adversely impact the assumptions used in the valuations and ultimately result in future impairmentcharges.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 2014 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, 2014 and 2013 were as follows: December 31, 2014 December 31, 2013(in millions of dollars)GrossCarryingAmounts AccumulatedAmortization NetBookValue GrossCarryingAmounts AccumulatedAmortization NetBookValueIndefinite-lived intangible assets: Trade names$499.4 $(44.5)(1) $454.9 $510.5 $(44.5)(1) $466.0Amortizable intangible assets: Trade names127.7 (55.5) 72.2 131.3 (47.5) 83.8Customer and contractualrelationships100.4 (57.2) 43.2 102.7 (46.4) 56.3Patents/proprietary technology10.2 (9.1) 1.1 10.3 (9.4) 0.9Subtotal238.3 (121.8) 116.5 244.3 (103.3) 141.0Total identifiable intangibles$737.7 $(166.3) $571.4 $754.8 $(147.8) $607.0(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 $22.2 million, $24.7 million and $19.9 million for the years ended December 31, 2014, 2013 and 2012,respectively.Estimated amortization expense for amortizable intangible assets for the next five years is as follows:(in millions of dollars)2015 2016 2017 2018 2019Estimated amortization expense$19.8 $17.4 $14.2 $12.0 $9.968ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Actual 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 2014, we committed to certain restructuring actions which further enhance our ongoing efforts to centralize, control andstreamline our global and regional operational, supply chain and administrative functions. These plans were primarily associated with our North Americanschool, office and computer products workforce. The associated actions will be substantially completed during the first half of 2015.During the fourth quarter of 2013, in light of current economic and industry conditions and in anticipation of an uncertain demand environment as wellas the expected impact of industry consolidation in 2014, we committed to restructuring actions that were primarily focused on streamlining our NorthAmerican school, office and computer products workforce, impacting all operational, supply chain and administrative functions. These efforts weresubstantially completed in 2014.Also in 2013, we committed to incremental cost savings plans intended to improve the efficiency and effectiveness of our businesses. These plans relateto cost-reduction initiatives within our North America and International segments, and were primarily associated with post-merger integration activities of theNorth American operations following the Merger and changes in the European business model and manufacturing footprint. The most significant of theseplans was finalized during the second quarter of 2013, and related to the closure of our Brampton, Canada distribution and manufacturing facility andrelocation of its activities to other facilities within the Company.In 2012, we initiated cost savings plans related to the consolidation and integration of our then recently acquired Mead C&OP business. The mostsignificant of these plans related to our dated goods business and included closure of a manufacturing and distribution facility in East Texas, Pennsylvaniaand relocation of its activities to other facilities within the Company, which was completed during the second quarter of 2013. We also committed to certaincost savings plans that were expected to improve the efficiency and effectiveness of our U.S. and European businesses, which were independent of any plansrelated to our acquisition of Mead C&OP.For the years ended December 31, 2014, 2013 and 2012, we recorded restructuring charges of $5.5 million, $30.1 million and $24.3 million,respectively.A summary of the activity in the restructuring accounts and a reconciliation of the liability for the year ended December 31, 2014 was as follows:(in millions of dollars)Balance at December31, 2013 Provision CashExpenditures Non-cashItems/Currency Change Balance at December31, 2014Employee termination costs$19.1 $4.3 $(15.3) $(0.3) $7.8Termination of lease agreements1.4 0.5 (1.5) 0.2 0.6Asset impairments/net loss ondisposal of assets resulting fromrestructuring activities— 0.6 — (0.6) —Other— 0.1 (0.1) — —Total restructuring liability$20.5 $5.5 $(16.9) $(0.7) $8.4Management expects the $7.8 million employee termination costs balance to be substantially paid within the next 12 months. Cash paymentsassociated with lease termination costs of $0.6 million are also expected to be paid within the next 12 months.The Company's East Texas, Pennsylvania manufacturing and distribution facility was sold during the second quarter of 2014 and generated net cashproceeds of $3.2 million. An immaterial loss was recognized on the sale.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, 2013 was as follows:(in millions of dollars)Balance at December31, 2012 Provision CashExpenditures 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) $20.5Not 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 was recognized in the Consolidated Statements ofIncome 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 costs0.3 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 was recognized in the ConsolidatedStatements of Income in SG&A.11. Income TaxesThe components of income (loss) before income taxes from continuing operations were as follows:(in millions of dollars)2014 2013 2012Domestic operations$43.5 $1.8 $(94.9)Foreign operations93.5 89.9 90.5Total$137.0 $91.7 $(4.4)70ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The reconciliation of income taxes computed at the U.S. federal statutory income tax rate of 35% to our effective income tax rate for continuingoperations was as follows:(in millions of dollars)2014 2013 2012Income tax at U.S. statutory rate of 35%$47.9 $32.1 $(1.5)State, local and other tax, net of federal benefit2.1 (1.4) (0.6)U.S. effect of foreign dividends and earnings7.4 7.5 23.7Unrealized foreign currency loss on intercompany debt(3.0) (3.5) (7.7)Foreign income taxed at a lower effective rate(8.6) (6.4) (7.2)Expiration of tax credits11.7 — —Decrease in valuation allowance(11.5) (11.6) (145.1)U.S. effect of capital gain— — 11.0Correction of deferred tax error— (3.1) 0.8Change in prior year tax estimates and other(0.6) 0.8 5.2Income taxes as reported$45.4 $14.4 $(121.4)Effective tax rate33.1% 15.7% NMFor 2014, we recorded an income tax expense from continuing operations of $45.4 million on income before taxes of $137.0 million. The effective ratefor 2014 of 33.1% is less than the U.S. statutory income tax rate primarily due to earnings from foreign jurisdictions, which are taxed at a lower rate. In 2014,the Foreign Tax Credit Carryover from 2005 in the amount of $11.7 million expired; the valuation allowance on the carryover was also removed. These itemsnetted together did not affect income tax expense.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 equitycompensation grants exercised during 2012. The Company determined that the impact of the error was not significant to the current or prior period, andaccordingly, a restatement 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 nettax benefit from the release of foreign valuation allowances of $11.6 million and 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. In 2014, the company had a net taxexpense from the release and generation of valuation allowances in U.S. state jurisdictions and certain foreign jurisdictions in the amount of $0.2 million. In2013, the company had a net tax benefit from the release and generation of valuation allowances in certain foreign jurisdictions in the amount of $11.6million due to there being sufficient evidence in the form of future taxable income in those jurisdictions. Following the Merger in the second quarter of 2012,the Company analyzed its need for maintaining valuation reserves against the expected U.S. future tax benefits. Based on that analysis the Companydetermined that as of June 30, 2012 there existed sufficient evidence in the form of future taxable income from the combined operations to release $126.1million of the valuation allowance that had been previously recorded against the U.S. deferred income tax assets. Also in 2012, valuation allowances in theamount of $19.0 million were released in certain foreign jurisdictions. The resulting U.S. deferred tax assets are comprised principally of net operating losscarryforwards that are expected to be fully realized within 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 valuation allowances.The effective tax rates for discontinued operations were 35.0% and 25.6% in 2013 and 2012, respectively.The U.S. federal statute of limitations remains open for the year 2011 and forward. Foreign and U.S. state jurisdictions have statutes of limitationsgenerally ranging from 2 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Australia (2010 forward), Brazil(2009 forward), Canada (2007 forward) and the U.K. (2011 forward). We are currently under examination in various foreign jurisdictions.71ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The components of the income tax expense (benefit) from continuing operations were as follows:(in millions of dollars)2014 2013 2012Current expense Federal and other$1.6 $0.8 $6.0Foreign23.2 25.3 27.1Total current income tax expense24.8 26.1 33.1Deferred expense (benefit) Federal and other15.4 (2.8) (129.5)Foreign5.2 (8.9) (25.0)Total deferred income tax expense (benefit)20.6 (11.7) (154.5)Total income tax expense (benefit)$45.4 $14.4 $(121.4)The components of deferred tax assets (liabilities) were as follows:(in millions of dollars)2014 2013(1)Deferred tax assets Compensation and benefits$20.4 $23.8 Pension32.0 19.1 Inventory7.1 2.6 Other reserves19.8 20.3 Accounts receivable7.6 7.4 Foreign tax credit carryforwards11.9 20.5 Net operating loss carryforwards87.5 114.6 Unrealized foreign currency loss on intercompany debt3.2 0.1 Other8.8 6.9Gross deferred income tax assets198.3 215.3 Valuation allowance(23.9) (33.0)Net deferred tax assets174.4 182.3Deferred tax liabilities Depreciation(19.1) (21.1) Identifiable intangibles(256.6) (259.5)Gross deferred tax liabilities(275.7) (280.6)Net deferred tax liabilities$(101.3) $(98.3)(1) Certain adjustments to the classifications of deferred tax balances at December 31, 2013 were made to conform to current year classifications. Theadjustments do not impact the total net deferred tax liability.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 $565 million and $549 million as of December 31, 2014 and at 2013, 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.As of December 31, 2014, $257.5 million of net operating loss carryforwards are available to reduce future taxable income of domestic andinternational companies. These loss carryforwards expire in the years 2015 through 2031 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 ofIncome. As of December 31, 2014, we have accrued a cumulative amount of $7.0 million for interest and penalties on unrecognized tax benefits.72ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows:(in millions of dollars)2014 2013 2012Balance at beginning of year$52.1 $56.3 $5.5Additions for tax positions of prior years3.5 2.4 2.0Reductions for tax positions of prior years(4.2) — (1.5)Settlements— (0.1) —Mead C&OP acquisition— — 50.3Foreign exchange changes(5.5) (6.5) —Balance at end of year$45.9 $52.1 $56.3As of December 31, 2014 the amount of unrecognized tax benefits decreased to $45.9 million, of which $44.2 million would affect our effective taxrate, 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 such deductibility.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 includingTilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued atax assessment (the "Brazilian Tax Assessment") against Tilibra, which challenged the tax deduction of goodwill from Tilibra's taxable income for the year2007. A second assessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD inOctober 2013.