ACCO Brands
Annual Report 2018

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 OF 1934For the Fiscal Year Ended December 31, 2018oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number 001-08454ACCO Brands Corporation(Exact Name of Registrant as Specified in Its Charter)Delaware 36-2704017(State or Other Jurisdictionof Incorporation or Organization) (I.R.S. EmployerIdentification Number)Four Corporate DriveLake Zurich, Illinois 60047(Address of Registrant’s Principal Executive Office, Including Zip Code)(847) 541-9500(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $.01 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o 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 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ NooIndicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesþ No oIndicate 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 the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filerxAccelerated fileroNon-accelerated filero (Do not check if a smaller reporting company)Smaller reporting companyo Emerging growth companyoIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þAs of June 30, 2018, the aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $1,415 million. As of February 19,2019, the registrant had outstanding 102,206,938 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 on May 21, 2019 areincorporated by reference into Part III of this report. Cautionary Statement Regarding Forward-Looking StatementsCertain statements contained in this Annual Report on Form 10-K other than statements of historical fact, particularly those anticipating futurefinancial performance, business prospects, growth, operating strategies and similar matters are "forward-looking statements" within the meaning of thePrivate Securities Litigation Reform Act of 1995. These statements, which are generally identifiable by the use of the words "will," "believe," "expect,""intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the datehereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by suchforward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.Some of the factors that could affect our results or cause plans, actions and results to differ materially from current expectations are detailed in "PartI, Item 1. Business" and "Part I, Item 1A. Risk Factors" and the financial statement line item discussions set forth in "Part II, Item 7. Management’s Discussionand Analysis of Financial Condition and Results of Operations" of this report and from time to time in our other Securities and Exchange Commission (the"SEC") filings.Website Access to Securities and Exchange Commission ReportsThe Company’s Internet website can be found at www.accobrands.com. The Company makes available free of charge on or through its website itsAnnual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished 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 SEC. We alsomake available the following documents on our Internet website: the Audit Committee Charter; the Compensation Committee Charter; the CorporateGovernance and Nominating Committee Charter; the Finance and Planning Committee Charter; the Executive Committee Charter; our CorporateGovernance Principles; and our Code of Conduct. The Company’s Code of Conduct applies to all of our directors, officers (including the Chief ExecutiveOfficer, Chief Financial Officer and Principal Accounting Officer) and employees. You may obtain a copy of any of the foregoing documents, free of charge,if you submit a written request to ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047, Attn: Investor Relations.TABLE OF CONTENTSPART I ITEM 1.Business1ITEM 1A.Risk Factors6ITEM 1B.Unresolved Staff Comments17ITEM 2.Properties18ITEM 3.Legal Proceedings18ITEM 4.Mine Safety Disclosures19PART II ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities20ITEM 6.Selected Financial Data22ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations26ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk44ITEM 8.Financial Statements and Supplementary Data46ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure105ITEM 9A.Controls and Procedures105ITEM 9B.Other Information105PART III ITEM 10.Directors, Executive Officers and Corporate Governance106ITEM 11.Executive Compensation106ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters106ITEM 13.Certain Relationships and Related Transactions, and Director Independence106ITEM 14.Principal Accountant Fees and Services107PART IV ITEM 15.Exhibits and Financial Statement Schedules107ITEM 16.Form 10-K Summary107 Signatures111PART IITEM 1. BUSINESSAs used in this Annual Report on Form 10-K for the fiscal year ended December 31, 2018, 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.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."Overview of the CompanyACCO Brands is a designer, marketer and manufacturer of recognized consumer and end-user demanded brands used in businesses, schools, and homes.Our widely known brands include AT-A-GLANCE®, Barrilito®, Derwent®, Esselte®, Five Star®, GBC®, Hilroy®, Kensington®, Leitz®, Marbig®, Mead®,NOBO®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra® and Wilson Jones®. More than 75% of our net sales come from brands that occupy the number-oneor number-two positions in the select product categories in which we compete. We distribute our products through a wide variety of retail and commercialchannels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop.These channels include mass retailers, e-tailers, discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independentoffice product dealers; office superstores; wholesalers; and contract stationers. Our products are sold primarily in the U.S., Europe, Australia, Canada, Braziland Mexico. For the year ended December 31, 2018, approximately 42% of our sales were in the U.S.; down from 45% in 2017. This decrease was primarilythe result of the Esselte Acquisition and GOBA Acquisition, as defined below, which further extended our geographic reach. For further information on theacquisitions, see "Note 3. Acquisitions" to the consolidated financial statements contained in Part II, Item 8. of this report and "Part II. Item 7. Management'sDiscussion and Analysis of Financial Condition and Results of Operations."The Company's strategy is to grow its global portfolio of consumer brands, increase its presence in faster growing geographies and channels anddiversify its customer base. The Company continues to focus on leveraging its cost structure through synergies and productivity savings to drive long-termprofit improvement and on strong free cash flow generation. We plan to supplement organic growth globally with strategic acquisitions in both existing andadjacent product categories.In furtherance of our strategy, we have transformed our business by acquiring companies with consumer and other end-user demanded brands, andcontinuing to diversify our distribution channels. In 2012, we acquired the Mead Consumer and Office Products business ("Mead C&OP"), whichsubstantially increased our presence in North America and Brazil in school and calendar products with well-known consumer brands. In 2016, we purchasedthe remaining equity interest in Pelikan Artline from our joint venture partner, which enhanced our competitive position in school and business products inAustralia and New Zealand and added new categories, including writing instruments and janitorial supplies. In early 2017, we acquired Esselte GroupHoldings AB ("Esselte"), which more than doubled our presence in Europe and added several iconic business brands, a significant base of independent dealercustomers, and a new product category of do-it-yourself hardware tools. On July 2, 2018, we completed the acquisition (the "GOBA Acquisition") of GOBAInternacional, S.A. de C.V. ("GOBA") in Mexico. Together these acquisitions have meaningfully expanded our portfolio of well-known end-user demandedbrands, enhanced our competitive position from both a product and channel perspective, and added scale to our business operations.Today our Company is a global enterprise focused on developing innovative branded consumer products for use in businesses, schools and homes. Webelieve our leading product category positions provide the scale to enable us to invest in marketing and product innovation to drive profitable growth. Weexpect to derive much of our growth, over the long term, in faster-growing emerging geographies such as Latin America and parts of Asia, the Middle Eastand Eastern Europe, which exhibit growing demand for our product categories. In all of our markets, we see opportunities to grow sales through share gains,channel expansion and innovative products.Reportable Business SegmentsACCO Brands has three reportable business segments each of which is comprised of different geographic regions. Each of the Company's threereportable business segments designs, markets, sources, manufactures and sells recognized consumer and other end-user demanded brands used in businesses,schools and homes. Product designs are tailored based on end-user preferences in each geographic region.1Our product categories include school products; storage and organization; laminating, binding and shredding machines and related consumablesupplies; calendars; stapling and punching; whiteboards; computer accessories; and do-it-yourself tools, among others. Our portfolio of consumer and otherend-user demanded brands includes both globally and regionally recognized brands.Reportable Business Segment Geographic Regions Primary BrandsACCO Brands North America United States and Canada AT-A-GLANCE®, Five Star®, GBC®, Hilroy®, Kensington®,Mead®, Quartet®, and Swingline® ACCO Brands EMEA Europe, Middle East and Africa Derwent®, Esselte®, GBC®, Kensington®, Leitz®, NOBO®, Rapid®,and Rexel® ACCO Brands International Australia/N.Z., Latin America andAsia-Pacific Artline®, Barrilito®, GBC®, Kensington®, Marbig®, Quartet®,Rexel®, Tilibra®, and Wilson Jones®Sales Percentage by Reportable Business Segment 2018 2017 2016ACCO Brands North America 49% 51% 65%ACCO Brands EMEA 31 28 11ACCO Brands International 20 21 24 100% 100% 100%ACCO Brands North AmericaThe ACCO Brands North America segment is comprised of the United States and Canada where the Company is a leading branded supplier of consumerand business products under brands such as AT-A-GLANCE®, Five Star®, GBC®, Hilroy®, Kensington®, Mead®, Quartet®, and Swingline®. The ACCO BrandsNorth America segment designs, sources or manufactures and distributes school products (such as notebooks); calendars; laminating, binding and shreddingmachines and related consumable supplies; whiteboards; storage and organization products (such as three-ring binders, sheet protectors and indexes),stapling and punching products; computer accessories, among others, which are primarily used in schools, homes and businesses. The majority of revenue inthis segment is related to consumer and home products and is associated with the "back-to-school" season and calendar year-end purchases; we expect salesof consumer products to become an increasingly greater percentage of our revenue as demand for consumer products is growing faster than most business-related products.ACCO Brands EMEAThe ACCO Brands EMEA segment is comprised largely of Europe, but also includes export sales to the Middle East and Africa. The Company is aleading branded supplier of consumer and business products under brands such as Derwent®, Esselte®, GBC®, Kensington®, Leitz®, NOBO®, Rapid®, andRexel®. The ACCO Brands EMEA segment designs, manufactures or sources and distributes storage and organization products (such as lever-arch binders,sheet protectors and indexes); stapling and punching products; laminating, binding and shredding products and related consumable supplies; do-it-yourselftools; computer accessories, among others, which are primarily used in businesses, homes and schools.ACCO Brands InternationalThe ACCO Brands International segment is comprised of Australia/New Zealand (N.Z.), Latin America and Asia-Pacific where the Company is a leadingbranded supplier of consumer and business products. These brands include Artline®, Barrilito®, GBC®, Kensington®, Marbig®, Quartet®, Rexel®, Tilibra®,and Wilson Jones®, among others. The ACCO Brands International segment designs, sources or manufactures and distributes school products (such asnotebooks); storage and organization products (such as three-ring binders, sheet protectors and indexes); laminating, binding and shredding products andrelated consumable supplies; writing instruments; computer accessories; whiteboards; stapling and punching products; calendars and janitorial supplies,among others, which are primarily used in schools, businesses and homes. The majority of revenue in this segment is related to consumer products and isassociated with the "back-to-school" season and calendar year-end purchases. We expect sales of consumer products to become an increasingly greaterpercentage of our revenue as demand for consumer products is growing faster than most business-related products.2CustomersACCO Brands markets and sells its strong multi-product offering broadly and is not dependent on any one channel. Our products are sold through allrelevant channels, namely retailers, including: mass retailers; e-tailers; discount, drug/grocery and variety chains; warehouse clubs; hardware and specialtystores; independent office product dealers; office superstores; wholesalers; and contract stationers. We also sell directly to commercial and consumer end-users through our e-commerce platform and our direct sales organization. Changes in consumer buying patterns over the past several years have resulted inincreased consumer purchases of our products through mass retailers and e-tailers. Increased sales through retail and e-tail channels have partially mitigatedthe impact of lower traffic and sales experienced by the traditional office products suppliers and wholesaler channels.Our top ten customers accounted for 40% of net sales for the year ended December 31, 2018. Net sales to no customer exceeded 10% of net sales for theyears ended December 31, 2018 and 2017. For the year ended December 31, 2016, net sales to Staples, our largest customer, and Walmart amounted toapproximately 14% and 10%, respectively, of our net sales.CompetitionWe operate in a highly competitive environment characterized by low-cost competitors, large, sophisticated customers, low barriers to entry, andcompetition from a wide range of products and services (including private label). ACCO Brands competes with numerous branded consumer productsmanufacturers as well as numerous private label suppliers and importers, including many of our customers who import their own private label productsdirectly from foreign sources. Examples of branded competitors to ACCO Brands include Bi-Silque, Blue Sky, CCL Industries, Dominion Blueline, Fellowes,Hamelin, Herlitz, LSC Communications, Newell Brands, Novus, Smead, Spiral Binding and Stanley Black and Decker, among others.The Company meets its competitive challenges by creating and maintaining leading brands and differentiated and innovative products that deliversuperior value, performance and benefits to consumers. Our products are sold to consumers and end-users through diverse distribution channels deliveringsuperior customer services. We further meet consumer needs by developing, producing and procuring products at a competitive cost, which are pricedattractively. The Company’s management also believes that its experience at successfully managing a complex, highly seasonal business is a competitiveadvantage.Product DevelopmentOur strong commitment to understanding our consumers and designing 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 products are developed from a strong understanding of consumer needs and by ourown research and development team or through partnership initiatives with inventors and vendors. Costs related to consumer and product research when paiddirectly by ACCO Brands are included in selling, general and administrative expenses.We consistently review our business units and product offerings, assess their strategic fit, and seek opportunities to invest in new products andadjacencies as well as to rationalize our product offerings. The criteria we use in assessing strategic fit or investment opportunities include: the ability toincrease sales for the Company; the ability to create strong, differentiated products and brands; the importance of the product category to key customers; therelationship with existing product lines; the importance to the market; the actual and potential impact on our operating performance; and the value to ACCOBrands versus an alternative owner.Marketing and Demand GenerationWe support our brands with a significant investment in targeted marketing, advertising and consumer promotions, which increase brand awareness andhighlight the innovation and differentiation of our products. We work with third party vendors, such as Nielsen, NPD Group, GfK SE and Kantar Group, tocapture and analyze consumer buying habits and product trends. We also use our deep consumer knowledge to develop effective marketing programs,strategies and merchandising activities.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; however, we arecurrently experiencing instability of supply of various grades of paper necessitating forward buys to ensure supply at reasonable prices.3SupplyOur products are either manufactured or sourced to ensure that we supply our customers with quality products, innovative solutions and attractivepricing as well as convenient customer service. We have built a customer-focused business model with a flexible supply chain to ensure that these factors areappropriately balanced. Using a combination of manufacturing and third-party sourcing also enables us to reduce our costs and effectively manage ourproduction assets by lowering capital investment and working capital requirements. Our overall strategy is to manufacture locally those products that wouldincur a relatively high freight and/or duty expense or that have high customer service needs and source through third parties those products that requirehigher direct labor to produce. We also look for opportunities to leverage our manufacturing facilities to improve operating efficiencies as well as customerservice. We currently manufacture approximately half of our products locally where we operate, and source the remaining half in lower cost countries,primarily China, but also other Far Eastern countries and Eastern Europe.SeasonalityHistorically, our business has experienced higher sales and earnings in the third and fourth quarters of the calendar year and we expect these trends tocontinue. Two principal factors contribute to this seasonality: (1) we are a major supplier of products related to the back-to-school season, which occursprincipally from June through September for our businesses in North America and from November through February for our Australian and Brazilianbusinesses; and (2) several product categories we sell lend themselves to calendar year-end purchase timing, including planners, paper storage andorganization products (including bindery) and Kensington® computer accessories, which have higher sales in the fourth quarter driven by traditionally strongfourth-quarter sales of personal computers and tablets. As a result, we have generated, and expect to continue to generate, most of our earnings and much ofour cash flow in the second half of the year as receivables are collected.For further information on the seasonality of net sales and earnings, see "Note 20. Quarterly Financial Information (Unaudited)" to the consolidatedfinancial statements contained in Part II, Item 8. of this report.Intellectual PropertyOur products are marketed under a variety of trademarks. Some of our more significant trademarks include ACCO®, AT-A-GLANCE®, Barrilito®,Derwent®, Esselte®, Five Star®, GBC®, Hilroy®, Kensington®, Leitz®, Marbig®, Mead®, NOBO®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra®, and WilsonJones®. We own rights to these trademarks in various countries throughout the world. We protect these marks as appropriate through registrations in the U.S.and other jurisdictions. Depending on the jurisdiction, trademarks are generally valid as long as they are in use or their registrations are properly maintainedand they have not been found to have become generic. Registrations of trademarks can also generally be renewed indefinitely as long as the trademarks are inuse. We also own numerous patents worldwide. While we consider our portfolio of trademarks, patents, proprietary trade secrets, technology, know-howprocesses, and related intellectual property rights to be material to our operations in the aggregate, the loss of any one trademark, patent or a group of relatedpatents would not have a material adverse effect on our business as a whole.Environmental MattersWe are subject to national, state, provincial and/or local environmental laws and regulations concerning the discharge of materials into the environmentand the handling, disposal and clean-up of waste materials and otherwise relating to the protection of the environment. This includes environmental laws andregulations that affect the design and composition of certain of our products. It is not possible to quantify with certainty the potential impact of actionsregarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future. In the opinion of management,compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a materialadverse effect upon our capital expenditures, financial condition and results of operations or competitive position. We strive to optimize resource utilizationand reduce our environmental impact.EmployeesAs of December 31, 2018, we had approximately 6,700 full-time and part-time employees. Of the North American employees, approximately 850 werecovered by collective bargaining agreements in certain of our manufacturing and distribution facilities. One of these agreements expired on December 31,2018 and was under negotiation and covers approximately 50 employees. A second agreement covering approximately 450 employees, expires in 2019.Outside the United States, the Company has government-mandated collective bargaining arrangements in certain countries, particularly in Europe. Therehave been no strikes or material labor disputes at any of our facilities during the past five years. We consider our employee relations to be good.4Executive Leadership of the CompanyAs of February 27, 2019, the executive leadership team of the Company consists of the following executive officers and key senior officers. Ages are as ofDecember 31, 2018.Mark C. Anderson, age 56•2007 - present, Senior Vice President, Corporate Development•Joined the Company in 2007Patrick H. Buchenroth, age 52•2017 - present, Executive Vice President and President, ACCOBrands International•2013 - 2017, Senior Vice President and President, EmergingMarkets•2013 - Controller and Chief Accounting Officer, NewPageCorporation•2012 - 2013, Senior Vice President, Finance, ACCO Brands USALLC•2005 - 2012, Chief Financial Officer, Consumer and Office ProductsDivision, MeadWestvaco Corporation•Joined the Company in 2002Stephen J. Byers, age 53•2019 - present, Senior Vice President and Chief Information Officer•2008 - 2018, Group Vice President and Chief Information Officer,Tate & Lyle PLC•2007 - 2008, Vice President, Enterprise Applications, UnitedStationers Inc.•2006 - 2007, Vice President, Infrastructure Operations, UnitedStationers Inc.•Joined the Company in 2019Boris Elisman, age 56•2016 - present, Chairman, President and Chief Executive Officer•2013 - 2016, 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 57•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 1984Ralph P. Hargrow, age 66•2013 - present, Senior Vice President, Global Chief People Officer•2005 - 2013, Global Chief People Officer, Molson Coors BrewingCompany•Joined the Company in 2013 Gregory J. McCormack, age 55•2018 - present, Senior Vice President, Global Products andOperations•2013 - 2018, 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 1996Cezary L. Monko, age 57•2017 - present, Executive Vice President and President, ACCOBrands EMEA•2014 - 2017, President and Chief Executive Officer, Esselte•2004 - 2014, President, Esselte Europe•2002 - 2004, President Sales Esselte Europe•Joined the Company in 1992Kathleen D. Hood, age 49•2017 - present, Senior Vice President and Chief Accounting Officer•2015 - 2017, Senior Vice President, Corporate Controller and ChiefAccounting Officer•2008 - 2015, Vice President and Corporate Controller•Joined the Company in 1994Pamela R. Schneider, age 59•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 48•2015 - present, Executive Vice President and President, ACCOBrands North America•2010 - 2015, Executive Vice President; President, ACCO BrandsU.S. Office and Consumer Products•2010, Chief Marketing and Product Development Officer•Joined the Company in 20105ITEM 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.A limited number of large customers account for a significant percentage of our net sales, and a substantial reduction in sales to, or gross profit from,or a significant decline in the financial condition of, one or more of these customers can materially adversely impact our business and results ofoperations.Our top ten customers accounted for 40% and 44%, respectively, of our net sales for the year ended December 31, 2018 and December 31, 2017. Theloss of, or a significant reduction in sales to, or gross profit from, one or more of our top customers, or significant adverse changes to the terms on which wesell our products to one or more of our top customers, can have a material adverse effect on our business, results of operations and financial condition.The competitive environment in which our large customers operate is rapidly changing. Office superstores, wholesalers and other traditional officeproducts resellers (especially in our more developed geographies such as the U.S., Europe and Australia) face increasing competition, especially from massmerchants and e-tailers, which is driving changes in the relative market shares of our large customers. In response, our commercial customers, including theoffice superstores and wholesalers, continue to evolve their businesses by shifting their channel or geographic focus, making changes to their operatingmodels and merchandising strategies and, in many cases, consolidating or divesting unprofitable or unattractive segments of their businesses. In particular,the acquisition of Essendant by Staples, which was under negotiation through much of 2018 and is now complete, brings together two of our large U.S.customers. Additionally, Staples and Office Depot have acquired a number of U.S. independent dealers. We have seen similar consolidating activity andbusiness model changes with large customers in Europe and Australia, where several of our office superstore and wholesaler customers have merged or areunder new private equity ownership. We expect these trends to continue.Our larger customers generally have the scale to develop supply chains that permit them to change their buying patterns, or develop and market theirown private label brands that compete with some of our products. In addition, the increasing competition, shifting market share and business model changeshave made, and will continue to make, our business relationships with our large customers more challenging and unpredictable. Their size and scale andrelative competitive market position make it easier for them to: (i) resist our efforts to increase prices; (ii) demand better pricing, more promotional programsand longer payment terms; (iii) reduce the shelf space allotted to, and carry a narrower assortment of, branded office and school products; (iv) increase theamount of private label products that compete with our branded offerings; and (v) reduce the amount of inventory they hold. Given the significance of thesecustomers to our business, lower sales to our large customers (many of which historically purchased products with relatively higher margins) have, and willcontinue to have, an adverse impact on our sales, margins and results of operations.Additionally, increased competition, a slowing economy in our key markets or changes in consumer buying habits could adversely affect the financialhealth of one or more of our large customers which, in turn, could have an adverse effect on our sales, results of operations and financial condition. The sell-through of our products by our customers is dependent in part on high quality merchandising and an appealing store environment to attract consumers, whichrequires continuing investments by our customers. Large customers that experience financial difficulties may fail to make such investments or delay them,resulting in lower sales and orders for our products.Shifts in the channels of distribution for our products have, and could continue to, adversely impact our sales, margins and results of operations.Due to the competitive pressures and resulting decline in market share of our traditional commercial customers, including office superstores andwholesalers, as well as the ongoing disruption and uncertainties in these channels (especially in the U.S., Europe and Australia), the key channels ofdistribution for our products is changing. Our ongoing strategy is to grow sales and market share in the faster growing mass merchant and e-tailer channels,increase our direct sales to independent dealers, and expand distribution into new and growing channels and geographies while maintaining strong margins.We may not be successful in executing against this strategy fast enough to offset the declines we are experiencing in the traditional commercial channels, ifat all. Additionally, the changes in our customer and product mix which have resulted, and may continue to result, from the shift in sales and market shareaway from our traditional commercial customers (which have historically purchased products with higher margins) into these faster growing channels have,and are likely to continue to negatively impact our margins. Our inability to successfully manage the shift away from distribution channels which aredeclining, and grow sales and market share with customers6in faster growing channels, could have a material adverse impact on our sales, margins, results of operations, cash flow and financial condition.Sales of our products may be adversely affected by issues that affect consumer discretionary spending and/or consumer spending decisions duringperiods of economic uncertainty or weakness.Our business depends on consumer discretionary spending, and as a result, our results are highly dependent on consumer and business confidence andthe health of the economies in the countries in which we operate. Consumer spending is affected by many factors outside of the Company’s control,including general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt,the costs of basic necessities and other goods and the effects of the weather or natural disasters. Additionally, during periods of economic uncertainty orweakness, we tend to see our reseller customers reduce inventories both to reduce their own working capital investment and because consumer demand forour products decreases as consumers switch to private label and other branded and/or generic products that compete on price and quality or forgo purchasesaltogether. Decreases in consumer demand for our products can result in the need to spend more on promotional activities. Overall, adverse changes ineconomic conditions or sustained periods of economic uncertainty or weakness could negatively affect our earnings and have an adverse effect on ourbusiness, results of operations, cash flow and financial condition.The Company has foreign currency translation and transaction risks that can materially adversely affect the Company’s sales, results of operations,financial condition and liquidity.Approximately 58% of our net sales for the fiscal year ended December 31, 2018 were transacted in a currency other than the U.S. dollar. Our primaryexposure to local currency movements is in Europe (the Euro, the Swedish krona and the British pound), Australia, Canada, Brazil and Mexico. Currencyexchange rates can be volatile especially in times of global, political and economic tension or uncertainty. Additionally, government actions such ascurrency devaluations, foreign exchange controls, and price or profit controls can further negatively impact foreign currency exchange rates.The fluctuations in the foreign currency rates relative to the U.S. dollar can cause translation, transaction, and other losses, which negatively impact oursales, profitability and cash flow. We source approximately half of our products from China and other Far Eastern countries using U.S. dollars. Thestrengthening of the U.S. dollar against foreign currencies ordinarily has a negative impact on the Company’s reported sales and operating margins, andconversely, the weakening of the U.S. dollar against foreign currencies ordinarily has a positive impact.When our cost of goods increases due to a strengthening in the U.S. dollar against the local foreign currency, we will seek to raise prices in our foreignmarkets in an effort to recover the lost margin. Due to competitive pressures and the timing of these price increases relative to the changes in the foreigncurrency exchange rates, it is often difficult to increase prices fast enough to fully offset the cumulative impact of the foreign-exchange-related inflation onour cost of goods sold in these markets. From time to time, we may also use hedging instruments to mitigate transactional exposure to changes in foreigncurrencies. The effectiveness of our hedges in part depends on our ability to accurately forecast future cash flows, which is particularly difficult duringperiods of uncertain demand for our products and services and highly volatile exchange rates. Further, hedging activities may only offset a portion, or none atall, of the material adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place and we mayincur significant losses from hedging activities due to factors such as demand volatility and currency fluctuations.Challenges related to the highly competitive business environments in which we operate could have a material adverse effect on our business, resultsof operations and financial condition.We operate in a highly competitive environment characterized by low-cost competitors; large, sophisticated customers; low barriers to entry; andcompetition from a wide range of products and services (including private label products and electronic and digital products and services that can replace orrender certain of our products obsolete). ACCO Brands competes with numerous branded consumer products manufacturers as well as numerous private labelsuppliers and importers, including many of our customers who import their own private label products directly from foreign sources. Many of our competitorshave strong, sought-after brands. They also have the ability to manufacture products locally at a lower cost or source them from other countries with lowerproduction costs, both of which can give them a competitive advantage in terms of price under certain circumstances. In addition, retail space devoted to ourproduct categories is limited and, as a result of competitive pressures, many of our customers are closing or reducing the size of their retail locations, anddiversifying their product offerings further reducing the available retail space devoted to our products.7As a result, our business has been, and is likely to continue to be, affected by actions: (1) by our customers to increase their purchases of private labelproducts or otherwise change product assortments; (2) by current and potential competitors to increase their investment in product and brand development,lower their prices, take advantage of low entry barriers to expand their production, or move production to countries with lower production costs; and (3) byconsumers and other end-users to use lower-priced or alternative products. Any such actions could result in lower sales and margins and adversely affect ourbusiness, results of operations and financial condition.Our success depends partially on our ability to continue to develop and market innovative products that meet our consumer demands, including priceexpectations.Our competitive position depends on our ability to successfully invest in innovation and product development. That success will depend, in part, onour ability to anticipate, develop and market products that appeal to the changing needs and preferences of our consumers. We could focus our efforts andinvestment on new products that ultimately are not accepted by consumers. Likewise, our failure to offer innovative products that meet consumer and otherend-user demand could compromise our competitive position and adversely affect our sales, profitability and results of operation.Our strategy is partially based on growth through acquisitions and the expansion of our product assortment into new and adjacent productcategories that are experiencing higher growth rates. Failure to properly identify, value, manage and integrate acquisitions or to expand into adjacentcategories may materially impact our business, results of operations and financial condition.Our growth strategy includes continued focus on mergers and acquisitions. We are focused on acquiring companies that are either in our existingproduct categories or geographic markets, which enhance our ability to compete effectively or that have the potential to accelerate our growth or our entryinto adjacent product categories.We 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 anticipated, be accretive to earnings or prove to be beneficial to our operations and cash flow. If wefail to effectively identify, value, consummate, manage or integrate any acquired company, we may not realize the potential growth opportunities or achievethe financial results anticipated at the time of its acquisition.An acquisition could also adversely impact our operating performance as a result of the issuance of acquisition-related debt, pre-acquisition assumedliabilities, undisclosed facts about the business, acquisition expense and the amortization of acquired assets or possible future impairments of goodwill orintangible assets associated with the acquisition.To the extent acquisitions increase our exposure to emerging markets, the risks associated with doing business in these markets will increase. See also "-Growth in emerging geographies may be difficult to achieve and exposes us to financial, operational, regulatory and compliance and other risks notpresent or not as prevalent as in more established markets."Additionally, part of our strategy is to expand our product assortment into new and adjacent product categories with a higher growth profile. There canbe no assurance that we will successfully execute these strategies. If we are unable to successfully increase sales by expanding our product assortment, ourbusiness, results of operations and financial condition could be adversely affected.We may face challenges with integrating acquisitions and achieving the financial and other results anticipated at the time of acquisition, includingthe planned synergies.We may face challenges in integrating our acquisitions with our existing operations. These challenges may include, among other things: integratingthe business cultures; possible difficulties in retaining key employees and key customers; and the difficulty of integrating the acquired business's finance,accounting and other business systems without negatively impacting our internal control over financial reporting and our disclosure controls and procedures.The process of integrating operations also could cause an interruption of, or loss of momentum in, the activities of one or more of our businesses.Members of our senior management may need to devote considerable amounts of time to the integration process. If our senior management is not able toeffectively manage the integration processes, or if any significant business activities are interrupted as a result of the integration process, our business andfinancial results could suffer.8Additionally, we generally expect that we will realize synergy cost savings and other financial and operating benefits from our acquisitions. Oursuccess in realizing these synergy savings and other financial and operating benefits, and the timing of this realization, depends on the successful integrationof the business operations of the acquired company. We cannot predict with certainty if or when these synergy savings and other benefits will occur, or theextent to which we will be successful.Finally, the integration of any acquisition will involve changes to, or implementation of critical information technology systems, modifications to ourinternal control systems, processes and accounting and financial systems, and the establishment of disclosure controls and procedures and internal controlover financial reporting necessary to meet our obligations as a public company. Failure to successfully complete any of these tasks could adversely affect ourinternal control over financial reporting, our disclosure controls and procedures and our ability to effectively and timely report our financial results. If we areunable to accurately report our financial results in a timely manner and establish internal control over financial reporting and disclosure controls andprocedures that are effective, our business, results of operation and financial condition, investor, supplier and customer confidence in our reported financialinformation, the market perception of our Company and/or the trading price of our common stock could be materially and adversely affected.Changes in U.S. trade policies and regulations, as well as the overall uncertainty surrounding international trade relations, could have a materialadverse effect on our business, results of operations and financial condition.Changes in U.S. trade policies, including tariffs on imports from China and on steel and aluminum that we use in our U.S. manufacturing operations,have had, and we expect that they will continue to have, an adverse effect on our cost of products sold and margins in our North America segment.Additionally, further changes in U.S. trade policies appear likely, including additional import tariffs, and could adversely impact our business. In response tothese changes, other countries have and may continue to change their own trade policies, including the imposition of tariffs and quotas, which could alsoadversely affect our business outside the U.S. The uncertainty surrounding U.S. trade policy makes it difficult to make long-term strategic decisions regardingthe best way to respond to these pressures and could also increase the volatility of currency exchange rates. Further, the knock-on effect of the tariffs hasresulted in an increase in the cost of U.S.