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 challengethe FRD's tax assessments, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take anumber of 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 receiveadditional tax assessments regarding the goodwill for one or both of those years. With respect to the years 2008 to 2012 we have accrued R102.7 million($38.7 million based on December 31, 2014 exchange rates) of tax, penalties and interest. If the FRD's initial position is ultimately sustained, the amountassessed would materially and 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, we consider the outcome ofthis 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 the amount of$44.5 million (at December 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to thepurchase price and which included the 2008-2012 tax years plus interest and penalties through December 2012. In addition, we will continue to accrueinterest related to this contingency until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During2014, 2013 and 2012, we accrued additional interest as a charge to current tax expense of $3.2 million, $1.8 million and $1.2 million, respectively.7312. Earnings per ShareTotal outstanding shares as of December 31, 2014 and 2013 were 111.9 million and 113.7 million, respectively. On May 1, 2012 we issued 57.1million shares of common stock related to the Merger. In 2014, we repurchased and retired 2.8 million shares of common stock, in the third and fourthquarters. The calculation of basic earnings per common share is based on the weighted average number of common shares outstanding in the year, or period,over which they were outstanding. Our calculation of diluted earnings per common share assumes that any common shares outstanding were increased byshares that would be issued upon exercise of those stock units for which the average market price for the period exceeds the exercise price; less, the sharesthat could have been purchased by us with the related proceeds, including compensation expense measured but not yet recognized, net of tax.(in millions)2014 2013 2012Weighted-average number of common shares outstanding — basic113.7 113.5 94.1Stock options0.1 — 0.1Stock-settled stock appreciation rights0.6 0.9 0.9Restricted stock units1.9 1.3 1.0Adjusted weighted-average shares and assumed conversions — diluted116.3 115.7 96.1Awards of shares representing approximately 4.3 million, 4.9 million and 5.4 million as of December 31, 2014, 2013 and 2012, respectively, ofpotentially dilutive shares of common stock were outstanding and are not included in the computation of dilutive earnings per share as their effect wouldhave been 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 currencyhedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar, British pound and Japanese yen. We aresubject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performance bycounterparties to financial instrument contracts. Management continues to monitor the status of our counterparties and will take action, as appropriate, tofurther manage our counterparty credit risk. There are 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.We measure 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, Brazil, Canada, Australia, Mexicoand Japan.Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Canada, Australia, 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"line in the Consolidated Statements of Income. As of December 31, 2014 and 2013, the Company had cash flow designated foreign exchange contractsoutstanding with a U.S. dollar equivalent notional value of $68.4 million and $88.7 million, respectively.Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses onthese derivative instruments are recognized within "Other expense, net" in the Consolidated Statements of Income and are largely offset by the changes in thefair value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, and do not extendbeyond 2015. As of December 31, 2014 and74ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)2013, we have undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $55.8 million and $55.5 million,respectively.The following table summarizes the fair value of our derivative financial instruments as of December 31, 2014 and 2013: Fair Value of Derivative Instruments Derivative Assets Derivative Liabilities(in millions of dollars)Balance SheetLocation December 31, 2014 December 31, 2013 Balance SheetLocation December 31, 2014 December 31, 2013Derivatives designated ashedging instruments: Foreign exchange contractsOther currentassets $4.6 $1.4 Other currentliabilities $0.1 $0.8Derivatives not designated ashedging instruments: Foreign exchange contractsOther currentassets 0.1 0.4 Other currentliabilities 0.4 0.1Total derivatives $4.7 $1.8 $0.5 $0.9The 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, 2014, 2013 and 2012: 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)2014 2013 2012 2014 2013 2012Cash flow hedges: Foreign exchange contracts$6.9 $3.7 $(0.2) Cost of products sold $(3.5) $(3.4) $(1.9) The Effect of Derivatives Not Designated as Hedging Instrumentson the Consolidated Statements of Income Location of (Gain) Loss RecognizedinIncome on Derivatives Amount of (Gain) LossRecognized in Income year ended December 31,(in millions of dollars) 2014 2013 2012Foreign exchange contractsOther expense, net $1.3 $(0.6) $2.314. 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 levelof input that is significant to the fair value measurement.75ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)We have determined that our financial assets and liabilities described in "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, 2014and 2013:(in millions of dollars)December 31, 2014 December 31, 2013Assets: Forward currency contracts$4.7 $1.8Liabilities: Forward currency contracts$0.5 $0.9Our 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 $800.7 million and $920.9 million and the estimated fair value of total debt was$831.9 million and $912.2 million as of December 31, 2014 and 2013, 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.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, 2012$0.1 $(28.0) $(128.2) $(156.1)Other comprehensive income (loss) before reclassifications, net oftax2.6 (61.6) 24.4 (34.6)Amounts reclassified from accumulated other comprehensiveincome (loss), net of tax(2.4) — 7.5 5.1Balance at December 31, 20130.3 (89.6) (96.3) (185.6)Other comprehensive income (loss) before reclassifications, net oftax4.9 (76.4) (37.1) (108.6)Amounts reclassified from accumulated other comprehensiveincome (loss), net of tax(2.5) — 4.1 1.6Balance at December 31, 2014$2.7 $(166.0) $(129.3) $(292.6)76ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The reclassifications out of accumulated other comprehensive income (loss) for the year ended December 31, 2014 were as follows: Year Ended December 31, (in millions of dollars) 2014 2013 Details about Accumulated Other ComprehensiveIncome ComponentsAmount Reclassified fromAccumulated Other ComprehensiveIncomeLocation on Income StatementGain on cash flow hedges: Foreign exchange contracts $(3.5) $(3.4) Cost of products soldTotal before tax (3.5) (3.4) Tax benefit 1.0 1.0 Income tax expense (benefit)Net of tax $(2.5) $(2.4) Defined benefit plan items: Amortization of actuarial loss $6.0 $11.4 (1)Amortization of prior service cost 0.3 0.1 (1)Total before tax 6.3 11.5 Tax expense (2.2) $(4.0) Income tax expense (benefit)Net of tax $4.1 $7.5 Total reclassifications for the period, net oftax $1.6 $5.1 (1)This accumulated other comprehensive income component is included in the computation of net periodic benefit cost (income)for pension and post-retirement plans (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. Ourthree 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, primarily NorthernEurope, Australia, Brazil and Mexico.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.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 traditional office resellers, wholesalers and otherretailers, including on-line retailers. We also supply some of our products directly to large commercial and industrial end-users, and provide businessmachine maintenance and certain repair services. We also supply private label products within the office products sector.Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily throughmass merchandisers, and other retailers, such as grocery, drug and office superstores as well as on-line retailers. We also supply private label products withinthe school products sector.Our calendar products are sold throughout all channels where we sell office or school products, as well as directly to consumers both on-line andthrough direct mail.77ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The customer base to which we sell our products is primarily made up of large global and regional resellers of our products including traditional officesupply resellers, wholesalers and other retailers, including on-line retailers. Mass merchandisers and retail channels primarily sell to individual consumers butalso to small businesses. We also sell to commercial contract dealers, wholesalers, distributors and independent dealers who primarily serve business end-users. Over half of our product sales by our customers are to business end-users, who generally seek premium products that have added value or ease-of-usefeatures and a reputation for reliability, performance and professional appearance. Some of our binding and laminating equipment products are sold directlyto high-volume end-users and commercial reprographic centers. We also sell calendar and computer products directly to consumers.Computer Products GroupOur Computer Products Group designs, sources, distributes, markets and sells accessories for laptop and desktop computers and tablets. Theseaccessories primarily include security products, input devices such as mice, laptop computer carrying cases, hubs, docking stations, power adapters, tabletaccessories and charging racks and ergonomic devices. We sell these products mostly under the Kensington®, Microsaver® and ClickSafe® brand names, withthe majority of revenue coming from the U.S. and Northern Europe. Our computer products are manufactured by third-party suppliers, principally in Asia, anddistributed from our regional facilities. Our computer products are sold primarily to consumer electronics retailers, information technology value-addedresellers, original equipment manufacturers, office products retailers, as well as directly to consumers on-line.Net sales by business segment for the years ended December 31, 2014, 2013 and 2012 were as follows:(in millions of dollars)2014 2013 2012ACCO Brands North America$1,006.0 $1,041.4 $1,028.2ACCO Brands International546.9 566.6 551.2Computer Products Group136.3 157.1 179.1Net sales$1,689.2 $1,765.1 $1,758.5Operating income by business segment for the years ended December 31, 2014, 2013 and 2012 were as follows(a):(in millions of dollars)2014 2013 2012ACCO Brands North America$140.7 $98.2 $86.2ACCO Brands International62.9 66.5 62.0Computer Products Group8.2 13.7 35.9Segment operating income211.8 178.4 184.1Corporate(38.2) (32.6) (44.8)Operating income173.6 145.8 139.3Interest expense49.5 59.0 91.3Interest income(5.6) (4.3) (2.0)Equity in earnings of joint ventures(8.1) (8.2) (6.9)Other expense, net0.8 7.6 61.3Income (loss) from continuing operations before income tax$137.0 $91.7 $(4.4)(a)Operating income as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less advertising, selling, generaland administrative expenses; iv) less amortization of intangibles; and v) less restructuring charges.78ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table presents the measure of segment assets used by the Company’s chief operating decision maker. December 31,(in millions of dollars)2014 2013ACCO Brands North America(b)$433.7 $465.4ACCO Brands International(b)429.7 464.1Computer Products Group(b)62.4 88.1 Total segment assets925.8 1,017.6Unallocated assets1,299.2 1,364.3Corporate(b)1.4 1.0 Total assets$2,226.4 $2,382.9(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)2014 2013ACCO Brands North America(c)$1,272.4 $1,332.0ACCO Brands International(c)692.7 758.4Computer Products Group(c)77.0 102.4 Total segment assets2,042.1 2,192.8Unallocated assets182.9 189.1Corporate(c)1.4 1.0 Total assets$2,226.4 $2,382.9(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.Property, plant and equipment, net by geographic region were as follows: December 31,(in millions of dollars)2014 2013U.S.$122.0 $134.4Brazil49.3 54.7U.K.34.1 30.5Australia12.0 13.7Other countries18.1 20.0 Property, plant and equipment, net$235.5 $253.379ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Net sales by geographic region for the years ended December 31, 2014, 2013 and 2012 were as follows(d):(in millions of dollars)2014 2013 2012U.S.