-sourced products commensurate with the tariffs.In order to mitigate the impact of these trade-related increases on our cost of products sold, we have increased, and intend to continue to increase pricesin the U.S., if necessary, to recover any increased costs. Over the longer term, we may make changes in our supply chain and, potentially, our U.S.manufacturing strategy. There can be no assurance that we will be able to successfully pass on these costs through price increases or adjust our supply chainby locating alternative suppliers for raw materials or finished goods at acceptable costs or in a timely manner. Additionally, implementing price increasesmay cause our customers to find alternative sources for their products or decrease their purchases from us. Conversely, when tariffs decline, customer demandsfor lower prices could result in lower sale prices and, to the extent we have existing inventory, lower margins. As a result, fluctuations in tariffs have had, andwill continue to have, a material adverse effect on the Company’s business, results of operations and financial condition.Our inability to effectively manage the negative impacts of changing U.S. and foreign trade policies, including tariffs, could materially adverselyimpact our sales, margins, results of operations and financial condition.We rely extensively on information technology systems to operate, transact and otherwise manage our business. Any material failure, inadequacy, orinterruption of that technology or its supporting infrastructure could materially adversely affect our business, results of operations and financialcondition.We rely extensively on our information technology systems, many of which are outsourced to third-party service providers. We depend on thesesystems and our third-party service providers to effectively manage our business and execute the production, distribution and sale of our products as well asto manage and report our financial results and run other support functions. Although we have implemented service level agreements and have establishedmonitoring controls, if our third-party service providers fail to perform their obligations in a timely manner or at satisfactory levels, our business could suffer.Additionally, our failure to properly maintain and successfully upgrade or replace any of these systems, especially our enterprise resource planning systems(including our financial systems) so that they operate effectively, could disrupt service to our customers or negatively impact our ability to report ourfinancial results in a timely and accurate manner.Our information technology general controls are an important element of our internal control over financial reporting and our disclosure controls andprocedures. Failure to successfully execute our information technology general controls could adversely impact the effectiveness of our internal control overfinancial reporting and our disclosure controls and procedures and impair our ability to accurately and timely report our financial results.9If services to our customers are negatively impacted by the failure of our information technology systems, if we are unable to accurately and timelyreport our financial results, or conclude that we do not have effective internal control over financial reporting and effective disclosure controls andprocedures, it could damage our reputation and adversely affect our business, results of operations and financial condition.Security breaches could compromise our confidential and proprietary information, as well as any personally identifiable information we hold, andexpose us to operational and legal risks which could cause our business and reputation to suffer and materially adversely affect our results of operations.We maintain information necessary to conduct our business in digital form, which is stored in data centers and on our networks and third-party cloudservices, including confidential and proprietary information as well as personally identifiable information regarding our customers and employees. Datamaintained in digital form is subject to the risk of intrusion, tampering and theft. Our information technology and infrastructure may be vulnerable to attacksby hackers or breached due to employee error, malfeasance or other disruptions.We maintain systems designed to prevent such intrusion, tampering and theft. The development and maintenance of these systems is costly andrequires ongoing monitoring and updating as technologies change and efforts by hackers to overcome security measures become more sophisticated. Further,we obtain assurances from third parties to whom we provide confidential, proprietary and personally identifiable information regarding the sufficiency oftheir security procedures and, where appropriate, assess the protections employed by these third parties. The cost and operational consequences ofimplementing, maintaining and further enhancing cybersecurity protection measures could increase significantly as cybersecurity threats increase.Despite these efforts, the possibility of intrusion, tampering and theft cannot be eliminated entirely. We have from time to time experiencedcybersecurity breaches, such as "phishing" attacks, employee or insider error, brute force attacks, unauthorized parties gaining access to our informationtechnology systems and similar incidents. To date these incidents have not had a material impact on our business, but there can be no assurance that futureincidents will not have a material impact. The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems changefrequently and often are not recognized until launched against a target. Additionally, there can be no assurance that the actions we and our third partyproviders are taking and will continue to take will prevent another breach of, or attack on the information technology systems which house our confidential,proprietary and personally identifiable information. Any such breach or attack could compromise our network, the network of a third party to whom we havedisclosed confidential, proprietary or personally identifiable information, a data center where we have stored such information or a third-party cloud serviceprovider, and the information stored there could be accessed, publicly disclosed, lost or stolen.Any such intrusion, tampering or theft and any resulting disclosure or other loss of such information could result in a disruption to our informationtechnology infrastructure, interruption of our business operations, violation of applicable privacy and other laws or standards, significant legal and financialexposure beyond the scope or limits of any insurance coverage (including legal claims and proceedings and regulatory enforcement actions and penalties),increased operating costs associated with remediation activities, and a loss of confidence in our security measures, all of which could harm our reputationwith our customers, end-users, employees and other stakeholders and adversely affect our results of operation. Contractual provisions with third parties,including cloud service providers, may limit our ability to recover these losses.Additionally, we are an acquisitive organization and the process of integrating the information technology systems of the businesses we acquire iscomplex and exposes us to additional risk as we might not adequately identify weaknesses in the targets' information technology systems. This could exposeus to unexpected liabilities or make our own systems more vulnerable to attack.Growth in emerging geographies may be difficult to achieve and exposes us to financial, operational, regulatory and compliance and other risks notpresent or not as prevalent as in more established markets.A portion of our sales are derived from emerging markets such as Latin America and parts of Asia, the Middle East, Africa 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, operational, regulatory and compliance risks than more mature markets. In some cases, emergingmarkets have greater political and economic volatility, greater vulnerability to infrastructure and labor disruptions, are more susceptible to corruption andhave different laws and regulations. Further, these emerging markets are generally more remote from our headquarters location and have different cultureswhich may make it be more difficult to impose corporate standards and procedures and the extraterritorial laws of the U.S. and other jurisdictions, includingthe U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other similar laws. Negative or uncertain political climates and military disruptions10in developing and emerging markets could also adversely affect us. Further, weak or corrupt legal systems may affect our ability to protect and enforce ourintellectual property, contractual and other rights.As we seek to expand and grow in these emerging markets, we increase our exposure to these financial, operational, and regulatory and compliance risksas well as legal and other risks, including currency transfer restrictions, the impact of currency fluctuations, hyperinflation or devaluation, changes ininternational trade and tax policies and regulations (including import and export restrictions), the lack of well-established or reliable legal systems,corruption, adverse economic conditions, political actions or instability, terrorism and civil unrest. Likewise, our overall cost of doing business increases dueto the costs of compliance with complex and numerous foreign and U.S. laws and regulations.If we are unable to successfully expand into emerging markets, profitably grow our existing emerging market businesses, achieve the return on capitalwe expect as a result of our investments, or effectively manage the risks inherent in our growth strategy in these markets, our business, results of operationsand financial condition could be adversely affected.The anticipated positive effects of the U.S. Tax Cuts and Jobs Act (the "U.S. Tax Act") on our financial results may not be fully realized and couldadversely impact our net income and cash flow.On December 22, 2017, the U.S. Tax Act was signed into law. The U.S. Tax Act made broad and complex changes to the U.S. tax code, including, butnot limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax oncertain undistributed earnings of foreign subsidiaries (the "Transition Toll Tax"); (iii) bonus depreciation that will allow for full expensing of qualifiedproperty; (iv) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (v) a new provision designed to tax global intangiblelow-taxed income ("GILTI"); (vi) the repeal of domestic production activity deductions; (vii) limitations on the deductibility of certain executivecompensation expenses; (viii) limitations on the use of foreign tax credits to reduce U.S. income tax liability; and (ix) a new provision that allows a domesticcorporation an immediate deduction for a portion of its foreign derived intangible income ("FDII").The initially anticipated positive effects of the U.S. Tax Act on our financial results have been mitigated by a reduction in the overall percentage mix ofour earnings from the U.S. and other unfavorable provisions of the new law. In 2018, the benefits associated with the lower U.S. federal corporate tax rate wereoffset by the impact of the GILTI tax and the limitations on deductibility of executive compensation expenses as well as a reduction in the overall percentageof our earnings from the U.S. The evolving regulations and interpretations still being issued by the IRS could change our understanding of, and assumptionspertaining to, the application of the U.S. Tax Act. Likewise, the manner in which the U.S. Tax Act will be enforced is still uncertain. In addition, a furtherreduction in the overall percentage mix of our earnings from the U.S. could further reduce the anticipated benefits of the lower corporate tax rate. As a resultof these factors, the aggregate impact of the U.S. Tax Act on our tax rate, cash taxes and net income could change and any such change could adverselyimpact our net income and cash flow.Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.We are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement as well as other claims incidental to ourbusiness. In addition, we may be unaware of third party claims of intellectual property infringement relating to our technology, brands or products and wemay face other claims related to business operations. Any litigation regarding patents or other intellectual property could be costly and time-consuming andmight require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale ofcertain of our products.It is the opinion of management that (other than the Brazilian Tax Assessment) the ultimate resolution of currently outstanding matters will not have amaterial adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful inour defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further,future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations and financial condition.In connection with our May 1, 2012 acquisition of the Mead Consumer and Office Products business ("Mead C&OP"), we assumed all of the taxliabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Departmentof the Ministry of Finance of Brazil ("FRD") issued a tax assessment (the "Brazilian Tax Assessment") against Tilibra, which challenged the tax deduction ofgoodwill from Tilibra's taxable income for the year 2007 (the "First Assessment"). A second assessment challenging the deduction of goodwill from Tilibra'staxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013 (the "Second Assessment"). Tilibra is disputing both of the taxassessments.11The final administrative appeal of the Second Assessment was decided against the Company in 2017. We are challenging this decision in court. Inconnection with the judicial challenge, we are required to provide security to guarantee payment of the Second Assessment, which represents $21.0 millionof the current reserve, should we not prevail. The First Assessment is still being challenged through established administrative procedures.We believe we have meritorious defenses and intend to vigorously contest these matters; however, there can be no assurances that we will ultimatelyprevail. The ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a number of years. If theFRD's initial position is ultimately sustained, the amount assessed 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 2012, we recorded a reserve in the amount of $44.5 million (atDecember 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price andwhich included the 2007-2012 tax years plus penalties and interest through December 2012. Included in this reserve is an assumption of penalties at 75%,which is the standard penalty. While there is a possibility that a penalty of 150% could be imposed in connection with the First Assessment, based on thefacts in our case and existing precedent, we believe the likelihood of a 150% penalty is not more likely than not as of December 31, 2018. We will continueto actively monitor administrative and judicial court decisions and evaluate their impact, if any, on our legal assessment of the ultimate outcome of our case.In addition, we will continue to accrue interest related to this contingency until such time as the outcome is known or until evidence is presented that we aremore likely than not to prevail. The time limit for issuing an assessment for 2011 expired in January 2018 and we did not receive an assessment; we thereforereversed $5.6 million of reserves related to 2011 in the first quarter of 2018. During the years ended December 31, 2018, 2017 and 2016, we accruedadditional interest as a charge to current tax expense of $1.1 million, $2.2 million and $2.8 million, respectively. At current exchange rates, our accrualthrough December 31, 2018, including tax, penalties and interest is $29.4 million. The time limit for issuing an assessment for 2012 expired in January 2019and we did not receive an assessment.Outsourcing the production of certain of our products, our information technology systems and other administrative functions could materiallyadversely affect our business, results of operations and financial condition.We outsource certain manufacturing functions to suppliers in China, other Asia-Pacific 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, we rely on our suppliers to ensure that our products meet our design and product content specifications, and allapplicable laws, including product safety, security, labor and environmental laws. We also expect our suppliers to conform to our and our customers’expectations with respect to product safety, product quality and social responsibility, be responsive to our audits and otherwise be certified as meeting ourand 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 orcease production at a particular facility. Substitute suppliers might not be available or, if available, might be unwilling or unable to offer products onacceptable terms or in a timely manner. Additionally, failure to meet legal and regulatory requirements or customer expectations may result in our having tostop selling non-conforming products until the issues are remediated. Any of these circumstances could result in unforeseen delays and increased costs andnegatively affect our ability to deliver products and services to our customers, all of which could adversely affect our business, sales, results of operations andfinancial 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 to our customers, all of which could adversely affect our business, sales,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.In addition, we outsource certain administrative functions, such as payroll processing and benefit plan administration to third party service providersand may outsource other functions in the future to achieve cost savings and efficiencies. If the service12providers to whom we outsource these functions do not perform effectively, we may not be able to achieve the expected cost savings and may have to incuradditional costs to correct errors they make. Depending on the function involved, such errors may lead to business disruption, processing inefficiencies orloss of, or damage to intellectual property, legal and regulatory exposure, or harm to employee morale.Continued declines in the use of certain of our products have and could continue to adversely affect our business.A number of our products and brands consist of paper-based and related products. As use of technology-based tools continues to rise worldwide,consumer demand for traditional paper-based and related products, such as decorative calendars, planners, envelopes, ring binders, lever arch files and otherstorage and organization products, and mechanical binding equipment, has declined. The impact of tariff and commodity price driven inflation in the U.S.also has the potential to result in higher pricing (especially for paper-based products) which may, in turn, accelerate the pace of change in consumerpreferences for product substitutes. Continuation or acceleration of the decline in the overall demand for any of the products we sell has, and could continueto, adversely impact our business, results of operations and financial condition.Our business is subject to risks associated with seasonality, which could materially adversely affect our cash flow, results of operations and financialcondition.Historically, our business has experienced higher sales and earnings in the third and fourth quarters of the calendar year and we expect these trends tocontinue. Two principal factors contribute to this seasonality: (1) we are a major supplier of products related to the back-to-school season, which occursprincipally from June through September for our businesses in North America and from November through February for our Australian and Brazilianbusinesses; and (2) several product categories we sell lend themselves to calendar year-end purchase timing, including planners, paper storage andorganization products (including bindery) and Kensington® computer accessories, which have higher sales in the fourth quarter driven by traditionally strongfourth-quarter sales of personal computers and tablets. As a result, we have generated, and expect to continue to generate, most of our earnings and much ofour cash flow in the second half of the year as receivables are collected. If these typical seasonal increases in sales of certain products do not materialize orwhen sales of these product lines represent a larger overall percentage of our sales or profitability, it could have an outsized impact on our business thatwould adversely affect our cash flow, results of operations and financial condition.Our operating results have, and may continue to be, adversely affected by changes in cost of products sold, including the cost or availability of rawmaterials, transportation, labor, and other necessary supplies and services and the cost of finished goods.Pricing and availability of raw materials, transportation, labor, and other necessary supplies and services used in our business can be volatile due tonumerous factors beyond our control, including general economic conditions, labor costs, production levels, and import tariffs as well as overall competitiveconditions, including demand and supply. This volatility has, and may continue to, significantly affect our business, results of operations, and financialcondition.We also rely on third-party manufacturers, principally in China, as a source for many of our finished products. These manufacturers are also subject tochanges in the cost or availability of raw materials, transportation, labor, and other necessary supplies and services, which may, in turn, result in an increase inthe amount we pay for finished goods.During periods of rising costs, we manage this volatility through a variety of actions, including periodic purchases, future delivery purchases, long-termcontracts, sales price increases and the use of certain derivative instruments. Over the longer term, we may also make adjustments in our supply chain in aneffort to mitigate the adverse impact of increasing costs. There can be no assurance that we will be able to effectively mitigate the impact on our cost ofproducts sold fast enough to preserve our margins, if at all. Additionally, we may lose sales as we seek to offset these cost increases by raising prices to ourcustomers. Conversely, when input costs decline, customer demands for lower prices could result in lower sale prices and, to the extent we have existinginventory, lower margins. As a result, fluctuations in costs of raw materials, transportation, labor, and finished goods has had, and may continue to have, amaterial adverse effect on the Company’s business, results of operations and financial condition.