$921.0 $955.5 $959.2Brazil154.0 157.2 118.9Canada150.6 159.7 160.8Netherlands130.2 130.2 45.9Australia108.5 119.8 133.4U.K.89.1 101.3 98.0Mexico58.8 58.9 59.2Other countries77.0 82.5 183.1 Net sales$1,689.2 $1,765.1 $1,758.5(d)Net sales are attributed to geographic areas based on the location of the selling company.Top CustomersNet sales to our five largest customers totaled $706.0 million, $680.5 million and $716.2 million in the years ended December 31, 2014, 2013 and2012, respectively. Net sales to Staples, our largest customer, were $224.1 million (13%), $229.5 million (13%) and $236.3 million (13%) in the years endedDecember 31, 2014, 2013 and 2012, respectively. Net sales to Office Depot, our second largest customer, were $190.9 million (11%) for the year endedDecember 31, 2014. Sales to no other customer exceeded 10% of net 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 company's domestic andinternational customer base, thus spreading the credit risk. As of December 31, 2014 and 2013, our top five trade account receivables totaled $144.2 millionand $194.0 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.Our share 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)2014 2013 2012Net sales$121.4 $105.4 $116.6Gross profit48.2 44.8 47.9Operating income23.6 23.0 24.7Net income16.4 16.4 17.3 December 31,(in millions of dollars)2014 2013Current assets$83.4 $71.8Non-current assets47.3 32.5Current liabilities40.7 32.1Non-current liabilities22.0 4.980ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 includingTilibra Produtos de Papelaria Ltda. ("Tilibra"). See "Note 11. Income Taxes - Income Tax Assessment" for details on tax assessments issued by the FRD againstTilibra, which challenged the tax deduction of goodwill from Tilibra'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) as of December 31, 2014 were asfollows:(in millions of dollars) 2015$23.0201620.0201716.3201814.0201912.9Thereafter35.0Total minimum rental payments$121.2Less minimum rentals to be received under non-cancelable subleases5.3 $115.9Total rental expense reported in our Consolidated Statements of Income for all non-cancelable operating leases (reduced by minor amounts forsubleases) amounted to $23.1 million, $25.3 million and $22.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.Unconditional Purchase CommitmentsFuture minimum payments under unconditional purchase commitments, primarily for inventory purchase commitments as of December 31, 2014 wereas follows:(in millions of dollars) 2015$74.0201610.7201710.520182.42019—Thereafter—Total unconditional purchase commitments$97.6EnvironmentalWe are subject to federal, state and local laws and regulations concerning the discharge of materials into the environment and the handling, disposaland clean-up of waste materials and otherwise relating to the protection of the environment. It is not possible to quantify with certainty the potential impactof actions regarding environmental matters, particularly remediation and81ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)other compliance efforts that we may undertake in the future. In the opinion of our management, compliance with the present environmental protection laws,before taking into account estimated recoveries from third parties, will not have a material adverse effect upon our capital expenditures, financial conditionor results of operations.19. Discontinued OperationsIncluded in discontinued operations are residual costs of our commercial print finishing business, which was sold in 2009. In association with ongoinglegal disputes related to this business, we recorded expenses of $0.2 million and $2.0 million, during 2013 and 2012, respectively.The operating results and financial position of discontinued operations were as follows:(in millions, except per share data)2014 2013 2012Operating Results: Loss on sale before income taxes— (0.3) (2.1)Income tax benefit— (0.1) (0.5)Loss from discontinued operations$— $(0.2) $(1.6)Per share: Basic loss from discontinued operations$— $— $(0.02)Diluted loss from discontinued operations$— $— $(0.02)Litigation-related accruals of $1.2 million for discontinued operations, which were included in the line "Other current liabilities" as of December 31,2013 have been settled in 2014.82ACCO 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 2014 and 2013:(in millions of dollars, except per share data)1st Quarter 2nd Quarter 3rd Quarter 4th Quarter2014 Net sales(1)$329.4 $427.7 $472.2 $459.9Gross profit88.5 131.2 153.3 156.9Operating income (loss)(0.6) 43.9 61.8 68.5Income (loss) from continuing operations(7.8) 21.3 34.2 43.9Loss from discontinued operations, net of income taxes— — — —Net income (loss)$(7.8) $21.3 $34.2 $43.9Basic income (loss) per share: Income (loss) from continuing operations(2)$(0.07) $0.19 $0.30 $0.39Loss from discontinued operations(2)$— $— $— $—Net income (loss)(2)$(0.07) $0.19 $0.30 $0.39Diluted income (loss) per share: Income (loss) from continuing operations(2)$(0.07) $0.18 $0.29 $0.38Loss from discontinued operations(2)$— $— $— $—Net income (loss)(2)$(0.07) $0.18 $0.29 $0.382013 Net sales(1)$352.0 $440.2 $469.2 $503.7Gross profit97.2 138.3 142.3 170.1Operating income (loss)(9.2) 37.9 50.3 66.8Income (loss) from continuing operations(8.9) 9.5 26.4 50.3Loss from discontinued operations, net of income taxes(0.1) — — (0.1)Net income (loss)$(9.0) $9.5 $26.4 $50.2Basic income (loss) per share: Income (loss) from continuing operations(2)$(0.08) $0.08 $0.23 $0.44Loss from discontinued operations(2)$— $— $— $—Net income (loss)(2)$(0.08) $0.08 $0.23 $0.44Diluted income (loss) per share: Income (loss) from continuing operations(2)$(0.08) $0.08 $0.23 $0.43Loss from discontinued operations(2)$— $— $— $—Net income (loss)(2)$(0.08) $0.08 $0.23 $0.43(1)Historically, our business has experienced higher sales in the third and fourth quarters of the calendar year. Two principal factors contribute to thisseasonality: (1) the office products industry, its customers and ACCO Brands specifically are major suppliers of products related to the "back-to-school"season, which occurs principally from June through September for our North American business and from November through February for our Australianand Brazilian businesses; and (2) several products we sell 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 thefourth quarter driven by traditionally strong fourth-quarter sales of personal computers and tablets.(2)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 and repurchasing of common shares during the year.83ACCO 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 ofoperations for the years ended December 31, 2014, 2013 and 2012, cash flows for the years ended December 31, 2014, 2013 and 2012 and financial positionas of December 31, 2014 and 2013 of the Company and its guarantor and non-guarantor subsidiaries (in each case carrying investments under the equitymethod), and the eliminations necessary to arrive at the reported amounts included in the condensed consolidated financial statements of the Company.84ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Balance Sheets December 31, 2014(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedAssets Current assets: Cash and cash equivalents$9.7 $0.1 $43.4 $— $53.2Accounts receivable, net— 156.1 264.4 — 420.5Inventories— 129.9 100.0 — 229.9Receivables from affiliates4.8 302.7 68.0 (375.5) —Deferred income taxes27.2 — 12.2 — 39.4Other current assets1.4 15.1 19.3 — 35.8Total current assets43.1 603.9 507.3 (375.5) 778.8Property, plant and equipment, net4.2 117.8 113.5 — 235.5Deferred income taxes0.9 — 30.8 — 31.7Goodwill— 330.9 214.0 — 544.9Identifiable intangibles, net57.5 397.9 116.0 — 571.4Other non-current assets15.2 1.0 47.9 — 64.1Investment in, long term receivable from affiliates1,680.0 890.8 441.0 (3,011.8) —Total assets$1,800.9 $2,342.3 $1,470.5 $(3,387.3) $2,226.4Liabilities and Stockholders’ Equity Current liabilities: Notes payable$— $— $0.8 — $0.8Current portion of long-term debt0.7 0.1 — — 0.8Accounts payable— 84.8 74.3 — 159.1Accrued compensation3.3 20.1 13.2 — 36.6Accrued customer programs liabilities— 60.1 51.7 — 111.8Accrued interest6.5 — — — 6.5Other current liabilities1.9 31.0 46.9 — 79.8Payables to affiliates5.6 214.1 240.5 (460.2) —Total current liabilities18.0 410.2 427.4 (460.2) 395.4Long-term debt799.0 — — — 799.0Long-term notes payable to affiliates178.2 26.7 31.2 (236.1) —Deferred income taxes120.0 — 52.2 — 172.2Pension and post-retirement benefit obligations1.5 52.3 46.7 — 100.5Other non-current liabilities3.2 19.9 55.2 — 78.3Total liabilities1,119.9 509.1 612.7 (696.3) 1,545.4Stockholders’ equity: Common stock1.1 448.0 247.0 (695.0) 1.1Treasury stock(5.9) — — — (5.9)Paid-in capital2,031.5 1,551.1 743.0 (2,294.1) 2,031.5Accumulated other comprehensive loss(292.6) (65.2) (183.0) 248.2 (292.6)(Accumulated deficit) retained earnings(1,053.1) (100.7) 50.8 49.9 (1,053.1)Total stockholders’ equity681.0 1,833.2 857.8 (2,691.0) 681.0Total liabilities and stockholders’ equity$1,800.9 $2,342.3 $1,470.5 $(3,387.3) $2,226.485ACCO 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) $2,382.986ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2014(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedNet sales$— $969.2 $772.0 $(52.0) $1,689.2Cost of products sold— 673.4 537.9 (52.0) 1,159.3Gross profit— 295.8 234.1 — 529.9Advertising, selling, general and administrative expenses45.4 157.1 126.1 — 328.6Amortization of intangibles0.1 17.7 4.4 — 22.2Restructuring charges— 4.6 0.9 — 5.5Operating (loss) income(45.5) 116.4 102.7 — 173.6(Income) expense from affiliates(1.5) (20.7) 22.2 — —Interest expense49.9 — (0.4) — 49.5Interest income— (0.1) (5.5) — (5.6)Equity in earnings of joint ventures— — (8.1) — (8.1)Other expense (income), net0.4 (0.7) 1.1 — 0.8Income (loss) from continuing operations before income taxesand earnings of wholly owned subsidiaries(94.3) 137.9 93.4 — 137.0Income tax expense18.2 — 27.2 — 45.4(Loss) income from continuing operations(112.5) 137.9 66.2 — 91.6Loss from discontinued operations, net of income taxes— — — — —Income (loss) before earnings of wholly owned subsidiaries(112.5) 137.9 66.2 — 91.6Earnings of wholly owned subsidiaries204.1 62.7 — (266.8) —Net income$91.6 $200.6 $66.2 $(266.8) $91.6Comprehensive (loss) income$(15.4) $181.0 $(17.1) $(163.9) $(15.4)87ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2013(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedNet sales$— $971.2 $814.0 $(20.1) $1,765.1Cost of products sold— 669.8 567.5 (20.1) 1,217.2Gross profit— 301.4 246.5 — 547.9Advertising, selling, general and administrative expenses40.6 183.5 123.2 — 347.3Amortization 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 expense58.6 — 0.4 — 59.0Interest income— (0.1) (4.2) — (4.3)Equity 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) $47.688ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Comprehensive Income Year Ended December 31, 2012(in millions of dollars)Parent Guarantors Non-Guarantors Eliminations ConsolidatedNet sales$— $976.5 $803.4 $(21.4) $1,758.5Cost of products sold— 684.2 558.6 (21.4) 1,221.4Gross profit— 292.3 244.8 — 537.1Advertising, selling, general and administrative expenses46.6 176.4 130.6 — 353.6Amortization 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 expense61.5 28.3 1.5 — 91.3Interest income(0.1) (0.1) (1.8) — (2.0)Equity 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) $90.389ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2014(in millions of dollars)Parent Guarantors Non-Guarantors ConsolidatedNet cash provided (used) by operating activities$(77.9) $182.3 $67.3 $171.7Investing activities: Additions to property, plant and equipment(0.2) (10.6) (18.8) (29.6)Payments for (proceeds from) interest in affiliates— 20.5 (20.5) —Proceeds from the disposition of assets— 3.6 0.2 3.8Net cash (used) provided by investing activities(0.2) 13.5 (39.1) (25.8)Financing activities: Intercompany financing188.3 (181.3) (7.0) —Net dividends35.4 (15.3) (20.1) —Repayments of long-term debt(121.0) (0.1) — (121.1)Borrowings of notes payable, net— — 1.0 1.0Payments for debt issuance costs(0.3) — — (0.3)Repurchases of common stock(19.4) — — (19.4)Payments related to tax withholding for share-based compensation(2.5) — — (2.5)Proceeds from the exercise of stock options0.3 — — 0.3Net cash (used) provided by financing activities80.8 (196.7) (26.1) (142.0)Effect of foreign exchange rate changes on cash and cashequivalents— — (4.2) (4.2)Net (decrease) increase in cash and cash equivalents2.7 (0.9) (2.1) (0.3)Cash and cash equivalents: Beginning of the period7.0 1.0 45.5 53.5End of the period$9.7 $0.1 $43.4 $53.290ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Cash Flows Year Ended December 31, 2013(in millions of dollars)Parent Guarantors Non-Guarantors ConsolidatedNet cash provided (used) by operating activities$(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 notes payable, net0.5 — (1.2) (0.7)Payments for debt issuance costs(4.3) — — (4.3)Payments related to tax withholding for share-basedcompensation(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 andcash equivalents— — (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 $53.591ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Condensed Consolidating Statement of Cash Flows Year Ended December 31,2012(in millions of dollars)Parent Guarantors Non-Guarantors ConsolidatedNet cash (used) provided by operating activities:$(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 acquisitions, 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)Payments related to tax withholding for share-basedcompensation(0.8) — — (0.8)Proceeds from the exercise of stock options0.2 — — 0.2Net cash provided (used) by financing activities535.6 (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 $50.092ITEM 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 orsubmitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized, and reported within the timeperiods specified in the applicable Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated tomanagement, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions 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 effective(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, 2014 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 ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed by and under the supervision of our ChiefExecutive Officer and Chief Financial Officer and effected by management and our board of directors to provide reasonable assurance regarding thereliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting 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 anyevaluation of the effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.As required by Section 404 of the Sarbanes-Oxley Act of 2002, management assessed the effectiveness of the Company’s internal control over financialreporting as of December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (2013) in Internal Control-Integrated Framework. Our management concluded that our internal control over financial reporting waseffective as of December 31, 2014.The effectiveness of the Company’s internal control over financial reporting as of December 31, 2014 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 of Previously Reported Material Weakness for Period Ended December 31, 2013A 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.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 MeadC&OP business that have a direct impact on our financial reporting. Based on the nature and interrelationship of the noted deficiencies, managementconcluded that these deficiencies, in the aggregate, resulted in a reasonable possibility that a material misstatement in our interim or annual financialstatements would not be prevented or detected93on a timely basis, and as such, constituted a material weakness. In particular, these deficiencies related to the configuration set-up of the system, user accessand change management controls that are intended to ensure that access to financial applications and data is adequately restricted to appropriate personneland that all changes affecting the financial applications and underlying account records are identified, tested and implemented appropriately. Based on ourassessment, management concluded that the Company did not maintain effective disclosures controls and procedures or internal control over financialreporting as of December 31, 2013.In response to the material weakness described above, management developed and implemented a remediation plan to address the material weakness.Management's plan to remediate the material weakness included the following actions:•The appropriate change management control settings, including tracking of access and history of changes, were properly configured and the log filesare being reviewed.•Internal IT resources were reassigned to remediate the deficiencies identified and to improve control within the IT environment.•An additional dedicated resource, reporting to our Chief Financial Officer, was appointed to monitor and verify the IT control environment on anongoing basis.•Appropriate change management processes including appropriate reviews and approvals were implemented.•A robust training program was designed and implemented. All personnel with responsibility for IT general controls completed appropriate retrainingregarding IT general control objectives and their roles and responsibilities for them. Additional specialized training for those who are responsible forand oversee the key IT general controls was conducted.•Controls associated with IT system access were reviewed and, where necessary, revised.•Access rules for our outsourced service providers were codified and implemented to remediate the deficiencies identified.•Robust monitoring processes were implemented within the IT function to ensure effective operation of our key IT controls. These processes includeretention of proper evidence to demonstrate the complete and timely execution of each key control. Ongoing monitoring also provides a controlfeedback loop that provides for the control design to be revised as needed to suit changing circumstances and ensures that we amend the associatedcontrol documentation.Because the reliability of the internal control processes requires repeatable execution, management tested and re-tested the internal controls overseveral periods. Based on the actions taken, and the testing results, management has concluded that the material weakness described above was remediated asof December 31, 2014.ITEM 9B. OTHER INFORMATIONNot applicable.94PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEInformation required under this Item is contained in the Company’s 2015 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2015 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 anyamendments to, or waivers from, our code of business conduct applicable to any of its directors or executive officers. The foregoing information will beavailable in print to any shareholder who requests such information from ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047-2997,Attn: Office of the General 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 2014 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 2015 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2015 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, 2014, about our common stock that may be issued upon the exercise of options, stock-settled appreciation 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)4,973,386 $7.02 4,987,128(2) Equity compensation plans not approved by security holders— — — Total4,973,386 $7.02 4,987,128(2) (1)This number includes 4,944,796 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 28,590 common shares that were subject to issuanceupon the exercise of stock options pursuant to the Company’s 2005 Assumed Option and Restricted Stock Unit Plan. The weighted-average exerciseprice in column (b) of the table reflects all such options/SSARs.(2)These are shares available for grant as of December 31, 2014 under the Restated Plan pursuant to which the Compensation Committee of the Board ofDirectors may make various stock-based awards including grants of stock options, stock-settled appreciation rights, restricted stock, restricted stockunits and performance share units. In addition to these shares, the following shares may become available for grant under the Restated Plan and, to theextent such shares have become95available as of December 31, 2014, they are included in the table as available for grant: shares covered by outstanding awards under the Plan that wereforfeited or otherwise terminated.Other information required under this Item is contained in the Company’s 2015 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2015, 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 2015 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2015 and is incorporated herein by reference.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation required under this Item is contained in the Company’s 2015 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 30, 2015 and is incorporated herein by reference.96PART 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 towhich the 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 Part II, Item 8. - FinancialStatements and Supplementary Data: PageReports of Independent Registered Public Accounting Firm42Consolidated Balance Sheets as of December 31, 2014 and 201343Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 201244Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2014, 2013 and 201245Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 201246Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2014, 2013 and 201247Notes to Consolidated Financial Statements482.Financial Statement Schedule:Schedule II - Valuation and Qualifying Accounts and Reserves, for each of the years ended December 31, 2014, 2013 and 2012.The separate consolidated financial statements of Pelikan-Artline Pty Ltd, the Company’s 50 percent owned joint venture as of September 30, 2014 and2013 and for each of the years in the three-year period ended September 30, 2014 required to be included in this report pursuant to Rule 3-09 of RegulationS-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.97EXHIBIT INDEXNumber Description of ExhibitPlans of acquisition, reorganization, arrangement, liquidation or succession2.1Agreement 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 among MeadWestvacoCorporation, Monaco SpinCo Inc., ACCO Brands Corporation and Augusta Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form8-K filed by the Registrant on March 22, 2012 (File No. 001-08454))Certificate of Incorporation and Bylaws3.1Restated 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 CurrentReport on 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))Instruments defining the rights of security holders, including indentures4.1Rights 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 Wells FargoBank, 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))Material Contracts10.1Tax 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))10.2Tax Allocation Agreement, dated as of August 16, 2005, between General Binding Corporation and Lane Industries, Inc. (incorporated by referenceto Exhibit 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))10.3Employee 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))98EXHIBIT INDEXNumber Description of Exhibit10.4Separation 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))10.5Employee 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))10.6Amendment 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))10.7Transition 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))10.8Tax 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))10.9Amended 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))10.10First Amendment to the Amended and Restated Credit Agreement dated as of July 19, 2013, among the Company, certain subsidiaries of theCompany, Bank of America, N.A., as administrative agent, and the other agents and lenders party thereto*10.11Second Amendment to the Amended and Restated Credit Agreement dated as of June 26, 2014, among the Company, certain subsidiaries of theCompany, Bank of America, N.A., as administrative agent, and the other agents and lenders party thereto (incorporated by reference to Exhibit 10.1of the Registrant's Form 8-K filed on June 27, 2014 (File No. 001-08454))Executive Compensation Plans and Management Contracts10.12ACCO 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))10.13Amended 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))10.14Amendment 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))10.15ACCO 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))10.162008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.31 to Form 10-Kfiled by the Registrant on February 29, 2008 (File No. 001-08454))10.17Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit10.1 to Form 8-K filed by the Registrant on January 22, 2009 (File No. 001-08454))10.18Form 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))99EXHIBIT INDEXNumber Description of Exhibit10.19Form of Stock-settled Stock Appreciation Rights Agreement under the ACCO Brands Corporation Amended and Restated 2005 Long-TermIncentive Plan, as amended (incorporated by reference to Exhibit 10.46 to Form 10-K filed by the Registrant on March 2, 2009 (File No. 001-08454))10.20Amended 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))10.21Amendment to Deferred Compensation Plan for Non-Employee Directors, effective January 1, 2014 (incorporated by reference to Exhibit 10.15 toForm 10-K filed by the Registrant on February 25, 2014 (File No. 001-089454))10.22Form of 2011 Amended and Restated Incentive Plan Directors Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.16to Form 10-K filed by the Registrant on February 25, 2014 (File No. 001-089454))10.23Letter 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))10.242011 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))10.25Form of Directors Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan(incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No.001-08454))10.26Form 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))10.27Form 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 