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. During 2018, we experienced significant increases in the cost of paper, steel and aluminum as well as increases intransportation costs. While we believe the situation has stabilized somewhat, we may see further increases in the cost of raw materials, finished goods andtransportation.13The risks associated with our failure to comply with laws, rules and regulations and self-regulatory requirements that affect our business, and thecosts of compliance, as well as the impact of changes in such laws could materially adversely affect our business, reputation and results of operations.Our business is subject to national, state, provincial and/or local laws, rules and regulations as well as self-regulatory requirements in numerouscountries due to the nature of our operations and the products we sell. This, in turn, affects the way we conduct our business as well as our customers’expectations and requirements. Among others, laws and self-regulatory requirements in the following significant areas (and the rules and regulationspromulgated thereunder) affect our business and our current and prospective customers’ expectations:•Laws relating to the discharge and emission of certain materials and waste, and establishing standards for their use, disposal and management;•Laws governing content of toxic chemicals and materials in the products we sell;•Product safety laws;•International trade laws;•Privacy and data security laws;•Self-regulatory requirements regarding the acceptance, processing, storage and transmission of credit card data;•Laws governing the use of the internet, social media, advertising, endorsements and testimonials;•Anti-bribery and corruption laws;•Anti-money laundering laws; and•Competition laws.All of these legal frameworks are complex and may change frequently. Capital and operating expenses required to establish and maintain compliancewith all of these laws, rules and regulations and self-regulatory requirements can be significant, and violations may result in substantial fines, penalties andcivil damages as well as damage to our reputation. Any significant increase in our costs to comply with applicable legal and self-regulatory requirements, orliability arising from noncompliance could have an adverse effect on our business, results of operations and financial condition as well as damage to ourreputation.In addition, as we expand our business into emerging and new markets, we increase the number of legal and self-regulatory requirements with which weare required to comply, which increases the complexity and costs of compliance as well as the risks of noncompliance.The level of investment returns on pension and post-retirement plan assets and the actuarial assumptions used for valuation purposes could affect theCompany’s earnings and cash flows in future periods. Changes in government regulations could also affect the Company’s pension and post-retirementplan expenses and funding requirements.As of December 31, 2018, the Company had $258.3 million recorded as pension liabilities in its Consolidated Balance Sheet. The funding obligationsfor the Company’s pension plans are impacted by the performance of the financial markets, particularly the equity markets, and interest rates. Fundingobligations are determined by government regulations and are measured each year based on the value of assets and liabilities on a specific date. If thefinancial markets do not provide the long-term returns that are expected, the Company could be required to make larger contributions. The equity marketscan be, and recently have been, very volatile, and therefore the Company’s estimate of future contribution requirements can change dramatically in relativelyshort periods of time. Similarly, changes in interest rates and legislation enacted by governmental authorities can impact the timing and amounts ofcontribution requirements. An adverse change in the funded status of the plans could significantly increase the Company’s required contributions in thefuture and adversely impact its liquidity.Assumptions used in determining projected benefit obligations and the fair value of plan assets for the Company’s pension and post-retirement benefitplans are determined by the Company in consultation with outside actuaries. In the event that the Company determines that changes are warranted in theassumptions used, such as the discount rate, expected long-term rate of return on assets, expected health care costs, or mortality rates, the Company’s futurepension and post-retirement benefit expenses could increase or decrease. Due to changing market conditions or changes in the participant population, theassumptions that the Company uses may differ from actual results, which could have a significant impact on the Company’s pension and post-retirementliabilities and related costs and funding requirements.We also participate in a multi-employer pension plan for our union employees at our Ogdensburg, New York facility. The plan has reported significantunderfunded liabilities and declared itself in critical and declining status. As a result, the trustees of the plan adopted a rehabilitation plan in an effort toforestall insolvency. Our required contributions to this plan could increase due to the shrinking contribution base resulting from the insolvency orwithdrawal of other participating employers, the inability or the failure of withdrawing participating employers to pay their withdrawal liability, lower thanexpected returns on pension fund14assets, and other funding deficiencies. In the event that we withdraw from participation in the plan, we will be required to make withdrawal liability paymentsfor a period of 20 years or longer in certain circumstances. The present value of our withdrawal liability payments could be significant and would be recordedas an expense in our Consolidated Statements of Income and as a liability on our Consolidated Balance Sheets in the first year of our withdrawal.See also "Part II, Item 7. Critical Accounting Policies - Employee Benefit Plans" and "Note 6. Pension and Other Retiree Benefits" to the consolidatedfinancial statements contained in Part II, Item 8. of this report.Impairment of intangible assets could have a material adverse effect on our financial results.We have approximately $1.5 billion of goodwill and other specifically identifiable intangible assets as of December 31, 2018. Future events may occurthat could adversely affect the reported value, or fair value, of our intangible assets that would require impairment charges to our financial results. Suchevents may include, but are not limited to, strategic decisions made in response to changes in economic and competitive conditions, the impact of theeconomic environment on the Company’s sales and customer base, the unfavorable resolution of litigation, a material adverse change in the Company’srelationship with significant customers, or a sustained decline in the Company’s stock price. The Company continues to evaluate the impact of developmentsfrom its reporting units to assess whether impairment indicators are present. Accordingly, the Company may be required to perform impairment tests based onwhether or not indicators are present. In addition, the Company performs an impairment test on an annual basis in the second quarter, as required by GAAPwhether or not impairment indicators are present. See also "Part II, Item 7. Critical Accounting Policies - Intangible Assets," " - Goodwill" and "Note 10.Goodwill and Identifiable Intangible Assets" to the consolidated financial statements contained in Part II, Item 8. of this report.Our existing borrowing arrangements require us to dedicate a substantial portion of our cash flow to debt payments and limit our ability to engage incertain activities. If we are unable to meet our obligations under these agreements or are contractually restricted from pursuing activities or transactionsthat we believe are in our long-term best interests, our business, results of operations and financial condition could be materially adversely affected.As of December 31, 2018, we had $888.0 million of outstanding debt.Our debt service obligations require us to dedicate a substantial portion of our cash flow from operating activities to payments on our indebtedness,which reduces the availability of our cash flow to fund working capital, capital expenditures, research and product development efforts, potentialacquisitions and for other general corporate purposes. Our indebtedness also may increase our vulnerability to economic downturns and changing marketconditions and place us at a competitive disadvantage relative to competitors that have less debt. In addition, as of December 31, 2018, $512.7 million of ouroutstanding 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 and our stockholders' long-term interest. Among other things, the covenants and financial ratios and tests contained in our debt agreements restrict or limit our ability to incur additionalindebtedness, incur certain liens on our assets, issue preferred stock or certain disqualified stock, make restricted payments (including dividends and sharerepurchases), make investments, sell our assets or merge with other companies, and enter into certain transactions with affiliates. We are also required tomaintain specified financial ratios under certain circumstances and satisfy financial condition tests. Our ability to comply with these covenants and financialratios and tests may be affected by events beyond our control, and we 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 indebtedness be realized, our business, results of operations and financial condition could be adverselyaffected. See also "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and CapitalResources."15Should one of our large customers or suppliers experience financial difficulties or file for bankruptcy, our cash flows, results of operations andfinancial condition could be materially adversely affected.Our customer concentration increases our customer credit risk. If any of our larger customers were 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 the payment of existing accounts receivablebalances. Such a result could adversely impact our cash flows, results of operations and financial condition.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.Our failure to comply with customer contracts may lead to fines or loss of business, which could adversely impact our revenue and results ofoperationsOur contracts with our customers include specific performance requirements. If we fail to comply with the specific provisions of our customer contracts,we could be subject to fines, suffer a loss of business or incur other penalties. If our customer contracts are terminated, if we fail to meet our contractualobligations, or if our ability to compete for new contracts is adversely affected, we could suffer a reduction in expected revenue and margins.Our inability to secure, protect and maintain rights to intellectual property could have an adverse impact on our business.We consider our intellectual property rights, particularly and most notably our trademarks and trade names, but also our patents, trade secrets, tradedress, copyrights and licensing agreements, to be an important and valuable part of our business. Our failure to obtain or adequately protect our intellectualproperty rights, or any change in law or other changes that serve to lessen or remove the current legal protections of our intellectual property, may diminishour competitiveness, dilute the value of our brands, cause confusion in the marketplace and materially impact our sales and profitability.Product liability claims, recalls or regulatory actions could materially adversely affect our financial results or harm our reputation or brands.Claims for losses or injuries purportedly caused by one of our products arise in the ordinary course of our business. In addition to the risk of litigationor regulatory enforcement actions and the associated costs and potential for monetary judgments and penalties, which could have an adverse effect on ourresults of operations and financial condition, product liability claims or regulatory actions, regardless of merit, could result in negative publicity that couldharm our reputation in the marketplace or the value of our consumer brands. We also could be required to recall and possibly discontinue the sale of defectiveor unsafe products, which could result in adverse publicity, significant expenses and adverse impacts to our financial position.Our success depends on our ability to attract and retain qualified personnel.Our success depends on our ability to attract and retain qualified personnel, including executive officers and other key personnel for a diverse, globalworkforce. We rely to a significant degree on compensating our executive officers and key employees with performance-based incentive awards that pay outonly if specified performance goals have been met. To the extent these performance goals are not met and our incentive awards do not pay out, or pay out lessthan the targeted amount, it may motivate certain executive officers and key employees to seek other opportunities and affect our ability to attract and retainqualified personnel. The loss of key management personnel or other key employees or our potential inability to attract such personnel may adversely affectour ability to manage our overall operations and successfully implement our business strategy.Our stock price is volatile.The market price for our common stock has been volatile historically. Our stock price may be 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;•investors' perceptions of the office products industry;•amounts we repurchase on the open market under our share repurchase program;•changes in financial estimates by us or securities analysts and recommendations by securities analysts; and•the composition of our stockholders, particularly the presence of "short sellers" trading in our stock.16Volatility 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, labor strikes, power and/or water shortages, acts of God, war, terrorism, othergeopolitical incidents or other circumstances outside our control could adversely impact our business, results of operations and financial condition.A disruption at one of our facilities or at a third-party service provider’s facilities (especially facilities in China, other Asia-Pacific countries and LatinAmerica) could adversely impact production, and our customer deliveries which can negatively impact our operations and result in increased costs. Such adisruption could occur as a result of any number of events, including but not limited to, a major equipment failure, labor stoppages, transportation failuresaffecting the supply and shipment of materials and finished goods, the unavailability of raw materials, severe weather conditions, natural disasters, civilunrest, fire, explosions, health pandemics, war or terrorism and disruptions in utility and other services. Any such disruptions could adversely impact ourbusiness, results of operations and financial condition.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.17ITEM 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 31,2018:LocationFunctional Use Owned/Leased (number of properties)ACCO Brands North America: Ontario, CaliforniaDistribution/Manufacturing LeasedBooneville, MississippiDistribution/Manufacturing OwnedOgdensburg, New YorkDistribution/Manufacturing OwnedSidney, New YorkDistribution/Manufacturing OwnedAlexandria, PennsylvaniaDistribution/Manufacturing OwnedPleasant Prairie, Wisconsin(a)Manufacturing LeasedMississauga, CanadaDistribution/Manufacturing/Office LeasedSan Mateo, CaliforniaOffice Leased ACCO Brands EMEA: Sint-Niklass, BelgiumDistribution/Manufacturing LeasedShanghai, ChinaManufacturing LeasedLanov, Czech RepublicDistribution/Manufacturing LeasedAylesbury, EnglandOffice LeasedHalesowen, EnglandDistribution OwnedLillyhall, EnglandManufacturing LeasedUxbridge, EnglandOffice LeasedVagney, FranceDistribution OwnedHeilbronn, GermanyDistribution OwnedStuttgart, GermanyOffice LeasedUelzen, GermanyManufacturing OwnedGorgonzola, ItalyDistribution/Manufacturing LeasedKozienice, PolandDistribution/Manufacturing OwnedWarsaw, PolandOffice LeasedArcos de Valdevez, PortugalManufacturing OwnedHestra, SwedenDistribution/Manufacturing/Office Owned ACCO Brands International: Sydney, AustraliaDistribution/Manufacturing/Office Owned/Leased (2)Bauru, BrazilDistribution/Manufacturing/Office Owned (2)Hong KongOffice LeasedTokyo, JapanOffice LeasedLerma, MexicoManufacturing/Office OwnedQueretaro, MexicoDistribution/Office LeasedAuckland, New ZealandDistribution/Office LeasedTaipei, Taiwan CityOffice Leased(a)Scheduled to be closed during 2019.We believe that the properties are suitable to the respective businesses and have production capacities adequate to meet the needs of our businesses.18ITEM 3. LEGAL PROCEEDINGSWe are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement as well as other claims incidental to ourbusiness. In addition, we may be unaware of third party claims of intellectual property infringement relating to our technology, brands or products and wemay face other claims related to business operations. Any litigation regarding patents or other intellectual property could be costly and time-consuming andmight require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale ofcertain of our products.It is the opinion of management that (other than the Brazilian Tax Assessment) the ultimate resolution of currently outstanding matters will not have amaterial adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful inour defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further,future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations and financial condition.In connection with our May 1, 2012 acquisition of the Mead Consumer and Office Products business ("Mead C&OP"), we assumed all of the taxliabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Departmentof the Ministry of Finance of Brazil ("FRD") issued a tax assessment (the "Brazilian Tax Assessment") against Tilibra, which challenged the tax deduction ofgoodwill from Tilibra's taxable income for the year 2007 (the "First Assessment"). A second assessment challenging the deduction of goodwill from Tilibra'staxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013 (the "Second Assessment"). Tilibra is disputing both of the taxassessments.The final administrative appeal of the Second Assessment was decided against the Company in 2017. We are challenging this decision in court. Inconnection with the judicial challenge, we are required to provide security to guarantee payment of the Second Assessment, which represents $21.0 millionof the current reserve, should we not prevail. The First Assessment is still being challenged through established administrative procedures.We believe we have meritorious defenses and intend to vigorously contest these matters; however, there can be no assurances that we will ultimatelyprevail. The ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a number of years. If theFRD's initial position is ultimately sustained, the amount assessed 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 2012, we recorded a reserve in the amount of $44.5 million (atDecember 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price andwhich included the 2007-2012 tax years plus penalties and interest through December 2012. Included in this reserve is an assumption of penalties at 75%,which is the standard penalty. While there is a possibility that a penalty of 150% could be imposed in connection with the First Assessment, based on thefacts in our case and existing precedent, we believe the likelihood of a 150% penalty is not more likely than not as of December 31, 2018. We will continueto actively monitor administrative and judicial court decisions and evaluate their impact, if any, on our legal assessment of the ultimate outcome of our case.In addition, we will continue to accrue interest related to this contingency until such time as the outcome is known or until evidence is presented that we aremore likely than not to prevail. The time limit for issuing an assessment for 2011 expired in January 2018 and we did not receive an assessment; we thereforereversed $5.6 million of reserves related to 2011 in the first quarter of 2018. During the years ended December 31, 2018, 2017 and 2016, we accruedadditional interest as a charge to current tax expense of $1.1 million, $2.2 million and $2.8 million, respectively. At current exchange rates, our accrualthrough December 31, 2018, including tax, penalties and interest is $29.4 million. The time limit for issuing an assessment for 2012 expired in January 2019and we did not receive an assessment.