IncentivePlan (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 20, 2011(File No. 001-08454))10.28Amendment 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))10.29Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit10.8 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))10.30Amendment 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))10.31Form of Restricted Stock Unit Award Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporated by referenceto Exhibit 10.1 of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.32Form of Non-qualified Stock Option Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporated by referenceto Exhibit 10.2 of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))100EXHIBIT INDEXNumber Description of Exhibit10.33Form of Performance Stock Unit Award Agreement under the 2011 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.3of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.34Form of Performance Stock Unit Award Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporated byreference to Exhibit 10.4 of the Registrant's Form 8-K filed on February 26, 2013 (File No. 001-08454))10.35ACCO 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))10.36Form of Performance Stock Unit Award Agreement under the 2011 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.1of the Registrant's Form 8-K filed on March 10, 2014 (File No. 001-08454))10.37Form of Non-qualified Stock Option Agreement under the 2011 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.2 ofthe Registrant's Form 8-K filed on March 10, 2014 (File No. 001-08454))10.38Form of Restricted 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 March 10, 2014 (File No. 001-08454))10.39Second Amendment of 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.4 to Form10-Q filed by the Registrant on April 30, 2014 (File No. 001-08454))Other Exhibits21.1Subsidiaries 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, 2014*101The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2014 formatted in XBRL(eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2014 and 2013, (ii) the Consolidated Statementsof Income for the years ended December 31, 2014, 2013 and 2012, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the yearsended December 31, 2014, 2013 and 2012, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012,(v) Consolidated Statements of Stockholders Equity (Deficit) for the years ended December 31, 2014, 2013 and 2012, and (vi) related notes to thosefinancial statements**Filed herewith.101SIGNATURESPursuant 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 onits behalf 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 accounting officer)February 25, 2015Pursuant 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, 2015Boris Elisman /s/ Neal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 25, 2015Neal V. Fenwick /s/ Thomas P. O’Neill, Jr. Senior Vice President, Finance andAccounting (principal accountingofficer) February 25, 2015Thomas P. O’Neill, Jr. /s/ Robert J. Keller* Executive Chairman of the Board ofDirectors February 25, 2015Robert J. Keller /s/ George V. Bayly* Director February 25, 2015George V. Bayly /s/ James A. Buzzard* Director February 25, 2015James A. Buzzard 102Signature Title Date /s/ Kathleen S. Dvorak* Director February 25, 2015Kathleen S. Dvorak /s/ Robert H. Jenkins* Director February 25, 2015Robert H. Jenkins /s/ Pradeep Jotwani* Director February 25, 2015Pradeep Jotwani /s/ Thomas Kroeger* Director February 25, 2015Thomas Kroeger /s/ Michael Norkus* Director February 25, 2015Michael Norkus /s/ E. Mark Rajkowski* Director February 25, 2015E. Mark Rajkowski /s/ Sheila G. Talton* Director February 25, 2015Sheila G. Talton /s/ Neal V. Fenwick * Neal V. Fenwick asAttorney-in-Fact 103ACCO 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)2014 2013 2012Balance at beginning of year$6.1 $6.5 $5.1Additions charged to expense1.0 1.5 2.2Deductions - write offs(1.3) (1.6) (3.0)Mead C&OP acquisition— — 2.1Foreign exchange changes(0.3) (0.3) 0.1Balance at end of year$5.5 $6.1 $6.5Allowances for Sales Returns and DiscountsChanges in the allowances for sales returns and discounts were as follows: Year Ended December 31,(in millions of dollars)2014 2013 2012Balance at beginning of year$12.9 $10.6 $7.7Additions charged to expense37.4 41.3 41.0Deductions - returns(38.4) (39.1) (41.6)Mead C&OP acquisition— — 2.8Foreign exchange changes0.1 0.1 0.7Balance at end of year$12.0 $12.9 $10.6Allowances for Cash DiscountsChanges in the allowances for cash discounts were as follows: Year Ended December 31,(in millions of dollars)2014 2013 2012Balance at beginning of year$2.2 $2.2 $1.1Additions charged to expense15.5 16.0 16.4Deductions - discounts taken(15.6) (16.2) (16.0)Mead C&OP acquisition— — 0.6Foreign exchange changes(0.1) 0.2 0.1Balance at end of year$2.0 $2.2 $2.2104ACCO 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)2014 2013 2012Balance at beginning of year$2.2 $2.8 $2.7Provision for warranties issued2.0 2.0 3.3Deductions - settlements made (in cash or in kind)(2.4) (2.6) (3.2)Balance at end of year$1.8 $2.2 $2.8Income Tax Valuation AllowanceChanges in the deferred tax valuation allowances were as follows: Year Ended December 31,(in millions of dollars)2014 2013 2012Balance at beginning of year$33.0 $55.4 $204.3Charges (credits) to expense0.2 (11.6) (145.1)Credited to other accounts(8.7) (10.5) (4.3)Foreign exchange changes(0.6) (0.3) 0.5Balance at end of year$23.9 $33.0 $55.4See accompanying report of independent registered public accounting firm.105Exhibit 10.10FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENTThis FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as ofJuly 19, 2013, is entered into by and between ACCO BRANDS CORPORATION, a Delaware corporation (“Holdings”), and BANK OFAMERICA, N.A., as administrative agent (in such capacity and including any successors, the “Administrative Agent”). All capitalizedterms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement (asdefined below).W I T N E S S E T H:WHEREAS, Holdings and the Administrative Agent are parties to that certain Amended and Restated Credit Agreement,dated as of May 13, 2013, by and among Holdings, certain Subsidiaries of Holdings from time to time party thereto, the Lenders partythereto from time to time, the Administrative Agent and the other financial institutions party thereto (as amended, amended andrestated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”);NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, Holdings and the Administrative Agent hereby agree as follows:1.Administrative Amendment pursuant to Section 11.01(e). Pursuant to Section 11.01(e) of the CreditAgreement, Holdings and the Administrative Agent hereby provide written notice to the Lenders that Section 1.01 of the CreditAgreement is to be amended as set forth herein. In accordance with the foregoing, the definition of “Borrower Retained ECFAmount” in Section 1.01 of the Credit Agreement is hereby amended to read pursuant to the text set forth below, adding the words thatare underlined and removing such words that are crossed out:“Borrower Retained ECF Amount” means, as of any date of determination on or after the date that is ninety (90) days after theFiscal Year ended December 31, 2013, the aggregate cumulative Excess Cash Flow Amount Consolidated Excess Cash Flowfor each Fiscal Year commencing on or after January 1, 2014 and ended at least ninety (90) days prior to such date or, in thecase of the Fiscal Year ended December 31, 2013, the Excess Cash Flow Amount Consolidated Excess Cash Flow for theperiod commencing on the first day of the calendar quarter immediately following the calendar quarter in which the RestatementDate occurs and ending on December 31, 2013, in each case, that is not required to be applied to the Pro Rata Obligationspursuant to Section 2.05(b)(ii) minus any portion of such amount used by Holdings and its Subsidiaries on or prior to such dateof determination to make (i) Investments pursuant to Section 7.02(c)(v)(C)(2) or Section 7.02(o)(2), (ii) Restricted Paymentspursuant to Section 7.06(d)(2) or (iii) payments of Junior Indebtedness pursuant to Section 7.14(c)(2).2.Conditions to Effectiveness. This Amendment shall become effective in accordance with Section 11.01(e) ofthe Credit Agreement.3.Reference to and Effect on the Credit Agreement(a)The execution, delivery and performance of this Amendment shall not constitute a waiver of anyprovision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of theother Loan Documents.(b)On and after the Effective Date, each reference in the Credit Agreement to “this Agreement”,“hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other LoanDocuments to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall meanand be a reference to the Credit Agreement as modified hereby.(c)Except as specifically amended by this Amendment, the Credit Agreement and the other LoanDocuments shall remain in full force and effect and are hereby ratified and confirmed.4.Miscellaneous Provisions.(a)Applicable Law; Miscellaneous. THIS AMENDMENT AND ALL CLAIMS OR CAUSES OF ACTION(WHETHER IN CONTRACT, TORT OR OTHERWISE) THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE IN ANY WAYHERETO OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF OR THE TRANSACTIONS CONTEMPLATEDHEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORKWITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW THAT WOULD RESULT IN THE APPLICATION OF ANY LAWOTHER THAN THE LAW OF THE STATE OF NEW YORK. The provisions of Section 11.14 and Section 11.15 of the CreditAgreement are incorporated by reference herein and made a part hereof.(b)Loan Document. This Amendment shall constitute a Loan Document for all purposes under the CreditAgreement and each of the other Loan Documents.(c)Headings. Section headings herein are included for convenience of reference only and shall not affectthe interpretation of this Amendment or any other Loan Document.(d)Counterparts. This Amendment may be executed in counterparts (and by different parties hereto indifferent counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic imaging means shall beeffective as delivery of a manually executed counterpart of this Amendment.(e)Severability. Any provision of this Amendment that is prohibited or unenforceable in any jurisdictionshall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainingprovisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable suchprovision in any other jurisdiction.[signature pages follow]Signature Page to First Amendment toAmended and Restated Credit AgreementIN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver thisAmendment as of the date first written above.ACCO BRANDS CORPORATION,as HoldingsBy: /s/ Pamela S. SchneiderName: Pamela S. SchneiderTitle: Senior Vice President, General Counsel and SecretaryBANK OF AMERICA, N.A.,as Administrative AgentBy: /s/ Anthony W. KellName: Anthony W. KellTitle: Vice PresidentExhibit 21.1SUBSIDIARIESACCO Brands Corporation, a Delaware corporation, had the domestic and international subsidiaries shown below as of December 31, 2014. 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 FIRMThe Board of DirectorsACCO Brands Corporation:We consent to the incorporation by reference in the registration statements (No. 333-127626, 333-127631, 333-127750, 333-136662, 333‑153157, 333-157726, 333-176247, and 333-181430) on Form S-8 of ACCO Brands Corporation of our report dated February 25, 2015, with respect to the consolidatedbalance sheets of ACCO Brands Corporation as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income(loss), cash flows, and stockholders’ equity (deficit) for each of the years in the three-year period ended December 31, 2014, and the related financialstatement schedule, and the effectiveness of internal control over financial reporting as of December 31, 2014, which report appears in the December 31, 2014annual report on Form 10‑K of ACCO Brands Corporation./s/ KPMG LLPChicago, IllinoisFebruary 25, 2015EXHIBIT 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 16, 2015Exhibit 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, and ThomasP. 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 of substitution 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 or desirable to enable theregistrant to comply with the U.S. Securities and Exchange Act of 1934, as amended, and any rules, regulations and requirements of the U.S. Securities and Exchange Commissionthereunder in connection with the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “Annual Report”), including specifically, but withoutlimiting the generality of the foregoing, power and authority to sign the name of the registrant and the name of the undersigned, individually and in his or her capacity as a directoror officer of the registrant, to the Annual Report as filed with the United States Securities and Exchange Commission, to any and all amendments thereto, and to any and allinstruments or documents filed as part thereof or in connection therewith; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents and each ofthem shall so or cause to be done by virtue hereof.Signature Title Date /s/ Boris Elisman President and ChiefExecutive Officer (principalexecutive officer) February 25, 2015Boris Elisman /s/ Neal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 25, 2015Neal V. Fenwick /s/ Thomas P. O’Neill, Jr. Senior Vice President,Finance and Accounting(principal accounting officer) February 25, 2015Thomas P. O’Neill, Jr. /s/ Robert J. Keller Executive Chairman of theBoard February 25, 2015Robert J. Keller /s/ George V. Bayly Director February 25, 2015George V. Bayly /s/ James A. Buzzard Director February 25, 2015James A. Buzzard /s/ Kathleen S. Dvorak Director February 25, 2015Kathleen S. Dvorak /s/ Robert H. Jenkins Director February 25, 2015Robert H. Jenkins /s/ Pradeep Jotwani Director February 25, 2015Pradeep Jotwani /s/ Thomas Kroeger Director February 25, 2015Thomas Kroeger /s/ Michael Norkus Director February 25, 2015Michael Norkus /s/ E. Mark Rajkowski Director February 25, 2015E. Mark Rajkowski /s/ Sheila G. Talton Director February 25, 2015Sheila G. Talton 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 our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose 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, 2015Exhibit 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 our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose 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, 2015Exhibit 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, 2014 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 of ACCO BrandsCorporation.By:/s/ Boris Elisman Boris Elisman President andChief Executive OfficerDate: February 25, 2015Exhibit 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, 2014 as filed with the Securitiesand Exchange Commission on the date hereof, (the “Report”), I, Neal V. Fenwick, Chief Financial Officer of ACCO Brands Corporation, hereby certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ACCO BrandsCorporation.By:/s/ Neal V. Fenwick Neal V. Fenwick Executive Vice President andChief Financial OfficerDate: February 25, 2015Exhibit 99.1Financial Statements of Pelikan Artline Joint Venture and Controlled EntitiesThe accompanying consolidated financial statements of Pelikan Artline Joint Venture and Controlled Entities, a 50% owned joint venture investment ofACCO Brands Corporation ("ACCO"), are being provided pursuant to Rule 3-09 of the Securities and Exchange Commission's ("SEC") Regulation S-X. 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 2014CONTENTS 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 and2011, 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 ArtlineJoint Venture, Parent entity only, referred to above present fairly, in all material respects, the financial position of Pelikan Artline Joint Venture andcontrolled entities and the financial position of Pelikan Artline Joint Venture, Parent entity only, at September 30, 2012 and 2011, and the results of thoseentities' operations and its 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 2014DIRECTORS' 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 entityand that 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 2014 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 20142PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 Note$ $ $ $Revenue2133,375,300 121,164,408 137,989,985 125,248,330 133,375,300 121,164,408 137,989,985 125,248,330 Expenses Purchases, distribution & selling (81,056,203) (70,971,638) (81,056,203) (70,971,638)Marketing (16,178,273) (14,420,294) (16,178,273) (14,420,294)Administration, IT & other expenses (11,190,951) (10,587,675) (25,917,744) (24,937,623)Finance costs (1,461,194) (882,237) (4,037,711) (3,795,577) (109,886,621) (96,861,844) (127,189,931) (114,125,132) Profit before income tax expense 23,488,679 24,302,564 10,800,054 11,123,198 Income tax expense1,5(5,161,803) (5,028,536) — — Profit after income tax expense for the year attributableto the owners of the Pelikan Artline Joint Venture 18,326,876 19,274,028 10,800,054 11,123,198 Other Comprehensive Income Items that may be reclassified subsequently to profit orloss: Fair value gains on available-for-sale financial assets, netof tax 34,095 48,411 — — Other comprehensive income for the year, net of tax 34,095 48,411 — — Comprehensive income for the year attributable to theowners of the Pelikan Artline Joint Venture 18,360,971 19,322,439 10,800,054 11,123,198 Profit after income tax expense for the year attributable to: Owners of the parent entity 16,327,690 17,228,841 10,800,054 11,123,198 Non controlling interest 1,999,186 2,045,187 — — 18,326,876 19,274,028 10,800,054 11,123,198 Total comprehensive income for the year attributable to: Owners of the parent entity 16,355,025 17,267,654 10,800,054 11,123,198 Non controlling interest 2,005,946 2,054,785 — — 18,360,971 19,322,439 10,800,054 11,123,198The above statement of profit and loss and other comprehensive income should be read in conjunction with the accompanying notes3PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesSTATEMENT OF FINANCIAL POSITIONAS AT 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 Note$ $ $ $ASSETS Current Assets Cash and cash equivalents621,010,665 26,250,928 5,724,826 10,984,155 Trade and other receivables737,855,053 32,622,617 38,047,061 32,491,514 Inventories832,051,224 20,436,444 32,051,224 20,436,444 Prepayments 524,673 609,290 493,264 573,954 Total current assets 91,441,615 79,919,279 76,316,375 64,486,067 Non-Current Assets Receivables91,918,620 — 1,918,620 12,409,836 Financial assets10638,709 590,001 60,853,792 40,853,792 Property, plant and equipment112,343,085 1,638,794 2,207,583 1,467,494 Deferred tax assets12601,684 617,859 — — Intangible assets1353,618,828 33,618,807 3,099,768 3,099,647 Total non-current assets 59,120,926 36,465,461 68,079,763 57,830,769 Total assets 150,562,541 116,384,740 144,396,138 122,316,836 LIABILITIES Current Liabilities Trade and other payables1432,308,436 29,848,558 43,796,677 40,005,620 Provisions152,436,674 2,133,260 1,663,674 1,405,260 Short-term borrowings169,112,803 4,021,592 4,049,270 4,021,592 Current tax liabilities 1,892,603 1,792,789 — — Total current liabilities 45,750,516 37,796,199 49,509,621 45,432,472 Non-Current Liabilities Trade and other payables17— — 47,877,927 44,573,179 Long-term borrowings1827,308,337 6,101,144 22,244,804 6,101,144 Deferred tax liabilities19135,065 152,839 — — Provisions201,128,317 1,265,724 1,050,317 1,179,724 Total non-current liabilities 28,571,719 7,519,707 71,173,048 51,854,047 Total liabilities 74,322,235 45,315,906 120,682,669 97,286,519 Net assets 76,240,306 71,068,834 23,713,469 25,030,317 EQUITY Capital introduced211,652,804 1,652,804 1,652,804 1,652,804 Available for sale reserves22248,203 220,868 — — Retained earnings2362,893,574 58,682,786 22,060,665 23,377,513 Non controlling interest2411,445,725 10,512,376 — — Total equity 76,240,306 71,068,834 23,713,469 25,030,317The 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 2014 CapitalintroducedAvailable forsale reservesRetainedEarningsNoncontrollinginterestTotal equityConsolidated$$$$$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 Balance at 1 October 2013 (unaudited)1,652,804220,86858,682,78610,512,37671,068,834 Profit after income tax expense for the year0—16,327,6901,999,18618,326,876Other comprehensive income for the year, net of tax027,335—6,76034,095Total comprehensive income for the year, net of tax—27,33516,327,6902,005,94618,360,971 Transactions with owners in their capacity as owners: Distributions of profit during the year——(12,116,902)—(12,116,902)Dividends paid (note 4)———(1,072,597)(1,072,597) ——(12,116,902)(1,072,597)(13,189,499)Balance at 30 September 2014 (unaudited)1,652,804248,20362,893,57411,445,72576,240,306 Parent 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—25,030,317 Balance at 1 October 2013 (unaudited)1,652,804—23,377,513—25,030,317 Profit after income tax expense for the year——10,800,054—10,800,054Other comprehensive income for the year, net of tax—————Total comprehensive income for the year, net of tax——10,800,054—10,800,054 Transactions with owners in their capacity as owners: Distributions of profit during the year——(12,116,902)—(12,116,902)Balance at 30 September 2014 (unaudited)1,652,804—22,060,665—23,713,469The 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 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 Note$ $ $ $Cash Flows From Operating Activities Receipts from customers (inclusive of GST) 141,963,994 135,946,128 141,935,446 135,668,524 Payments to suppliers and employees (inclusive of GST) (121,173,052) (102,133,367) (134,781,578) (116,635,239) Dividend received 6,495 4,700 4,337,295 3,869,034 Interest received 712,424 518,268 169,249 197,912 Finance costs (1,331,879) (809,190) (4,128,972) (3,722,530) Income tax paid (5,085,598) (5,711,500) — —Net cash from operating activities2915,092,384 27,815,039 7,531,440 19,377,701 Cash Flows From Investing Activities Purchase of property, plant and equipment (1,574,333) (836,323) (1,574,333) (836,323) Proceeds from sale of property, plant and equipment 97,779 153,084 97,779 153,084 Purchase of intangibles (19,919,312) (1,828,852) (220,820) (1,828,852) Investment in controlled entity — — (19,698,592) —Net cash used in investing activities (21,395,866) (2,512,091) (21,395,966) (2,512,091) Cash Flows From Financing Activities Repayment of borrowings (4,000,000) (4,000,000) (4,000,000) (4,000,000) Proceeds from borrowings 20,000,000 — 20,000,000 — Loans from related parties (net) — — 6,469,381 5,948,664 Lease liabilities (net) 171,338 (11,761) 171,338 (11,761) Rental deposit (1,918,620) — (1,918,620) — Profit distributions paid (12,116,902) (10,712,056) (12,116,902) (10,712,056) Dividends paid (1,072,597) (956,798) — —Net cash from (used in) financing activities 1,063,219 (15,680,615) 8,605,197 (8,775,153) Net increase (decrease) in cash and cash and cash equivalents (5,240,263) 9,622,333 (5,259,329) 8,090,457 Cash and cash equivalents at the beginning of the financial year 26,250,928 16,628,595 10,984,155 2,893,698 Cash and cash equivalents at the end of the financial year1, 621,010,665 26,250,928 5,724,826 10,984,155The 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 2014NOTE 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 2014.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 bythe consolidated entity for the annual reporting period ended 30 September 2014. 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 dominatethe decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Pelikan Artline Joint Venture toachieve the objectives of Pelikan Artline Joint Venture.7PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014NOTE 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 eachjurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognisedfor prior periods, 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 whichintend to 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 complywith the 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. Revenueis measured 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 isa valid 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 2014NOTE 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 entersinto a 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.The consolidated 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 isrecognised in 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 institutions andother 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 originalterms of 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 2014NOTE 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 transactionsand discounted 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 2014NOTE 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 aseparate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the costof the item can 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 linebasis over their useful lives to the consolidated entity commencing from the time each asset is held ready for use. Leasehold improvements are depreciatedover the shorter 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 thereduction of the 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 2014NOTE 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 trademarkagreement which 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 thebasis there is no foreseeable limit to the period