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.19PART 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." As of February 19, 2019, we had approximately11,291 record 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, 2013 through December 31, 2018. Cumulative Total Return 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18ACCO Brands Corporation$100.00 $134.08 $106.10 $194.20 $181.55 $103.10Russell 2000100.00 104.89 100.26 121.63 139.44 124.09S&P Office Services and Supplies(SuperCap1500)100.00 104.75 91.49 99.18 94.72 83.2620Common Stock PurchasesThe following table provides information about our purchases of equity securities during the quarter ended December 31, 2018: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)October 1, 2018 to October 31, 2018 — $— — $108,964,228November 1, 2018 to November 30, 2018 — — — 108,964,228December 1, 2018 to December 31, 2018 — — — 108,964,228Total — $— — $108,964,228(1) On October 28, 2015, the Company announced that its Board of Directors had approved the repurchase of up to $100 million in shares of itscommon stock. On February 14, 2018, the Company announced that its Board of Directors had approved an authorization to repurchase up to an additional$100 million in shares of its common stock.During the year ended December 31, 2018, we repurchased $75.0 million of our common stock in the open market.The number of shares to be purchased, if any, and the timing of purchases will be based on the Company's stock price, leverage ratios, cash balances,general business and market conditions, and other factors, including alternative investment opportunities and working capital needs. The Company mayrepurchase its shares, from time to time, through a variety of methods, including open-market purchases, privately negotiated transactions and block trades orpursuant to repurchase plans designed to comply with the Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Any stock repurchases will besubject to market conditions, SEC regulations and other considerations and may be commenced or suspended at any time or from time to time, without priornotice. Accordingly, there is no guarantee as to the number of shares that will be repurchased or the timing of such repurchases.Dividend PolicyIn February 2018, the Company's Board of Directors approved the initiation of a dividend program under which the Company intends to pay a regularquarterly cash dividend of $0.06 per share on its common stock ($0.24 per share on an annualized basis). The continued declaration and payment ofdividends is at the discretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results ofoperations, cash flows and other factors.21ITEM 6. SELECTED FINANCIAL DATASELECTED HISTORICAL FINANCIAL DATAThe following table sets forth our selected consolidated financial data. The selected consolidated financial data as of and for the five fiscal years endedDecember 31 are derived from our consolidated financial statements. The data should be read in conjunction with the consolidated financial statements andrelated notes contained in Part II, Item 8. of this report. Year Ended December 31,(in millions, except per share data)2018(1) 2017(1) 2016(1) 2015 2014Income Statement Data: Net sales$1,941.2 $1,948.8 $1,557.1 $1,510.4 $1,689.2Operating income(2) (3)187.0 184.5 159.1 155.1 169.8Interest expense41.2 41.1 49.3 44.5 49.5Interest income(4.4) (5.8) (6.4) (6.6) (5.6)Non-operating pension income(3)(9.3) (8.5) (8.2) (8.4) (3.8)Other expense (income), net(4)1.6 (0.4) 1.4 2.1 0.8Net income(5)106.7 131.7 95.5 85.9 91.6Per common share: Net income(5) Basic$1.02 $1.22 $0.89 $0.79 $0.81Diluted$1.00 $1.19 $0.87 $0.78 $0.79Balance Sheet Data (as of December 31): Total assets$2,786.4 $2,799.1 $2,064.5 $1,953.4 $2,215.1Total debt, net882.5 932.4 696.2 720.5 789.3Total stockholders’ equity789.7 774.1 708.7 581.2 681.0Other Data: Cash provided by operating activities$194.8 $204.9 $167.1 $171.2 $171.7Cash used by investing activities(71.9) (319.1) (106.4) (24.6) (25.8)Cash (used) provided by financing activities(125.6) 142.2 (76.4) (137.8) (142.0)(1)The Company acquired GOBA on July 2, 2018; the results of GOBA are included in 2018 results from July 2, 2018. The Company acquired Esselte onJanuary 31, 2017; the results of Esselte are included in 2017 results from February 1, 2017. The Company acquired Pelikan Artline on May 2, 2016;the results of Pelikan Artline are included in 2016 results from that date forward.(2)Operating income for the years 2018, 2017, 2016, 2015 and 2014 was impacted by restructuring charges (credits) of $11.7 million, $21.7 million, $5.4million, $(0.4) million and $5.5 million, respectively. Such charges were largely severance related, and were principally associated with post-mergerintegration activities following various acquisitions.(3)On January 1, 2018, we adopted the accounting standard ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving thePresentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires presentation of all components ofnet periodic pension and postretirement benefit (income)/costs, other than service costs, in an income statement line item included in "Non-operating(income)/expense." On this basis, the Company restated its operating income for the years 2017, 2016, 2015 and 2014, which were reduced by $8.5million, $8.2 million, $8.4 million and $3.8 million, respectively. For further information see "Note 2. Significant Accounting Policies, RecentAccounting Pronouncements and Adopted Accounting Standards" to the consolidated financial statements contained in Part II, Item 8. of this report.(4)Other expense (income), net for the year 2016 was impacted by a $28.9 million non-cash gain arising from the Pelikan Artline acquisition due to therevaluation of the previously held equity interest to fair value. For further information see "Note 3. Acquisitions" to the consolidated financialstatements contained in Part II, Item 8. of this report. Other expense (income), net for the years 2017, 2016, and 2015 was also impacted by incrementalcharges related to various refinancings of $0.3 million, $29.9 million, and $1.9 million, respectively. For further information on the refinancingscompleted in 2017 and222016 see "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financial statements contained in Part II, Item 8. of this report.(5)In 2017, we recorded a net tax benefit of $25.7 million related to the U.S. Tax Act.SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES - COMPARABLE NET SALESTo supplement our consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), weprovide investors with certain non-GAAP financial measures, including comparable net sales, adjusted operating income, adjusted net income, adjusted netincome per share, free cash flow, and normalized tax rate. See below for an explanation of how we calculate and use these non-GAAP financial measures andfor a reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures. We sometimes refer to comparable net sales ascomparable sales and adjusted net income per share as adjusted earnings per share.We use the non-GAAP financial measures both in the internal evaluation and management of our business and to explain our results to stockholders andthe investment community. Senior management’s incentive compensation is derived, in part, using certain of these measures. We believe these measuresprovide management and investors with a more complete understanding of our underlying operational results and trends, facilitate meaningful comparisonsand enhance an overall understanding of our past financial performance and our future prospects. The non-GAAP results are an indication of our baselineperformance before gains, losses or other charges that we consider to be outside our core operating results.The non-GAAP financial measures exclude certain items that may have a material impact upon our reported financial results such as unusual income taxitems, restructuring and integration charges, acquisition-related expenses, the impact of foreign currency fluctuation and acquisitions, and other one-time ornon-recurring items. These measures should not be considered in isolation or as a substitute for, or superior to, the directly comparable GAAP financialmeasures and should be read in connection with the Company’s financial statements presented in accordance with GAAP.Comparable Net SalesWe calculate comparable net sales by excluding the effect of acquisitions and by translating the current-period foreign operation net sales at prior-yearcurrency rates.The following tables provides a reconciliation of GAAP net sales change as reported to non-GAAP comparable net sales change: Amount of Change - Year Ended December 31, 2018 compared to the Year EndedDecember 31, 2017 $ Change - Net Sales Non-GAAP GAAP Comparable Net Sales Currency Net Sales(in millions)Change Translation Acquisition ChangeACCO Brands North America$(58.3) $(0.3) $0.9 $(58.9)ACCO Brands EMEA62.4 10.8 42.7 8.9ACCO Brands International(11.7) (22.0) 20.3 (10.0) Total$(7.6) $(11.5) $63.9 $(60.0) % Change - Net Sales Non-GAAP GAAP Comparable Net Sales Currency Net Sales Change Translation Acquisition ChangeACCO Brands North America(5.8)% —% 0.1% (5.9)%ACCO Brands EMEA11.5% 2.0% 7.9% 1.6%ACCO Brands International(2.9)% (5.4)% 5.0% (2.5)% Total(0.4)% (0.6)% 3.3% (3.1)%23 Amount of Change - Year Ended December 31, 2017 compared to the Year EndedDecember 31, 2016 $ Change - Net Sales Non-GAAP GAAP Comparable Net Sales Currency Net Sales(in millions)Change Translation Acquisition ChangeACCO Brands North America$(17.1) $2.0 $13.4 $(32.5)ACCO Brands EMEA371.0 0.8 387.5 (17.3)ACCO Brands International37.8 9.6 37.9 (9.7) Total$391.7 $12.4 $438.8 $(59.5) % Change - Net Sales Non-GAAP GAAP Comparable Net Sales Currency Net Sales Change Translation Acquisition ChangeACCO Brands North America(1.7)% 0.2% 1.3% (3.2)%ACCO Brands EMEA215.9% 0.5% 225.6% (10.2)%ACCO Brands International10.2% 2.6% 10.3% (2.7)% Total25.2% 0.8% 28.2% (3.8)%Adjusted Operating Income and Adjusted Earnings per ShareThe following table sets forth a reconciliation of certain Income Statement information reported in accordance with GAAP to adjusted non-GAAPinformation: Year Ended December 31, 2018 Reported % of Adjusted Adjusted % of GAAP Sales Items Non-GAAP SalesGross profit$627.8 32.3% $0.1 (A.1)$627.9 32.3%Selling, general and administrativeexpenses392.4 20.2% (4.6) (A.2)387.8 20.0%Restructuring charges11.7 (11.7) (A.3)— Operating income187.0 9.6% 16.4 203.4 10.5%Interest expense41.2 (0.6) (A.4)40.6 Non-operating pension income(9.3) 0.6 (A.5)(8.7) Income before income tax157.9 8.1% 16.4 174.3 9.0%Income tax expense51.2 1.1 (A.6)52.3 Income tax rate32.4% 30.0% Net income$106.7 5.5% $15.3 $122.0 6.3%Diluted income per share$1.00 $0.14 $1.14 Weighted average number of sharesoutstanding:107.0 107.0 Notes for Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)A."Adjusted" results exclude restructuring charges, amortization of the step-up in value of finished goods, transaction and integration expenses associated with theacquisitions of Esselte Group Holdings AB ("Esselte") and GOBA Internacional, S.A. de C.V ("GOBA"). In addition, "Adjusted" results exclude other one-time or non-recurring items and all unusual income tax items, including income taxes related to the aforementioned items; in addition, income taxes have been recalculated at anormalized tax rate of 30% for 2018.1.Represents the adjustment related to the amortization of step-up in the value of finished goods inventory associated with the acquisition of GOBA.2.Represents the elimination of integration and transaction expenses associated with the acquisitions of Esselte and GOBA.3.Represents the elimination of restructuring charges.4.Represents the elimination of forward points on a hedged intercompany loan for the GOBA acquisition.5.Represents the elimination of a pension curtailment gain related to a restructuring project for the integration of Esselte.246.Primarily reflects the tax effect of the adjustments outlined in items A.1-5 above and adjusts the company's effective tax rate to a normalized rate of 30% for 2018. TheCompany's estimated long-term rate remains subject to variations from the mix of earnings across the Company's operating jurisdictions and changes in tax laws.Free Cash FlowFree cash flow represents cash flow from operating activities less cash used for additions to property, plant and equipment, plus cash proceeds from thedisposition 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)Year Ended December 31,2018Net cash provided by operating activities$194.8Net cash (used) provided by: Additions to property, plant and equipment(34.1)Proceeds from the disposition of assets0.2Free cash flow (non-GAAP)$160.925ITEM 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.Overview of the CompanyACCO Brands is a designer, marketer and manufacturer of recognized consumer and end-user demanded brands used in businesses, schools, and homes.Our widely known brands include AT-A-GLANCE®, Barrilito®, Derwent®, Esselte®, Five Star®, GBC®, Hilroy®, Kensington®, Leitz®, Marbig®, Mead®,NOBO®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra® and Wilson Jones®. More than 75% of our net sales come from brands that occupy the number-oneor number-two positions in the select product categories in which we compete. We distribute our products through a wide variety of retail and commercialchannels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop.These channels include mass retailers, e-tailers, discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independentoffice product dealers; office superstores; wholesalers; and contract stationers. Our products are sold primarily in the U.S., Europe, Australia, Canada, Braziland Mexico. For the year ended December 31, 2018, approximately 42% of our sales were in the U.S., down from 45% in 2017. This decrease was primarilythe result of the Esselte and GOBA acquisitions, which further extended our geographic reach.The Company's strategy is to grow its global portfolio of consumer brands, increase its presence in faster growing geographies and channels anddiversify its customer base. The Company continues to focus on leveraging its cost structure through synergies and productivity savings to drive long-termprofit improvement and on strong free cash flow generation. We plan to supplement organic growth globally with strategic acquisitions in both existing andadjacent product categories.In furtherance of our strategy, we have transformed our business by acquiring companies with consumer and other end-user demanded brands, andcontinuing to diversify our distribution channels. In 2012, we acquired the Mead Consumer and Office Products business ("Mead C&OP"), whichsubstantially increased our presence in North America and Brazil in school and calendar products with well-known consumer brands. In 2016, we purchasedthe remaining equity interest in Pelikan Artline from our joint venture partner, which enhanced our competitive position in school and business products inAustralia and New Zealand and added new categories, including writing instruments and janitorial supplies. In early 2017, we acquired Esselte GroupHoldings AB ("Esselte"), which more than doubled our presence in Europe and added several iconic business brands, a significant base of independent dealercustomers, and a new product category of do-it-yourself hardware tools. On July 2, 2018, we completed the acquisition (the "GOBA Acquisition") of GOBAInternacional, S.A. de C.V. ("GOBA") in Mexico. Together these acquisitions have meaningfully expanded our portfolio of well-known end-user demandedbrands, enhanced our competitive position from both a product and channel perspective, and added scale to our business operations.Today our Company is a global enterprise focused on developing innovative branded consumer products for use in businesses, schools and homes. Webelieve our leading product category positions provide the scale to enable us to invest in marketing and product innovation to drive profitable growth. Weexpect to derive much of our growth, over the long term, in faster-growing emerging geographies such as Latin America and parts of Asia, the Middle Eastand Eastern Europe, which exhibit growing demand for our product categories. In all of our markets, we see opportunities to grow sales through share gains,channel expansion and innovative products.AcquisitionsGOBA Internacional, S.A. de C.V. AcquisitionOn July 2, 2018, we completed the GOBA Acquisition. GOBA is a leading provider of school and craft products in Mexico under the Barrilito® brand,for a preliminary purchase price of approximately $38.0 million, net of cash acquired, and subject to working capital and other adjustments. The GOBAAcquisition is expected to increase the breadth and depth of our distribution, especially with wholesalers and retailers throughout Mexico and complementour existing office products portfolio with a strong offering of school and craft products. The results of GOBA are included in the ACCO Brands Internationalsegment from July 2, 2018.26Esselte Group Holdings AB AcquisitionOn January 31, 2017, we completed the acquisition (the "Esselte Acquisition") of Esselte. Accordingly, the results of Esselte are included in theCompany's consolidated financial statements from February 1, 2017 forward and are reported in all three of the Company's segments, but primarily in theACCO Brands EMEA segment. The acquisition of Esselte made ACCO Brands a leading European manufacturer and marketer of branded consumer andoffice products, and improved ACCO Brands' scale. Esselte products are primarily marketed under the Leitz®, Rapid® and Esselte® brands in the storage andorganization, stapling, punching, binding and laminating equipment and do-it-yourself tools product categories.Pelikan Artline Joint Venture AcquisitionOn May 2, 2016, we completed the acquisition of Australia Stationery Industries, Inc. (the "PA Acquisition"), which indirectly owned the 50% of thePelikan Artline joint venture and the issued capital stock of Pelikan Artline Pty Limited (collectively, "Pelikan Artline") that was not already owned by theCompany. Prior to the PA Acquisition, the Pelikan Artline joint venture was accounted for using the equity method. The results of Pelikan Artline areincluded in the Company's consolidated financial statements from May 2, 2016 forward, and are reported in the ACCO Brands International segment. PelikanArtline is a premier distributor of recognized consumer brands used in businesses, schools, and homes in Australia and New Zealand.For further information on the acquisitions, see "Note 3. Acquisitions" to the consolidated financial statements contained in Item 8. of this report. Forinformation on the financings of the acquisitions, see "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financial statementscontained in Item 8. of this report.Reportable Business SegmentsThe Company has three reportable business segments each of which is comprised of different geographic regions. The Company's three reportablebusiness segments are as follows:Reportable Business Segment Geographic Regions Primary BrandsACCO Brands North America United States and Canada AT-A-GLANCE®, Five Star®, GBC®, Hilroy®, Kensington®,Mead®, Quartet®, and Swingline® ACCO Brands EMEA Europe, Middle East and Africa Derwent®, Esselte®, GBC®, Kensington®, Leitz®, NOBO®,Rapid®, and Rexel® ACCO Brands International Australia/N.Z., Latin America andAsia-Pacific Artline®, Barrilito®, GBC®, Kensington®, Marbig®, Quartet®,Rexel®, Tilibra®, and Wilson Jones®Each of the Company's three reportable business segments designs, markets, sources, manufactures and sells recognized consumer and other end-userdemanded brands used in businesses, schools and homes. Product designs are tailored based on end-user preferences in each geographic region.Our product categories include school products; storage and organization; laminating, binding and shredding machines and related consumablesupplies; calendars; stapling and punching; whiteboards; computer accessories; and do-it-yourself tools, among others. Our portfolio of consumer and otherend-user demanded brands includes both globally and regionally recognized brands.ACCO Brands markets and sells its strong multi-product offering broadly and is not dependent on any one channel. Our products are sold through allrelevant channels, namely retailers, including: mass retailers; e-tailers; discount, drug/grocery and variety chains; warehouse clubs; hardware and specialtystores; independent office product dealers; office superstores; wholesalers; and contract stationers. We also sell directly to commercial and consumer end-users through our e-commerce platform and our direct sales organization.Overview of 2018 PerformanceNet sales for the year ended December 31, 2018 decreased slightly, primarily due to lower sales to wholesalers and reduced sales of calendar products,both in the U.S., which offset the benefits of the acquisitions and growth in EMEA. Operating income increased 1% due to lower restructuring and integrationcharges in the current year as well as lower management incentive compensation expenses, which offset the negative margin impact of the sales reduction,adverse mix, inflation and foreign exchange. The lower management incentive compensation expenses resulted from failure to meet sales and operatingincome targets and lower than expected cash flow performance for 2018.27Our financial results for the year ended December 31, 2018 were impacted by the following key factors:•Sales and gross profit declined in our North America segment primarily due to declines with a large wholesaler customer and lost placement ofcalendar products. Our gross profit margin was also reduced by the customer and product mix impact from these lost sales. The lower sales to thewholesaler were largely driven by consolidation, in particular, the acquisition of Essendant by Staples, which was under negotiation through muchof 2018 and is now completed, and the acquisition of various U.S. independent dealers by both Staples and Office Depot. The ongoingconsolidation in the U.S. commercial office products channel is creating substantial uncertainty and disruption. This uncertainty has and will likelycontinue to adversely impact our customers' buying patterns. We expect this trend to continue and this could result in a further reduction of sales toand profit from these channels.