over which the asset is expected to generate cash inflows. They are not subject to amortisation. Impairmentlosses on goodwill 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 wheneverevents or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which theasset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value 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. Theamounts are unsecured and are usually paid within 30 days of recognition, with the exception of certain liabilities to employees that are usually paid within12 months of 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 12months after 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 theliabilities are 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 2014NOTE 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 governmentbonds with 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 anoutflow of economic benefits will result and that outflow can be reliably measured. Provisions recognised represent the best estimate of the amounts requiredto settle the obligation 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 expensedas incurred to profit or loss.13PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014NOTE 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 theacquisition-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 fairvalue of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the considerationtransferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, thedifference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification andmeasurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously heldequity 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 allthe information 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 yearare discussed 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 2014NOTE 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 indefinitelife intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generatingunits have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated discount rates basedon the current 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, therecoverable amount of the asset is determined. This involves fair value less costs to sell or value-in-use calculations, which incorporate a number of keyestimates and assumptions.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 taxlaw. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisionsin the period 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 throughpromotion and 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$43,622,725 or trademark licences amounting to $9,996,103 for the year ended 30 September 2014.15PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 2 Revenue Revenue Sales net of discounts and rebates allowed 132,670,380 120,222,220 132,670,380 120,222,220 Other revenue Dividend received 6,495 4,700 4,337,295 3,869,034 Interest received 611,949 571,158 924,382 1,068,350 Other operating revenue 86,476 366,330 57,928 88,726 704,920 942,188 5,319,605 5,026,110 Total revenue 133,375,300 121,164,408 137,989,985 125,248,330 Note 3 Expenses Depreciation - property, plant & equipment 501,929 473,222 466,131 405,768 Bad and doubtful debts expense Bad debts 21,724 74,895 21,724 74,895 Provision for impairment 3,240 4,521 3,240 4,521 Total bad and doubtful debts 24,964 79,416 24,964 79,416 Foreign currency translation losses (gains) (21,803) (277,604) — — Loss on disposal of property, plant and equipment 48,546 23,184 48,546 23,184 Rental expenses relating to operating leases 3,919,585 3,128,580 3,919,585 3,128,580 Employee benefits expense 21,256,434 20,051,883 15,538,452 14,128,771 Note 4 Dividends Fully franked dividends - franked at tax rate of 30% 1,072,597 956,798 — — 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. 29,213,939 26,752,858 — —16PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 5 - Income tax (a) The components of income tax expense comprise Current income tax 5,177,888 4,988,799 n/a n/a Deferred income tax - other items (16,085) 39,737 n/a n/a Under provision in respect of prior years — — n/a n/a Total income tax expense 5,161,803 5,028,536 n/a n/a Deferred income tax expense included in income tax expense Decrease in deferred tax assets (note 12) 16,301 30,356 n/a n/a Increase (decrease) in deferred tax liabilities (note 19) (32,386) 9,381 n/a n/a (16,085) 39,737 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) 7,039,616 7,279,554 n/a n/a Add (less) tax effect of:- Non allowable items 67,177 2,849 n/a n/a Non assessable items (6,163) (77,765) n/a n/a Over (under) provision in respect of prior years — — n/a n/a Increase (decrease) in tax losses not recognised — 147 n/a n/a Income tax not payable by parent entity - non taxable entity (1,938,827) (2,176,249) n/a n/a Income tax expense 5,161,803 5,028,536 n/a n/a The applicable weighted average effective tax rates are as follows: 22% 21% n/a n/a Tax effect relating to other comprehensive income: Deferred tax 14,612 20,747 n/a n/a Note 6 Current Assets - Cash and Cash Equivalents Cash at bank 16,361,079 8,588,687 2,298,361 2,936,307 Cash on deposit 4,649,586 17,662,241 3,426,465 8,047,848 21,010,665 26,250,928 5,724,826 10,984,155 Note 7 Current Assets - Trade and Other Receivables Trade receivables 36,107,559 31,318,675 36,107,559 31,318,675 Less provision for impairment (26,499) (23,259) (26,499) (23,259) 36,081,060 31,295,416 36,081,060 31,295,416 Current tax assets 7,398 — — — Other receivables 1,766,595 1,327,201 1,966,001 1,196,098 37,855,053 32,622,617 38,047,061 32,491,51417PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 8 Current Assets - Inventories Stock on hand (note 1) 32,051,224 20,436,444 32,051,224 20,436,444 Note 9 Non-Current Assets - Receivables Loan to controlled entity - unsecured — — — 12,409,836 Other receivables (rental bond) 1,918,620 — 1,918,620 — 1,918,620 — 1,918,620 12,409,836 Note 10 Non-Current Assets - Financial Assets Other Financial Assets Unlisted investments Shares in subsidiary companies (at cost) — — 60,853,792 40,853,792 Shares in unlisted corporations (at fair value) - available for sale 638,709 590,001 — — 638,709 590,001 60,853,792 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 JOP Pty Limited, Spirax HoldingsNZ Limited and Spirax New Zealand Limited. During 2014Spirax Holdings Pty Limited acquired 100% of the issued sharecapital in Spirax JOP Pty Limited (formerly Jasco Office ProductsPty Limited). Consolidated Entity - Shares in unlisted corporations Shares in other corporations represent an investment inShachihata (Malaysia) Sdn. Bhd., a private company incorporatedin Malaysia that manufactures certain products sold by theConsolidated 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 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 11 Non-Current Assets - Property, Plant and Equipment Plant and equipment (at cost) 5,835,263 4,723,047 4,806,726 3,694,510 Less accumulated depreciation (3,492,178) (3,084,253) (2,599,143) (2,227,016) Total property, plant and equipment 2,343,085 1,638,794 2,207,583 1,467,494 Movements in carrying amounts Plant andequipment Total Consolidated Entity $ $ At 1 October 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 Year ended 30 September 2014 (unaudited) Net carrying amount at 1 October 2013 1,638,794 1,638,794 Additions 1,350,785 1,350,785 Disposals (144,565) (144,565) Depreciation and amortisation charge (501,929) (501,929) Net carrying amount at 30 September 2014 2,343,085 2,343,085 At 30 September 2014 (unaudited) Cost 5,835,263 5,835,263 Accumulated depreciation and impairment (3,492,178) (3,492,178) Net carrying amount 2,343,085 2,343,085 Plant andequipment Total Parent Entity $ $ At 1 October 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 1,467,494 Year ended 30 September 2014 (unaudited) Net carrying amount at 1 October 2013 1,467,494 1,467,494 Additions 1,350,785 1,350,785 Disposals (144,565) (144,565) Depreciation and amortisation charge (466,131) (466,131) Net carrying amount at 30 September 2014 2,207,583 2,207,583 At 30 September 2014 (unaudited) Cost 4,806,726 4,806,726 Accumulated depreciation and impairment (2,599,143) (2,599,143) Net carrying amount 2,207,583 2,207,58319PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 12 Non-Current Assets - Deferred Tax Assets Deferred tax assets 601,684 617,859 n/a n/a Deferred tax assets - movement Balance at the beginning of the year 617,859 645,019 n/a n/a Unrealised currency gains and losses 88 3,151 n/a n/a Provisions 10,422 (14,194) n/a n/a Accruals (18,936) (17,116) n/a n/a Property, plant and equipment (7,749) 999 n/a n/a Balance at the end of the year 601,684 617,859 n/a n/a Deferred tax assets comprise Provisions 282,430 271,931 n/a n/a Accruals 295,628 314,552 n/a n/a Property, plant and equipment 23,626 31,376 n/a n/a 601,684 617,859 n/a n/a20PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $ Note 13 Non-Current Assets - Intangible Assets Trademark licence (at cost) 9,996,103 2,076,652 — — Goodwill (at cost) 43,622,725 31,542,155 3,099,768 3,099,647 53,618,828 33,618,807 3,099,768 3,099,647 Movements in carrying amounts Trademarklicence Goodwill Goodwill Consolidated Entity $ $ $ At 1 October 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 Year ended 30 September 2014 (unaudited) Net carrying amount at 1 October 2013 2,076,652 31,542,155 33,618,807 Additions 7,919,451 12,080,449 19,999,900 Currency fluctuations — 121 121 Net carrying amount at 30 September 2014 9,996,103 43,622,725 53,618,828 At 30 September 2014 (unaudited) Cost 9,996,103 43,622,725 53,618,828 Accumulated amortisation and impairment — — — Net carrying amount 9,996,103 43,622,725 53,618,828 Trademarklicence Goodwill Goodwill Parent Entity $ $ $ At 1 October 2013 (unaudited) Cost — 3,099,647 3,099,647 Accumulated amortisation and impairment — — — Net carrying amount — 3,099,647 3,099,647 Year ended 30 September 2014 (unaudited) Net carrying amount at 1 October 2013 — 3,099,647 3,099,647 Currency fluctuations — 121 121 Net carrying amount at 30 September 2014 — 3,099,768 3,099,768 At 30 September 2014 (unaudited) Cost — 3,099,768 3,099,768 Accumulated amortisation and impairment — — — Net carrying amount — 3,099,768 3,099,76821PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 14 Current Liabilities - Trade and Other Payables Trade payables 12,523,827 7,408,837 13,355,136 7,808,218 Liabilities to employees 4,233,470 5,929,384 3,294,679 5,018,063 Other payables 15,551,139 16,510,337 14,971,167 16,199,783 Loans - unsecured — — 12,175,695 10,979,556 32,308,436 29,848,558 43,796,677 40,005,620 Note 15 Current Liabilities - Provisions Deferred purchase price 250,000 220,000 250,000 220,000 Employee benefits - long service leave 2,186,674 1,913,260 1,413,674 1,185,260 2,436,674 2,133,260 1,663,674 1,405,260 Note 16 Current Liabilities - Short-term Borrowings Lease liabilities (note 25) 49,270 21,592 49,270 21,592 Loans - Vendor (secured) 5,063,533 — — — Loans - Westpac (secured) 4,000,000 4,000,000 4,000,000 4,000,000 9,112,803 4,021,592 4,049,270 4,021,592 Note 17 Non-Current Liabilities - Trade and Other Payables Loans - unsecured — — 47,877,927 44,573,179 Note 18 Non-Current Liabilities - Long-term Borrowings Lease liabilities (note 25) 244,804 101,144 244,804 101,144 Loans - Vendor (secured) 5,063,533 — — Loans - Westpac (secured) 22,000,000 6,000,000 22,000,000 6,000,000 27,308,337 6,101,144 22,244,804 6,101,144 Note 19 Non-Current Liabilities - Deferred Tax Liabilities Deferred tax liabilities 135,065 152,839 n/a n/a Deferred tax liabilities - movement Balance at the beginning of the year 152,839 122,711 n/a n/a Receivables (30,934) 15,703 n/a n/a Prepayments (1,452) (6,322) n/a n/a Revaluation of available for sale financial assets charged directly to other comprehensive income 14,612 20,747 n/a n/a Balance at the end of the year 135,065 152,839 n/a n/a Deferred tax liabilities comprise Receivables — 27,122 n/a n/a Prepayments 2,387 6,876 n/a n/a Revaluation of available for sale financial assets 132,678 118,841 n/a n/a 135,065 152,839 n/a n/a 22PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $Note 20 Non-Current Liabilities - Provisions Deferred purchase price 749,180 1,000,000 749,180 1,000,000 Employee benefits - long service leave 379,137 265,724 301,137 179,724 1,128,317 1,265,724 1,050,317 1,179,724 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 29,341,393 26,083,000 11,688,757 11,483,186 Share of joint venture profits - current year 8,163,845 8,614,421 5,400,027 5,561,599 Share of transfers to reserves - prior year 110,434 91,028 — — Share of transfers to reserves - current year 13,668 19,407 — — Distribution of profit (6,058,451) (5,356,028) (6,058,451) (5,356,028) Joint venture interest at the end of the year 32,397,291 30,278,229 11,856,735 12,515,159 ACCO Brands Australia Pty Ltd Capital introduced 826,402 826,402 826,402 826,402 Share of joint venture profits - prior years 29,341,393 26,083,000 11,688,757 11,483,186 Share of joint venture profits - current year 8,163,845 8,614,421 5,400,027 5,561,599 Share of transfers to reserves - prior year 110,434 91,028 — — Share of transfers to reserves - current year 13,668 19,407 — — Distribution of profit (6,058,451) (5,356,028) (6,058,451) (5,356,028) Joint venture interest at the end of the year 32,397,291 30,278,229 11,856,735 12,515,159 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 58,682,786 52,166,000 23,377,513 22,966,371 Share of joint venture profits - current year 16,327,690 17,228,842 10,800,054 11,123,198 Share of transfers to reserves - prior year 220,868 182,055 — — Share of transfers to reserves - current year 27,335 38,813 — — Distribution of profit (12,116,902) (10,712,056) (12,116,902) (10,712,056) Joint venture interest at the end of the year 64,794,581 60,556,458 23,713,469 25,030,317 Outside equity interests in controlled entities (note 24) 11,445,725 10,512,376 — — Total equity as per the statement of financial position 76,240,306 71,068,834 23,713,469 25,030,317 Note 22 Available For Sale Reserves Available for sale financial assets revaluation reserve Balance at the beginning of the financial year 220,868 182,055 — — Movement during the year 27,335 38,813 — — Balance at the end of the year 248,203 220,868 — — 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 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $ Note 23 Retained Earnings Movements in retained earnings were as follows: Balance at the beginning of the year 58,682,786 52,166,001 23,377,513 22,966,371 Profit attributable to owners of the parent for the year 16,327,690 17,228,841 10,800,054 11,123,198 Distribution of profit during the year (12,116,902) (10,712,056) (12,116,902) (10,712,056) Dividends paid or provided (1,072,597) (956,798) — — Dividends attributable to outside equity interest 1,072,597 956,798 — — Balance at the end of the year 62,893,574 58,682,786 22,060,665 23,377,513 Distribution to joint venture partners Columbia Pelikan Pty Ltd 31,446,787 29,341,393 11,030,333 11,688,757 ACCO Brands Australia Pty Ltd 31,446,787 29,341,393 11,030,333 11,688,757 62,893,574 58,682,786 22,060,665 23,377,513 Note 24 Non Controlling Interest Non controlling interest comprises: Share capital 141,562 141,562 — — Available for sale reserves 673,902 667,142 — — Retained earnings 10,630,261 9,703,672 — — 11,445,725 10,512,376 — — Note 25 Commitments and Contingent Liabilities (a)Finance lease commitments Payable: Not later than 1 year 68,108 28,227 68,108 28,227 Later than 1 year but not later than 5 years 275,396 111,921 275,396 111,921 Minimum lease payments 343,504 140,148 343,504 140,148 Less future finance charges (49,430) (17,412) (49,430) (17,412) Present value of minimum lease payments 294,074 122,736 294,074 122,736 Recorded in the financial report as: Current liability (refer note 16) 49,270 21,592 49,270 21,592 Non-current liabilty (refer note 18) 244,804 101,144 244,804 101,144 294,074 122,736 294,074 122,736 Finance lease commitments relate to motor vehicle finance leasesentered into by the parent entity having a term of four years. Theleases provide the parent entity with a right to acquire the vehicles atthe end of the lease. Lease payments comprise a base monthly amountplus one residual payment. 24PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $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 2,175,397 3,045,325 2,175,397 3,045,325 Later than 1 year but not later than 5 years 3,643,707 2,989,320 3,643,707 2,989,320 Later than 5 years but not later than 10 years 1,394,188 — 1,394,188 — 7,213,292 6,034,645 7,213,292 6,034,645 Operating lease commitments relate to parent entity leasedproperty, equipment and motor vehicles under operating leasesexpiring from one to nine 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 (2013: 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 andthe consolidated entity. The overdraft was unused at 30September 2014 but an interest rate of 8.78% was chargeable onoverdrawn balances. The carrying amounts of assets pledged as security for theregistered mortgage debenture are: Cash and cash equivalents assets 21,010,665 26,250,928 5,724,826 10,984,155 Trade and other receivables 37,855,053 32,622,617 38,047,061 32,491,514 Inventories 32,051,224 20,436,444 32,051,224 20,436,444 Prepayments 524,673 609,290 493,264 573,954 Receivables 1,918,620 — 1,918,620 12,409,836 Financial assets 638,709 590,001 60,853,792 40,853,792 Property, Plant & Equipment 2,343,085 1,638,794 2,207,583 1,467,494 Deferred tax assets 601,684 617,859 — — Intangible assets 53,618,828 33,618,807 3,099,768 3,099,647 Total assets 150,562,541 116,384,740 144,396,138 122,316,83625PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $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 $880,582 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 18,326,876 19,274,028 10,800,054 11,123,198 Adjustments for: Interest received - non-cash — — (755,133) (870,438) Depreciation 501,929 473,222 466,131 405,768 Net loss on disposal of plant and equipment 48,546 23,184 48,546 23,184 Impairment provision - receivables 3,240 4,521 3,240 4,521 Employee benefits - provision 155,868 235,597 118,868 285,597 Lease interest — 8,363 — 8,363 Changes in assets and liabilities: Decrease (increase) in trade and other receivables (4,975,436) 2,286,927 (5,305,945) 2,321,892 Decrease (increase) in current tax assets (7,398) 29,260 — — Decrease (increase) in inventories (11,614,780) (683,100) (11,614,780) (683,100) Decrease (increase) in prepayments 84,617 292,908 80,690 259,064 Decrease (increase) in deferred tax assets 16,175 27,160 — — Increase (decrease) in trade and other payables 2,358,253 6,582,353 13,689,769 6,499,652 Increase (decrease) in short-term borrowings 10,127,066 — — — Increase (decrease) in current tax liabilities 85,202 (748,765) — — Increase (decrease) in deferred tax liabilities (17,774) 9,381 — — Net cash from operating activities 15,092,384 27,815,039 7,531,440 19,377,70126PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $ 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 JOP Pty Limited, Spirax Holdings NZ Limited, Spirax NewZealand Limited, Geoff Penney (Australia) Pty Limited, CustomXstamper Australia Pty Limited and Pelikan Artline Limited. Loans from related parties Aggregate amounts payable to related parties at reporting date:- Loans unsecured (current) - controlled entities 12,175,695 10,979,556 Loans unsecured (non-current) - controlled entities 47,877,927 44,573,179 60,053,622 55,552,735 Loans to and other receivables owing by related parties Aggregate amounts receivable from related parties at reporting date:- Other receivables - controlled entities 214,423 — Loans unsecured (non-current) - controlled entities — 12,409,836 214,423 12,409,836 Transactions with related parties Transactions between related parties are on normal commercial termsand conditions no more favourable than those available to otherparties unless otherwise stated. Transactions between the parent entity and its controlled entitiesduring the year consisted of:- Payment of interest on the above loans (3,011,516) (2,913,340) Receipt of interest on the above loans 755,133 870,438 Receipt of dividends 4,337,295 3,869,034 Recovery of overheads (6,078,275) (6,572,313) Distribution fee (14,633,504) (14,307,807) Purchase of inventory from joint venture partner related parties (1,261,076) (1,459,542) Recovery of administration and accounting services provided to ajoint venture 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 2014 Consolidated Parent (Unaudited) (Unaudited) 2014 2013 2014 2013 $ $ $ $ Note 31 Financial Risk Management The consolidated entity's financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, loanspayable and leases payable. 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) 21,010,665 26,250,928 5,724,826 10,984,155 Trade and other receivables (notes 7 & 9) 39,773,673 32,622,617 39,965,681 44,901,350 Other financial assets (note 10) 638,709 590,001 60,853,792 40,853,792 61,423,047 59,463,546 106,544,299 96,739,297 Financial Liabilities Trade and other payables (note 14 & 17) 32,308,436 29,848,558 91,674,604 84,578,799 Other loans and borrowings (note 16 & 18) 36,421,140 10,122,736 26,294,074 10,122,736 68,729,576 39,971,294 117,968,678 94,701,535 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 2014 2013 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 JOP Pty Limited Australia 100.00% Nil% Spirax Holdings NZ Limited New Zealand 100.00% 100.00% Spirax New Zealand Limited New Zealand 100.00% 100.00% 28PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014Note 33 Additional Information The following additional financial data is in accordance with the books and records of the consolidated entity which have been subjected to theauditing procedures applied by the auditors of the consolidated entity's financial report for the year ended 30 September 2012. (a) Statement of Comprehensive Income for the year ended 30 September 2012 Consolidated Parent 2012 2012 Revenue $ $ Revenue Sales net of discounts and rebates allowed 123,785,950 123,785,950 Other revenue Dividend received 4,630 8,986,069 Interest received 886,128 1,118,991 Other operating revenue 152,152 92,278 1,042,910 10,197,338 Total revenue 124,828,860 133,983,288 Expenses Purchases, distribution & selling (75,069,342) (75,069,342) Marketing (14,376,829) (14,376,829) Administration, IT & other expenses (10,130,573) (24,463,587) Finance costs (1,151,633) (3,652,813) (100,728,377) (117,562,571) Profit before income tax expense 24,100,483 16,420,717 Income tax expense (4,964,522) — Profit after income tax expense for the year attributable to theowners of the Pelikan Artline Joint Venture 19,135,961 16,420,717 Other Comprehensive Income Available for sale financial assets 17,914 — Other comprehensive income for the year, net of tax 17,914 — Comprehensive income for the year attributable to the owners ofthe Pelikan Artline Joint Venture 19,153,875 16,420,717 Profit attributable to: Owners of the parent entity 17,103,612 16,420,717 Minority interest 2,032,349 — 19,135,961 16,420,717 Total comprehensive income attributable to: Owners of the parent entity 17,117,974 16,420,717 Minority interest 2,035,901 — 19,153,875 16,420,71729PELIKAN ARTLINE JOINT VENTUREand Controlled EntitiesNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 SEPTEMBER 2014Note 33 Additional Information (continued) (b) Statement of Cash Flows Consolidated Parent for the year ended 30 September 2012 2012 2012 $ $ Cash Flows From Operating Activities Receipts from customers (inclusive of GST) 140,669,241 138,380,023 Payments to suppliers and employees (inclusive of GST) (115,633,973) (127,580,141) Dividend received 4,630 8,986,069 Interest received 1,224,211 280,988 Finance costs (1,395,997) (3,897,177) Income tax paid (5,107,383) — Net cash from operating activities (note 33(c)) 19,760,729 16,169,762 Cash Flows From Investing Activities Purchase of property, plant and equipment (397,995) (397,995) Proceeds from sale of property, plant and equipment 37,500 37,500 Purchase of intangibles (100,000) — Net cash used in investing activities (460,495) (360,495) Cash Flows From Financing Activities Repayment of borrowings (4,000,000) (4,000,000) Loans from related parties (net) — 10,577,508 Profit distributions paid (22,612,370) (22,612,370) Dividends paid (2,222,222) — Net cash used in financing activities (28,834,592) (16,034,862) Net decrease in cash and cash and cash equivalents (9,534,358) (225,595) Cash and cash equivalents at the beginning of the financial year 26,162,953 3,119,293 Cash and cash equivalents at the end of the financial year 16,628,595 2,893,698 (c) Reconciliation of profit after income tax to net cash inflow from operating activities: Profit after income tax expense for the year 19,135,961 16,420,717 Adjustments for: Interest received - non-cash — (838,003) Depreciation 483,561 362,571 Net loss on disposal of plant and equipment 154,160 57,180 Impairment provision - receivables (18,385) (18,385) Employee benefits - provision 57,809 58,809 Changes in assets and liabilities: Decrease in trade and other receivables 1,839,502 1,534,462 Decrease in current tax assets 17,833 — Increase in inventories 2,746,558 2,746,558 Increase in prepayments 20,028 9,984 Increase in deferred tax assets 38,218 — Decrease in trade and other payables (4,515,604) (4,164,131) Decrease in current tax liabilities (80,746) — Decrease in deferred tax liabilities (118,166) — Net cash flows from operating activities 19,760,729 16,169,76230

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