•The profitability of our North America segment was also negatively impacted by inflationary increases in input costs, including the cost of paper,steel, aluminum, and transportation, as well as increased tariffs. These cost increases adversely impacted our cost of products sold and gross profitmargin during the second half of 2018. We implemented price increases in the U.S. in October 2018 and January 2019 which, together with costreduction initiatives, are expected to fully offset current inflation in 2019. It is currently anticipated that tariffs on purchased finished goods wesource from China will increase again as early as March 1, 2019. We may need to increase prices again to offset the cost of any further inflationaryincreases, including increased tariffs, in the coming quarters, which may result in a decrease in sales volume. Further increases in input costs,including tariffs, could adversely impact our sales, cost of products sold and gross margin.•Acquisitions benefited our 2018 net sales by $63.9 million, including the additional month of Esselte and six months of contribution from GOBA.•Foreign currency translation negatively impacted our net sales and operating income. The negative foreign currency translation in the Internationalsegment was partially offset by favorable foreign currency translation in the EMEA segment.•The year-to-date average foreign exchange rates have moved as follows for our major currencies relative to the U.S. dollar: 2018 YTD AverageVersus 2017 YTDAverage 2017 YTD AverageVersus 2016 YTDAverageCurrencyIncrease/(Decline) Increase/(Decline)Euro5% 2%Australian dollar(3)% 3%Canadian dollar—% 2%Brazilian real(12)% 9%Swedish krona(2)% —%British pound4% (5)%Mexican peso(2)% (1)%Japanese yen2% (3)%28Consolidated Results of Operations for the Years Ended December 31, 2018 and 2017 Year Ended December 31, Amount of Change (in millions, except per share data)2018(1) 2017(2) $ %/pts Net sales$1,941.2 $1,948.8 $(7.6) (0.4)% Cost of products sold1,313.4 1,291.5 21.9 1.7 % Gross profit627.8 657.3 (29.5) (4.5)% Gross profit margin32.3% 33.7% (1.4)pts Selling, general and administrative expenses392.4 415.5 (23.1) (5.6)% Amortization of intangibles36.7 35.6 1.1 3.1 % Restructuring charges11.7 21.7 (10.0) (46.1)% Operating income187.0 184.5 2.5 1.4 % Operating income margin9.6% 9.5% 0.1pts Interest expense41.2 41.1 0.1 0.2 % Interest income(4.4) (5.8) (1.4) (24.1)% Non-operating pension income(9.3) (8.5) 0.8 9.4 % Other expense (income), net1.6 (0.4) 2.0 NM Income tax expense51.2 26.4 24.8 93.9 % Effective tax rate32.4% 16.7% 15.7pts Net income106.7 131.7 (25.0) (19.0)% Weighted average number of diluted shares outstanding:107.0 110.9 (3.9) (3.5)% Diluted income per share$1.00 $1.19 $(0.19) (16.0)% (1)The Company acquired GOBA on July 2, 2018; GOBA's results are included in 2018 results from July 2, 2018 forward.(2)The Company acquired Esselte on January 31, 2017; Esselte's results are included in 2017 results from February 1, 2017 forward.Net SalesNet sales of $1,941.2 million decreased $7.6 million, or 0.4%, from $1,948.8 million in the prior-year period, as growth from acquisitions ($44.2million from the addition of Esselte for the month of January and $19.7 million from GOBA) was offset by lower net sales, and adverse foreign currencytranslation, which reduced net sales by $11.5 million, or 0.6%. Comparable net sales, excluding acquisitions and foreign currency translation, decreased3.1% driven by declines in the North America segment, partially offset by higher net sales in the EMEA segment.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 processes, allocation of certain information technology costs supporting those processes, inbound andoutbound freight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes and inventoryvaluation adjustments. Cost of products sold of $1,313.4 million, including $29.7 million from the addition of Esselte for the month of January and $14.2million attributable to GOBA, increased $21.9 million, or 1.7%, from $1,291.5 million in the prior-year period. Foreign currency translation reduced cost ofproducts sold by $8.3 million, or 0.6% in the current-year period. Underlying cost of products sold, excluding acquisitions and foreign currency translation,decreased due to lower comparable net sales, partially offset by inflationary increases in input costs, some of which were driven by new tariffs in the U.S.29Gross ProfitWe believe that gross profit and gross profit margin provide enhanced shareholder understanding of underlying profit drivers. Gross profit of $627.8million, including $14.5 million from the addition of Esselte for the month of January and $5.5 million attributable to GOBA, decreased $29.5 million, or4.5%, from $657.3 million in the prior-year period. Foreign currency translation reduced gross profit by $3.2 million, or 0.5% in the current-year period.Underlying gross profit, excluding acquisitions and foreign currency translation, decreased primarily due to lower comparable net sales and unfavorablecustomer and product mix in the North America and International segments and rising input costs primarily in North America, partially offset by cost savings.For similar reasons, gross profit margin as a percent of net sales decreased to 32.3% from 33.7%.Selling, General and Administrative expensesSelling, general and administrative expenses ("SG&A") include advertising, marketing, selling (including commissions), research and development,customer service, depreciation related to assets outside the manufacturing and distribution processes, and all other general and administrative expensesoutside the manufacturing and distribution functions (e.g., finance, human resources, information technology and corporate expenses). SG&A of $392.4million, including $7.9 million from the addition of Esselte for the month of January and $2.3 million attributable to GOBA, decreased $23.1 million, or5.6%, from $415.5 million in the prior-year period. The current-year period includes $4.6 million of integration costs (primarily related to the EsselteAcquisition) and transaction costs (related to the GOBA Acquisition). The prior-year period included $16.4 million in integration and transaction costsprimarily related to the Esselte and Pelikan Artline acquisitions. Underlying SG&A, excluding acquisitions, transaction and integration costs, and foreigncurrency translation, decreased due to a $19.8 million reduction in management incentive compensation expenses resulting from our below targetperformance for 2018 and cost and synergy savings.For similar reasons, SG&A as a percentage of net sales decreased to 20.2% from 21.3%.Restructuring ChargesRestructuring charges of $11.7 million decreased $10.0 million, or 46.1%, from $21.7 million in the prior-year period. The current-year period chargesprimarily related to changes in the operating structure of the North America segment and the continued integration of Esselte within the EMEA segment. Theprior-year period charges of $21.7 million primarily related to Esselte and Pelikan Artline integration activities.Operating IncomeOperating income of $187.0 million, including $5.2 million from the addition of Esselte for the month of January and $2.3 million attributable toGOBA, increased $2.5 million, or 1.4%, from $184.5 million in the prior-year period. Foreign currency translation reduced operating income by $4.1 million,or 2.2%, in the current-year period. Underlying operating income, excluding acquisitions, restructuring, transaction and integration costs, and foreigncurrency translation, decreased primarily due to lower gross profit, primarily in the North America segment, substantially offset by a $20.8 million reductionin management incentive compensation expenses and cost and synergy savings.Other Expense (Income), NetOther expense (income), net was an expense of $1.6 million compared to income of $0.4 million in the prior-year period. The increase in expense wasdue to foreign exchange losses in the current-year period.Income TaxesFor the current-year period, income tax expense was $51.2 million on income before taxes of $157.9 million, an effective tax rate of 32.4%. For theprior-year period, income tax expense was $26.4 million on income before taxes of $158.1 million, an effective tax rate of 16.7%. The low effective tax ratein the prior-year period was primarily due to a one-time net tax benefit of $25.7 million related to the U.S. Tax Act. This benefit was driven by the reductionof net deferred tax liabilities, partially offset by the Transition Toll Tax. Also contributing to the low effective rate in 2017 was $5.6 million of tax benefitfrom the settlement of stock-based compensation.30Net Income/Diluted Income per ShareNet income of $106.7 million decreased $25.0 million, or 19%, from $131.7 million in the prior-year period. Foreign currency translation reduced netincome by $5.9 million, or 4.5%, in the current-year period. Diluted income per share was $1.00, down $0.19, or 16% from $1.19 per diluted share in theprior-year period. The decrease in net income was primarily driven by the higher effective tax rate.Segment Net Sales and Operating Income for the Years Ended December 31, 2018 and 2017 Year Ended December 31, 2018 Amount of Change Net Sales SegmentOperatingIncome(1) OperatingIncome Margin Net Sales Net Sales SegmentOperatingIncome SegmentOperatingIncome MarginPoints (in millions) $ % $ % ACCO Brands North America$940.7 $116.6 12.4% $(58.3) (5.8)% $(35.8) (23.5)% (290)ACCO Brands EMEA605.2 59.4 9.8% 62.4 11.5% 27.4 85.6 % 390ACCO Brands International395.3 49.2 12.4% (11.7) (2.9)% (1.7) (3.3)% (10)Total$1,941.2 $225.2 $(7.6) $(10.1) Year Ended December 31, 2017 Net Sales SegmentOperatingIncome(1) OperatingIncome Margin (in millions) ACCO Brands North America$999.0 $152.4 15.3% ACCO Brands EMEA542.8 32.0 5.9% ACCO Brands International407.0 50.9 12.5% Total$1,948.8 $235.3 (1)Segment operating income excludes corporate costs. See "Item 8. Note 17. Information on Business Segments" for a reconciliation of total "Segmentoperating income" to "Income before income tax."ACCO Brands North AmericaACCO Brands North America net sales of $940.7 million decreased $58.3 million, or 5.8%, from $999.0 million in the prior-year period, including $0.9million from the addition of Esselte for the month of January. Comparable net sales, excluding Esselte and foreign currency translation, decreased 5.9%. Bothdeclines were primarily due to lower net sales to U.S. wholesalers, which accounted for approximately 4.0% of the sales reduction, with the remaining declineprimarily driven by lower net sales due to lost share of calendar products. We anticipate there could be further net sales declines in our U.S. business in 2019due to ongoing disruption in the traditional commercial reseller channel (including office superstores and wholesalers).ACCO Brands North America operating income of $116.6 million decreased $35.8 million, or 23.5%, from $152.4 million in the prior-year period, andoperating income margin decreased to 12.4% from 15.3%. Operating income decreased primarily as a result of lower net sales, which contributed lower grossprofit. Operating income margin declined due to unfavorable customer and product mix and rising input costs, including tariffs. This was partially offset bycost savings, lower management incentive compensation expenses of $11.1 million, and an October sales price increase.ACCO Brands EMEAACCO Brands EMEA net sales of $605.2 million increased $62.4 million, or 11.5%, from $542.8 million in the prior-year period, due to thecontribution of $42.7 million from the addition of Esselte for the month of January and favorable foreign currency translation of $10.8 million, or 2.0%.Comparable net sales, excluding Esselte and foreign currency translation, increased 1.6% due to increased volume resulting from expanding distribution oflegacy ACCO Brands' products to the acquired Esselte customer base, as well as double-digit growth in shredders and computer products, which werepartially offset by lower sales of commodity products.ACCO Brands EMEA operating income of $59.4 million, including $5.4 million from the addition of Esselte for the month of January, increased $27.4million, or 85.6%, from $32.0 million in the prior-year period, and operating margin increased to 9.8% from 5.9%. Foreign currency translation increasedoperating income by $0.3 million, or 0.9%, in the current-year period. Underlying31operating income, excluding Esselte and foreign currency translation, increased due to $9.5 million in lower restructuring charges and integration costs, andhigher gross profit and gross profit margin from both favorable mix and synergy savings.ACCO Brands InternationalACCO Brands International net sales of $395.3 million decreased $11.7 million, or 2.9%, from $407.0 million in the prior-year period as growth fromacquisitions ($19.7 million attributable to GOBA and $0.6 million from the addition of Esselte for the month of January) was offset by foreign currencytranslation, which reduced net sales by $22.0 million, or 5.4%. Comparable net sales, excluding acquisitions and foreign currency translation, decreased2.5% primarily driven by reduced customer purchases as certain customers lowered their inventory levels in Australia and Mexico, as well as lower net salesfrom lost share of commodity products in Australia. These declines were only partially offset by net sales growth in Brazil.ACCO Brands International operating income of $49.2 million, including $2.3 million attributable to GOBA, decreased $1.7 million, or 3.3%, from$50.9 million in the prior-year period. Operating income margin was flat at 12.4%. Foreign currency translation reduced operating income by $4.3 million, or8.4%, in the current-year period. Underlying operating income, excluding acquisitions and foreign currency translation, decreased due to lower net salesresulting in lower gross profit, partially offset by $4.7 million in lower restructuring charges and integration costs as well as cost savings.Consolidated Results of Operations for the Years Ended December 31, 2017 and 2016 Year Ended December 31, Amount of Change (in millions, except per share data)2017(1) 2016(2) $ %/pts Net sales$1,948.8 $1,557.1 $391.7 25.2 % Cost of products sold1,291.5 1,042.2 249.3 23.9 % Gross profit657.3 514.9 142.4 27.7 % Gross profit margin33.7% 33.1% 0.6ptsSelling, general and administrative expenses415.5 328.8 86.7 26.4 % Amortization of intangibles35.6 21.6 14.0 64.8 % Restructuring charges21.7 5.4 16.3 NM Operating income184.5 159.1 25.4 16.0 % Operating income margin9.5% 10.2% (0.7)ptsInterest expense41.1 49.3 (8.2) (16.6)% Interest income(5.8) (6.4) (0.6) (9.4)% Non-operating pension income(8.5) (8.2) 0.3 3.7 % Equity in earnings of joint venture— (2.1) (2.1) (100.0)% Other (income) expense, net(0.4) 1.4 1.8 NM Income tax expense26.4 29.6 (3.2) (10.8)% Effective tax rate16.7% 23.7% (7.0)ptsNet income131.7 95.5 36.2 37.9 % Weighted average number of diluted shares outstanding:110.9 109.2 1.7 1.6 % Diluted income per share$1.19 $0.87 $0.32 36.8 % (1)The Company acquired Esselte on January 31, 2017; Esselte's results are included in 2017 results from February 1, 2017 forward.(2)The Company acquired Pelikan Artline on May 2, 2016; Pelikan Artline's results are included in 2016 results from that date forward.Net SalesNet sales of $1,948.8 million, including $438.8 million attributable to the Esselte and PA Acquisitions, increased $391.7 million, or 25.2%, from$1,557.1 million in the prior-year period. Foreign currency translation increased sales by $12.4 million, or 0.8%. Comparable net sales, excluding theacquisitions and foreign currency translation, decreased primarily due to declines at certain office superstore customers and lost product placements.32Cost of Products SoldCost of products sold of $1,291.5 million increased $249.3 million, or 23.9%, from $1,042.2 million in the prior-year period. Foreign currencytranslation reduced cost of products sold by $8.4 million, or 0.8%. Underlying cost of products sold, excluding foreign currency translation, increased due tothe inclusion of the acquisitions, partially offset by lower comparable sales and cost savings and productivity improvements.Gross ProfitGross profit of $657.3 million increased $142.4 million, or 27.7%, from $514.9 million in the prior-year period. Foreign currency translation increasedgross profit by $4.0 million, or 0.8%. Underlying gross profit, excluding foreign currency translation, increased due to the inclusion of the acquisitions,together with productivity initiatives and higher pricing, which was partially offset by lower comparable sales and inflation.Gross profit as a percent of net sales increased to 33.7% from 33.1%. The increase was primarily due to productivity improvements and higher pricing.Selling, General and Administrative expensesSG&A of $415.5 million increased $86.7 million, or 26.4%, from $328.8 million in the prior-year period. The 2017 year included $16.4 million ofintegration and transaction costs related to the acquisitions. The prior-year period included $12.8 million in transaction and integration costs related to theacquisitions. Foreign currency translation increased SG&A by $0.6 million, or 0.2%. Underlying SG&A, excluding integration and transaction costs andforeign currency translation, increased primarily due to the inclusion of the acquisitions.As a percentage of net sales, SG&A increased to 21.3% from 21.1% in the prior-year period, primarily due to higher integration and transaction costsincurred in 2017, partially offset by productivity initiatives.Amortization of IntangiblesAmortization of intangibles of $35.6 million increased $14.0 million, or 64.8%, from $21.6 million in the prior-year period. The increase was due tothe inclusion of the Esselte and PA Acquisitions.Restructuring ChargesRestructuring charges in 2017 of $21.7 million related primarily to the integrations of Esselte and Pelikan Artline. Restructuring charges in the prior-year period of $5.4 million related primarily to the integration of Pelikan Artline and consolidation of certain functions in the North America segment.Operating IncomeOperating income of $184.5 million increased $25.4 million, or 16.0%, from $159.1 million in the prior-year period. Foreign currency translationincreased operating income by $3.2 million, or 2.0%. Underlying operating income, excluding restructuring, transaction and integration costs, and foreigncurrency translation, increased primarily due to the inclusion of the acquisitions.Interest Expense, Equity in Earnings of Joint Venture and Other (Income) Expense, NetInterest expense of $41.1 million decreased $8.2 million, or 16.6%, from $49.3 million in the prior-year period. The decrease was primarily due to thelower interest rate paid on our senior unsecured notes, which were refinanced in the fourth quarter of 2016, partially offset by interest resulting from increaseddebt incurred in connection with the Esselte Acquisition. 2016 also included $2.5 million of incremental interest expense related to the above-referencedrefinancing of our senior unsecured notes and the accelerated amortization of debt issuance cost related to the prepayment of our then outstanding U.S. DollarSenior Secured Term Loan A due April 2020.As a result of the PA Acquisition, which was completed on May 2, 2016, equity in earnings of joint venture decreased $2.1 million as the Companyceased accounting for the Pelikan Artline joint venture using the equity method of accounting.Other (income) expense, net was income of $0.4 million compared to expense of $1.4 million in the prior-year period. The 2017 year included a $2.3million foreign currency gain related to the settlement of certain intercompany loan transactions. The33prior-year period included charges associated with the refinancing of our senior unsecured notes. These charges consisted of $25.0 million in a "make-whole"call premium and a $4.9 million charge for the write-off of debt issuance costs, which were offset by a $28.9 million non-cash gain arising from the PAAcquisition due to the revaluation of the Company's previously held equity interest to fair value and a gain on the settlement of an intercompany loan of$1.0 million, previously deemed permanently invested.Income TaxesIncome tax expense was $26.4 million on income before taxes of $158.1 million, or an effective tax rate of 16.7%. The low effective tax rate in 2017 isprimarily due to a net tax benefit of $25.7 million related to the U.S. Tax Act. This benefit was driven by the reduction of net deferred tax liabilities, partiallyoffset by the Transition Toll Tax. For further information on the impact of the U.S. Tax Act, see "Note 12. Income Taxes" to the consolidated financialstatements contained in Item 8. of this report. Also contributing to the low effective rate in 2017 was a $5.6 million benefit due to the impact of theCompany's adoption of ASU No. 2016-9, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.ASU No. 2016-9 in 2017.For 2016, income tax expense was $29.6 million on income before taxes of $125.1 million, or an effective tax rate of 23.7%. The low effective tax ratefor 2016 was primarily due to the following: 1) the $28.9 million gain arising from the PA Acquisition due to the revaluation of the previously held equityinterest to fair value, which was not subject to tax, and 2) tax losses on foreign exchange on the repayment of intercompany loans, for which the pre-tax effectwas recorded in equity.Net Income/Diluted Income per ShareNet income of $131.7 million increased $36.2 million, or 37.9%, from $95.5 million in the prior-year period. Diluted income per share was $1.19, up$0.32, or 36.8% from $0.87 per diluted share in the prior-year period. Foreign currency translation increased net income by $5.9 million, or 6.2%. Theincrease in net income was primarily due to inclusion of the acquisitions, lower interest expense and a lower effective tax rate.Segment Net Sales and Operating Income for the Years Ended December 31, 2017 and 2016 Year Ended December 31, 2017 Amount of Change Net Sales SegmentOperatingIncome(1) OperatingIncome Margin Net Sales Net Sales SegmentOperatingIncome SegmentOperatingIncome MarginPoints (in millions) $ % $ % ACCO Brands North America$999.0 $152.4 15.3% $(17.1) (1.7)% $2.6 1.7% 60ACCO Brands EMEA542.8 32.0 5.9% 371.0 215.9% 24.0 300.0% 120ACCO Brands International407.0 50.9 12.5% 37.8 10.2% 1.5 3.0% (90)Total$1,948.8 $235.3 $391.7 $28.1 Year Ended December 31, 2016 Net Sales SegmentOperatingIncome(1) OperatingIncome Margin (in millions) ACCO Brands North America$1,016.1 $149.8 14.7% ACCO Brands EMEA171.8 8.0 4.7% ACCO Brands International369.2 49.4 13.4% Total$1,557.1 $207.2 (1)Segment operating income excludes corporate costs. See "Item 8. Note 17. Information on Business Segments" for a reconciliation of total "Segmentoperating income" to "Income before income tax."ACCO Brands North AmericaACCO Brands North America net sales of $999.0 million, including $13.4 million attributable to the Esselte Acquisition, decreased $17.1 million, or1.7%, from $1,016.1 million in the prior-year period. Foreign currency translation increased sales by $2.0 million, or 0.2%. Comparable net sales, excludingEsselte and foreign currency translation, decreased primarily due to continued declines with office superstore customers and lost product placements withcertain customers. Sales during the back-to-school season decreased slightly compared to the prior year, which had strong growth.34ACCO Brands North America operating income of $152.4 million increased $2.6 million, or 1.7%, from $149.8 million in the prior-year period, andoperating income as a percent of net sales increased to 15.3% from 14.7%. The increase was due to higher gross margins from cost savings and productivityinitiatives, and reduced customer sales rebates, which were partially offset by lower comparable sales, higher go-to-market spending and $5.5 million inrestructuring charges (versus $1.1 million in the prior-year period). The restructuring charges related to the realignment of the operating structure of ourformer Computer Products Group, the Esselte integration and other projects to enhance the future long-term performance of the business.ACCO Brands EMEAACCO Brands EMEA net sales of $542.8 million, including approximately $388 million attributable to the Esselte Acquisition, increased $371.0million, or 215.9%, from $171.8 million in the prior-year period. Foreign currency translation increased sales by $0.8 million, or 0.5%. Comparable net sales,excluding Esselte and foreign currency translation, decreased due to lost product placements and inventory reductions by certain customers.ACCO Brands EMEA operating income of $32.0 million, including approximately $24.9 million attributable to the Esselte Acquisition, increased$24.0 million, or 300%, from $8.0 million in the prior-year period, and operating income as a percent of net sales increased to 5.9% from 4.7%. The increasein operating income was driven by the Esselte Acquisition and includes restructuring costs of $11.2 million, integration costs of $5.5 million, and theamortization of step-up in the value of finished goods inventory of $0.8 million. Foreign currency translation increased operating income by $2.4 million.Underlying operating income, excluding Esselte, restructuring and integration costs, foreign currency translation and the amortization of step-up in the valueof finished goods inventory, decreased due to lower comparable sales, partially offset by reduced SG&A expenses.Operating income as a percent of sales increased due to lower SG&A margins in the legacy Esselte business, partially offset by restructuring andintegration costs, higher intangible amortization resulting from the Esselte Acquisition and lower gross margins (primarily due to Esselte having lowermargins than the legacy ACCO business).ACCO Brands InternationalACCO Brands International net sales of $407.0 million, including $37.9 million attributable to the PA and Esselte Acquisitions, increased $37.8million, or 10.2%, from $369.2 million in the prior-year period. Foreign currency translation increased sales by $9.6 million, or 2.6%. Comparable net sales,excluding acquisitions and foreign currency translation, decreased primarily due to lost product placements and inventory reductions in Australia, partiallyoffset by higher sales in Brazil and Mexico.ACCO Brands International operating income of $50.9 million increased $1.5 million, or 3.0%, from $49.4 million in the prior-year period, butoperating income as a percent of net sales decreased to 12.5% from 13.4%. Restructuring and integration costs in 2017 were $5.0 million and $2.6 million,respectively. In addition, 2017 included a $1.5 million gain on the sale of a distribution center in New Zealand related to the integration of Pelikan Artline.The prior-year period includes restructuring costs of $4.3 million, integration costs of $2.3 million and the amortization of the step-up in value of the finishedgoods inventory of $0.4 million. Foreign currency translation increased operating income by $0.7 million. Underlying operating income, excludingrestructuring and integration costs, the amortization of step-up in the value of finished goods inventory, the gain on sale of the distribution center and foreigncurrency translation, was flat due to the inclusion of the results of Pelikan Artline in 2017 and improved profitability in Brazil and Mexico, which was offsetby lower comparable net sales and higher distribution costs associated with the warehouse and IT system consolidation in Australia.Liquidity and Capital ResourcesOur primary liquidity needs are to service indebtedness, fund capital expenditures and support working capital requirements. Our principal sources ofliquidity are cash flow from operating activities, cash and cash equivalents held and seasonal borrowings under our $500 million multi-currency RevolvingFacility (as defined in "Debt Amendments and Refinancing" below). As of December 31, 2018, there was $180.7 million in borrowings outstanding under theRevolving Facility and the amount available for borrowings was $309.0 million (allowing for $10.3 million of letters of credit outstanding on that date).We maintain adequate financing arrangements at market rates. Because of the seasonality of our business, we typically generate much of our cash flowin the third and fourth quarters, as accounts receivables are collected, and use cash in the second quarter to fund working capital in order to support the NorthAmerica back-to-school season. We anticipate a different cash flow pattern in 2019, with a cash outflow in the first quarter and a much lower outflow in thesecond quarter when compared to 2018. Our Brazilian business is also highly seasonal due to the timing of the back-to-school season, which coincides withthe calendar year-end in the fourth quarter. Due to various tax laws, it is costly to transfer short-term working capital in and out of Brazil;35therefore, our normal practice is to hold seasonal cash requirements in Brazil, and invest in short-term Brazilian government securities. Consolidated cash andcash equivalents was $67.0 million as of December 31, 2018, approximately $35 million of which was held in Brazil.In February 2018, the Company's Board of Directors approved the initiation of a dividend program under which the Company intends to pay a regularquarterly cash dividend of $0.06 per share on its common stock ($0.24 per share on an annualized basis). The continued declaration and payment ofdividends is at the discretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results ofoperations, cash flows and other factors.Our priorities for cash flow use over the near term, after funding business operations, including restructuring expenditures, are debt reduction, sharerepurchases, dividends and funding strategic acquisitions.The current senior secured credit facilities have a weighted average interest rate of 2.45% as of December 31, 2018 and our senior unsecured notes havea fixed interest rate of 5.25%.Debt Amendments and RefinancingThird Amended and Restated Credit AgreementThe Company is party to a Third Amended and Restated Credit Agreement, dated as of January 27, 2017, among the Company, certain subsidiaries ofthe Company, Bank of America, N.A., as administrative agent, and the other agents and various lenders party thereto, which was subsequently amendedeffective July 26, 2018 (the "Credit Agreement"). The Credit Agreement provides a five-year senior secured credit facility, which consists of a €300 million(US$320.8 million based on January 27, 2017 exchange rates) term loan facility (the "Euro Term Loan A"), a A$80 million (US$60.4 million based onJanuary 27, 2017 exchange rates) term loan facility (the "AUD Term Loan A" and, together with the Euro Term Loan A, the "Term A Loan Facility"), and aUS$500 million multi-currency revolving credit facility (the "Revolving Facility").Financial CovenantsThe Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement), and as of the end of any fiscal quarter may not exceed 3.75:1.00;provided that following the consummation of a Material Acquisition (as defined in the Credit Agreement), and as of the end of the fiscal quarter in whichsuch Material Acquisition occurred and as of the end of the three fiscal quarters thereafter, the maximum Consolidated Leverage Ratio level above willincrease by 0.50:1.00, provided that no more than one such increase can be in effect at any time. The Esselte Acquisition qualified as a Material Acquisitionunder the Credit Agreement.The Credit Agreement requires the Company to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) as of theend of any fiscal quarter at or above 1.25 to 1.00.As of December 31, 2018, our Consolidated Leverage Ratio was approximately 2.8 to 1 and our Fixed Charge Coverage Ratio was approximately 2.0 to1.Other Covenants and RestrictionsThe Credit Agreement contains customary affirmative and negative covenants as well as events of default, including payment defaults, breach ofrepresentations and warranties, covenant defaults, cross-defaults, certain bankruptcy or insolvency events, certain ERISA-related events, changes in control orownership and invalidity of any loan document. The Credit Agreement also establishes limitations on the aggregate amount of Permitted Acquisitions andInvestments (each as defined in the Credit Agreement) that the Company and its subsidiaries may make during the term of the Credit Agreement.As of and for the periods ended December 31, 2018 and December 31, 2017, the Company was in compliance with all applicable loan covenants.Guarantees and SecurityGenerally, obligations under the Credit Agreement are guaranteed by certain of the Company's existing and future subsidiaries, and are secured bysubstantially all of the Company's and certain guarantor subsidiaries' assets, subject to certain exclusions and limitations.36Senior Unsecured Notes due December 2024On December 22, 2016, the Company completed a private offering of $400.0 million in senior unsecured notes, due December 2024 (the "New Notes"),which bear interest at 5.25%. Net proceeds from the sale of the New Notes, together with borrowings of $73.9 million under the Company's revolving creditfacility and cash on hand, were used to redeem the then existing senior unsecured notes (the "Old Notes"). During 2018, the Company repurchased and retired$25.0 million of its New Notes.For further information, see "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financial statements contained in Item 8. of thisreport.Restructuring and Integration ActivitiesFrom time to time the Company may implement restructuring, realignment or cost-reduction plans and activities, including those related to integratingacquired businesses.During the year ended December 31, 2018, the Company recorded an aggregate $11.7 million in restructuring expenses, primarily severance, related toadditional changes in the operating structure of the North America segment and the continued integration of Esselte within the EMEA segment. For furtherinformation, see "Note 11. Restructuring" to the consolidated financial statements contained in Item 8. of this report.In addition, during the year ended December 31, 2018, the Company recorded an aggregate $4.2 million in integration expenses related to theintegration of the Esselte operations.The Company currently expects to recognize approximately $3 million of additional restructuring expenses, primarily severance, during the firstquarter of 2019, associated with our ACCO Brands North America and International segments, which has not yet been recorded in our 2018 financialstatements, pursuant to GAAP rules.Cash Flow for the Years Ended December 31, 2018 and 2017Cash Flow from Operating ActivitiesCash provided by operating activities during the year ended December 31, 2018 of $194.8 million decreased from $204.9 million provided in the 2017period due to lower sales and profit, partially offset by cash provided by net working capital (accounts receivable, inventories, accounts payable).The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2018 and 2017:(in millions) 2018 2017Accounts receivable $46.0 $10.2Inventories (92.9) 2.5Accounts payable 101.0 (18.7)Cash flow provided (used) by net working capital $54.1 $(6.0)Accounts receivable contributed $46.0 million in 2018, driven by lower accounts receivable as a result of lower sales and improved collections whencompared to the $10.2 million generated in the prior year. Earlier than usual purchases of finished goods ahead of proposed tariffs, and raw materials, notablypaper, in order to secure supply and lock-in pricing, increased both inventory, $92.9 million, and accounts payable, $101.0 million, to levels significantlyhigher than the prior year. Other significant cash outflows during the year ended December 31, 2018 included pension contributions of $20.9 million, interestpayments of $37.9 million, tax payments of $33.7 million and restructuring payments of $14.7 million, all of which were broadly in line with similarpayments made in the prior year. Cash payments associated with transaction and integration activities were $8 million lower than the prior year.37Cash Flow from Investing ActivitiesCash used by investing activities was $71.9 million and $319.1 million for the years ended December 31, 2018 and 2017, respectively. The 2018 cashoutflow includes $38.0 million of preliminary purchase price, net of cash acquired, paid for GOBA, while the 2017 outflow reflects $292.3 million ofpurchase price, net of cash acquired, paid for Esselte. For further details, see "Note 3. Acquisitions" to the consolidated financial statements contained in Item8. of this report. Capital expenditures were $34.1 million and $31.0 million for the years ended December 31, 2018 and 2017, respectively, with the increasecompared to the prior-year period driven by information technology systems-related investments.Cash Flow from Financing ActivitiesCash used by financing activities was $125.6 million for the year ended December 31, 2018 compared to $142.2 million provided for the same periodof 2017. Cash used in 2018 includes net repayments of long-term debt of $24.2 million, $75.7 million of repurchases of our common stock and paymentsrelated to tax withholding for stock-based compensation net of proceeds received from the exercise of stock options, and $25.1 million for the payment ofdividends.Cash provided in 2017 reflects long-term borrowings of $187.6 million, largely in connection with the Esselte Acquisition. This was partially offset by$41.8 million for repurchases of our common stock and payments related to tax withholding for stock-based compensation net of proceeds received from theexercise of stock options, and $3.6 million for debt issuance costs associated with the 2017 debt refinancing in connection with the Esselte Acquisition.Cash Flow for the Years Ended December 31, 2017 and 2016Cash Flow from Operating ActivitiesCash provided by operating activities during the year ended December 31, 2017 of $204.9 million was generated principally from increased operatingprofits, primarily due to the Esselte and PA Acquisitions. Cash generated by incremental operating profits was partially offset by lower contribution fromworking capital (accounts receivable, inventories, accounts payable), payments of professional fees associated with acquisition and integration activities forthe Esselte and PA Acquisitions, increased cash taxes and higher pension contributions. For the 2016 year, cash provided by operating activities was $167.1million. Net income for 2017 was $131.7 million compared to $95.5 million in 2016.The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2017 and 2016,respectively:(in millions) 2017 2016Accounts receivable $10.2 $13.4Inventories 2.5 16.7Accounts payable (18.7) (19.3)Cash flow (used) provided by net working capital $(6.0) $10.8Accounts receivable contributed $10.2 million, which was lower than the prior year of $13.4 million due to the timing of the Esselte Acquisition andhigher sales in certain foreign markets. Inventory contributed $2.5 million, which was lower than the prior year of $16.7 million due to the Esselte and PAAcquisitions, inventory reductions at certain customers and inventory builds in support of warehouse integration activities. Partially offsetting the cashgenerated from net working capital were employee annual incentive payments made in the first quarter (including payroll taxes) as well as transactionbonuses paid by the seller in connection with the Esselte Acquisition. The settlement of customer program liabilities was lower, primarily driven by lowersales in comparable businesses, partially offset by increased settlements from the Esselte Acquisition. Other significant cash fluctuations included income taxpayments of $34.8 million in 2017, which were higher than the $16.9 million paid in 2016 due to higher international taxes, largely related to the EsselteAcquisition, and pension contributions of $21.7 million in 2017, which increased from $6.2 million in 2016 due to higher U.S. contribution requirementsand the Esselte Acquisition. Restructuring payments of $13.4 million (primarily associated with headcount reductions and footprint rationalization activitiesin connection with the integration of Esselte and Pelikan Artline) were higher than the prior-year spend of $4.9 million. Interest payments were $38.0 million,lower than the prior-year payments of $50.1 million due to refinancing activities in late 2016 and lower debt.38Cash Flow from Investing ActivitiesCash used by investing activities was $319.1 million and $106.4 million for the years ended December 31, 2017 and 2016, respectively. The 2017 cashoutflow reflects the $292.3 million purchase price, net of cash acquired, paid for Esselte. The 2016 cash outflow reflects the $88.8 million purchase price, netof cash acquired, paid for Pelikan Artline. For further information, see "Note 3. Acquisitions" to the consolidated financial statements contained in Item 8. ofthis report. Capital expenditures were $31.0 million and $18.5 million for the years ended December 31, 2017 and 2016, respectively, with the increasedriven by information technology systems-related investments.Cash Flow from Financing ActivitiesCash provided by financing activities was $142.2 million for the year ended December 31, 2017, compared to $76.4 million used for the same period of2016. Cash provided in 2017 reflects long-term borrowings of $484.1 million, consisting of €300.0 million (US$320.8 million based on January 27, 2017exchange rates) in the form of the Euro Term Loan A incurred to fund the Esselte Acquisition, along with additional borrowings of US$91.4 million under theCompany's 2017 Revolving Facility, primarily to repay the then existing U.S. Dollar Senior Secured Term Loan A in the amount of $81.0 million and toreduce the outstanding balance on the Australian Dollar Senior Secured Term Loan A. Additionally, we used $41.8 million for repurchases of our commonstock and payments related to tax withholding for stock-based compensation, net of proceeds received from the exercise of stock options, and $3.6 million ofdebt issuance costs associated with the financing of the Esselte Acquisition.Cash used in 2016 of $76.4 million reflected long-term borrowings of $587.4 million, consisting primarily of a private issuance of New Notes of $400.0million and an incremental loan in the amount of A$100.0 million (US$76.6 million based on May 2, 2016 exchange rates), along with additionalborrowings under the Company’s then existing revolving facility, to fund the PA Acquisition. Repayments of long-term debt of $685.1 million primarilyreflects the early satisfaction and discharge of our $500 million principal amount of senior unsecured notes, repayments totaling $148.0 million on the thenexisting U.S. Dollar Senior Secured Term Loan A and payment of $24.5 million of debt assumed with the PA Acquisition. In 2016, we also made a "make-whole" call premium payment of $25.0 million related to the early satisfaction and discharge of our $500.0 million principal amount of senior unsecurednotes, and paid $6.9 million in debt issuance fees in connection with the New Notes.CapitalizationThe Company had 102.7 million and 106.7 million shares of common stock outstanding as of December 31, 2018 and 2017, respectively.Adequacy of Liquidity SourcesBased on our 2019 business plan and current forecasts, we believe that cash flow from operations, our current cash balance and borrowings availableunder our Revolving Facility, will be adequate to support our requirements for working capital, capital expenditures, to pay dividends and to serviceindebtedness for the foreseeable future. Our future operating performance is dependent on many factors, some of which are beyond our control, includingprevailing economic, financial and industry conditions. For further information on these risks, see "Part I, Item1A. Risk Factors - Our existing borrowingarrangements require us to dedicate a substantial portion of our cash flow to debt payments and limit our ability to engage in certain activities. If we areunable to meet our obligations under these agreements or are contractually restricted from pursuing activities or transactions that we believe are in ourlong-term best interests, our business, results of operations and financial condition could be materially adversely affected."Off-Balance-Sheet Arrangements and Contractual Financial ObligationsThe Company does not have any material off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on ourfinancial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.39Our contractual obligations and related payments by period as of December 31, 2018 were as follows:(in millions)2019 2020 - 2021 2022 - 2023 Thereafter TotalDebt$39.4 $95.3 $378.0 $375.0 $887.7Interest on debt(1)32.9 63.7 45.8 18.9 161.3Operating lease obligations29.7 45.2 27.4 19.6 121.9Purchase obligations(2)89.1 1.9 0.2 — 91.2Transition Toll Tax(3)3.1 6.1 8.8 17.3 35.3Other long-term liabilities(4)21.0 15.2 15.6 39.0 90.8Total$215.2 $227.4 $475.8 $469.8 $1,388.2(1)Interest calculated at December 31, 2018 rates for variable rate debt.(2)Purchase obligations primarily consist of contracts and non-cancelable purchase orders for raw materials and finished goods.(3)The U.S. Tax Act requires companies to pay a one-time Transition Toll Tax. The Transition Toll Tax is payable over eight years.(4)Other long-term liabilities consist of estimated expected employer contributions for 2019, along with estimated future payments, for pension and post-retirement plans that are not paid from assets held in a plan trust.Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2018, we areunable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $43.7 million of unrecognizedtax benefits have been excluded from the contractual obligations table above. For further information, see "Note 12. Income Taxes" to the consolidatedfinancial statements contained in Item 8. of this report.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 reported amounts of assets, liabilities, revenues and expenses presentedfor each reporting period in the financial statements and the related accompanying notes. Actual results could differ significantly from those estimates. Weregularly review our assumptions and estimates, which are based on historical experience and, where appropriate, current business trends. We believe that thefollowing discussion addresses our critical accounting policies, which require significant, subjective and complex judgments to be made by our management.Revenue RecognitionRevenue is recognized when control of the promised goods or services is transferred to our customers in an amount reflective of the consideration weexpect to receive in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue.Incidental items incurred that are immaterial in the context of the contract are expensed.At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. Toidentify the performance obligations, the Company considers all products and services promised regardless of whether they are explicitly stated or impliedwithin the contract or by standard business practices.Products: For our products, we transfer control and recognize a sale primarily when we either ship the product from our manufacturing facility ordistribution center, or upon delivery to a customer specified location depending upon the terms in the customer agreement. In addition, we recognize revenuefor private label products as the product is manufactured (or over-time) when a contract has an enforceable right to payment. For consignment arrangements,revenue is not recognized until the products are sold to the end customer.40Customer Program Costs: Customer programs and incentives ("Customer Program Costs") are a common practice in our industry. We incur CustomerProgram Costs to obtain favorable product placement, to promote sell-through of products and to maintain competitive pricing. The amount of considerationwe receive and revenue we recognize is impacted by Customer Program Costs, including sales rebates (which are generally tied to achievement of certainsales volume levels); in-store promotional allowances; shared media and customer catalog allowances; other cooperative advertising arrangements; freightallowance programs offered to our customers; allowances for discounts and reserves for returns. We recognize Customer Program Costs, primarily as adeduction to gross sales, at the time that the associated revenue is recognized. Customer Program Costs are based on management's best estimates using themost likely amount method and is an amount that is unlikely to be reversed. In the absence of a signed contract, estimates are based on historical or projectedexperience for each program type or customer. We adjust our estimate of revenue when the most likely amount of consideration we expect to receive changes.InventoriesInventories are priced at the lower of cost (principally first-in, first-out) or net realizable value. Inventory reserves are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specificidentification of items, such as product discontinuance or engineering/material changes. These estimates could vary significantly, either favorably orunfavorably, from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from our expectations.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 test indefinite-lived intangibles for impairment at least annually, normally in the second quarter, and whenever market or business events indicatethere may be a potential adverse impact on a particular intangible. The test may be on a qualitative or quantitative basis as allowed by GAAP. We considerthe implications of both external factors (e.g., market growth, pricing, competition, and technology) and internal factors (e.g., product costs, margins, supportexpenses, and capital investment) and their potential impact on cash flows in both the near and long term, as well as their impact on any identifiableintangible asset associated with the business. Based on recent business results, consideration of significant external and internal factors, and the resultingbusiness projections, indefinite-lived intangible assets are reviewed to determine whether they are likely to remain indefinite-lived, or whether a finite life ismore appropriate. In addition, based on events in the period and future expectations, management considers whether the potential for impairment exists.Finite lived intangibles are amortized over 10, 15, 23 or 30 years.We performed our annual assessment, on a qualitative basis, as allowed by GAAP, for the majority of our indefinite-lived trade names in the secondquarter of 2018 and concluded that no impairment existed. For one of our indefinite-lived trade names that was not substantially above its carrying value,Mead®, we performed a quantitative test in the second quarter of 2018. A 1.5% long-term growth rate and an 11.5% discount rate were used. We concludedthat the Mead® trade name was not impaired.As of June 30, 2018, we changed the indefinite-lived Mead® trade name to an amortizable intangible asset. The change was made as a result ofdecisions regarding the Company's future use of the trade name. The Company began amortizing the Mead® trade name on a straight-line basis over a life of30 years on July 1, 2018.GoodwillGoodwill has been recorded on our balance sheet and represents the excess of the cost of an acquisition 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 EMEA and ACCO Brands International.We test goodwill for impairment at least annually and whenever events or circumstances make it more likely than not that an impairment may haveoccurred. As permitted by GAAP, we may perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit isless than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test as required by GAAP. Weperformed our annual assessment in the second quarter of 2018, on a qualitative basis, and concluded that it was not more likely than not that the fair value ofany reporting unit is less than its carrying amount.41If the qualitative assessment determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if it isdetermined that a qualitative assessment is not appropriate, we would perform a quantitative goodwill impairment test where we calculate the fair value of thereporting units. When applying a fair-value-based test, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unitexceeds the carrying value of the net assets assigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carryingvalue of the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, an impairment charge is recognized, however, the loss recognizedis not to exceed the total amount of goodwill allocated to the reporting unit.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 2018 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 2019 or prior to that, if a triggering event isidentified outside of the quarter when the annual impairment test is performed. It is not possible at this time to determine if any such future impairment chargewould 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 pension, 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, mortality rate tables, compensation increases, turnover rates and health care cost trends. Actuarial assumptions are reviewed onan annual basis and modifications to these assumptions are made based on current rates and trends when it is deemed appropriate. As required by GAAP, theeffect of our modifications and unrecognized actuarial gains and losses are generally recorded to a separate component of accumulated other comprehensiveincome (loss) ("AOCI") in stockholders’ equity and amortized over future periods. We believe that the assumptions utilized in recording our obligationsunder the plans are reasonable based on our experience. The actuarial assumptions used to record our plan obligations could differ materially from actualresults due to changing economic and market conditions, higher or lower withdrawal rates or other factors which may impact the amount of retirement-relatedbenefit expense recorded by us in future periods.The discount rate assumptions used to determine the pension and post-retirement obligations of the benefit plans are based on a spot-rate yield curvethat matches projected future benefit payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. Theassumed discount rates reflect market rates for high-quality corporate bonds currently available. Our discount rates were determined by considering theaverage of pension yield curves constructed of a large population of high quality corporate bonds. The resulting discount rates reflect the matching of planliability cash flows to the yield curves.The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested based onour investment profile to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation, fixedincome returns and equity returns, while also considering historical returns over the last 10 years, asset allocation and investment strategy.We estimate the service and interest components of net periodic benefit cost (income) for pension and post-retirement benefits utilizing a full yieldcurve approach by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cashflows.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 AOCI and then amortized into the income statement in future periods, based on the average remaining lifetime oraverage remaining service expected.Pension income was $5.5 million, $4.9 million and $5.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. Post-retirementincome was $0.2 million, $0.2 million and $0.7 million for the years ended December 31, 2018, 2017 and 2016, respectively.42The weighted average assumptions used to determine benefit obligations for the years ended December 31, 2018, 2017, and 2016 were as follows: Pension Post-retirement U.S. International 2018 2017 2016 2018 2017 2016 2018 2017 2016Discount rate4.6% 3.7% 4.3% 2.5% 2.3% 2.7% 3.7% 3.2% 3.4%Rate of compensationincreaseN/A N/A N/A 3.0% 2.8% 3.1% N/A N/A N/AThe weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2018, 2017 and 2016 were as follows: Pension Post-retirement U.S. International 2018 2017 2016 2018 2017 2016 2018 2017 2016Discount rate3.5% 3.8% 4.6% 2.1% 2.3% 3.7% 3.2% 3.4% 3.9%Expected long-term rate ofreturn7.4% 7.8% 7.8% 5.0% 5.5% 6.0% N/A N/A N/ARate of compensationincreaseN/A N/A N/A 2.8% 3.1% 3.0% N/A N/A N/AIn 2019, we expect pension income of approximately $2.5 million and post-retirement income of approximately $0.2 million.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 $0.5 million for 2019. 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 $1.0 million for 2019.Pension and post-retirement liabilities of $257.2 million as of December 31, 2018 decreased from $275.5 million at December 31, 2017, primarily dueto cash contributions and favorable foreign currency translation.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 any assessments are received, revised or resolved.On December 22, 2017, the U.S. Tax Act was signed into law. The U.S. Tax Act made broad and complex changes to the U.S. tax code, including, butnot limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax oncertain undistributed earnings of foreign subsidiaries (the "Transition Toll Tax"); (iii) bonus depreciation that will allow for full expensing of qualifiedproperty; (iv) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (v) a new provision designed to tax global intangiblelow-taxed income ("GILTI"); (vi) the repeal of domestic production activity deductions; (vii) limitations on the deductibility of certain executivecompensation expenses; (viii) limitations on the use of foreign tax credits to reduce U.S. income tax liability; and (ix) a new provision that allows a domesticcorporation an immediate deduction for a portion of its foreign derived intangible income ("FDII"). The Company has elected to treat taxes due on taxableincome related to GILTI as a current period expense when incurred.With the enactment of the U.S. Tax Act, we believe that our offshore cash can be accessed without adverse U.S. tax consequences. After analyzing ourglobal working capital and cash requirements, the Company has reassessed and updated its indefinite reinvestment assertion under ASC 740. As ofDecember 31, 2018, the Company has recorded $1.4 million of deferred taxes on approximately $369 million of unremitted earnings of non-U.S. subsidiariesthat may be remitted to the U.S. The Company43has $106 million of additional unremitted earnings of non-U.S. subsidiaries, which are indefinitely reinvested and for which no deferred taxes have beenprovided.For further information on the U.S. Tax Act, see "Note 12. Income Taxes" to the consolidated financial statements contained in Item 8. of this report.Recent Accounting Standards Updates and Recently Adopted Accounting StandardsFor information on recent accounting pronouncements, see "Note 2. Significant Accounting Policies, Recent Accounting Pronouncements and AdoptedAccounting Standards" to the consolidated financial statements contained in Item 8. of this report.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKOur industry has historically been concentrated in a small number of major customers, primarily large regional resellers of our products including massretailers; e-tailers; warehouse clubs; office superstores; wholesalers; and contract stationers. Customer consolidation, shifts in the channels of distribution forour products and share growth of private-label products continue to increase pricing pressures, which may adversely affect margins for our competitors andfor us. We are addressing these challenges through strong end-user brands, broader product penetration within categories, ongoing introduction of innovativenew products, continuing improvements in customer service and diversification of our customer base, as well as continued cost and asset 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.See also "Item 1A. Risk Factors."Foreign Exchange Risk ManagementWe enter into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventorypurchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe (the Euro, the Swedish krona and theBritish pound), Australia, Canada, Brazil, and Mexico. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar, Swedishkrona, British pound and Japanese yen. Increases and decreases in the fair market values of our forward agreements are expected to be offset by gains/losses inrecognized net underlying foreign currency transactions or loans. Notional amounts of outstanding foreign currency forward exchange contracts were $212.0million and $188.5 million at December 31, 2018 and 2017, respectively. The net fair value of these foreign currency contracts was $2.1 million and $(0.3)million at December 31, 2018 and 2017, respectively. At December 31, 2018, a 10% unfavorable exchange rate movement in our portfolio of foreigncurrency forward contracts would have reduced our unrealized gains by $11.8 million. Consistent with the use of these contracts to neutralize the effect ofexchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of theunderlying transactions being hedged. When taken together, we believe these forward contracts and the offsetting underlying commitments do not creatematerial market risk.For further information related to outstanding foreign currency forward exchange contracts, see "Note 14. Derivative Financial Instruments" and "Note15. Fair Value of Financial Instruments" to the consolidated financial statements contained in Item 8. of this report.For the PA and Esselte Acquisitions, we took on additional debt in the local currency of the targets to reduce our foreign exchange leverage risk. In thecase of the PA Acquisition, which primarily conducts its business in the Australian dollar, we borrowed A$100.0 million. For the Esselte Acquisition,completed on January 31, 2017, which primarily conducts its business in the Euro, we borrowed €300.0 million. For further information see, "Note 3.Acquisitions" and "Note 4. Long-term Debt and Short-term Borrowings" to the consolidated financial statements contained in Item 8. of this report.44Interest Rate Risk ManagementAmounts outstanding under the Credit Agreement bear interest at a rate per annum equal to the Euro Rate, with a 0% floor, the Australian BBSR Rate,the Canadian BA Rate or the Base Rate, as applicable and as each such rate is defined in the Credit Agreement, plus an "applicable rate." The applicable rateapplied to outstanding Euro, Australian and Canadian dollar denominated loans and Base Rate loans is based on the Company’s Consolidated LeverageRatio as follows:ConsolidatedLeverage Ratio Applicable Rate onEuro/AUD/CDN DollarLoans Applicable Rate on BaseRate Loans> 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 > 3.00 to 1.00 2.00% 1.00%≤ 3.00 to 1.00 and > 2.00 to 1.00 1.50% 0.50%≤ 2.00 to 1.00 1.25% 0.25%As of December 31, 2018, the applicable rate on Euro, Australian and Canadian dollar loans was 1.50% and the applicable rate on Base Rate loans was0.50%. Undrawn amounts under the Revolving Facility are subject to a commitment fee rate of 0.25% to 0.40% per annum, depending on the Company’sConsolidated Leverage Ratio. As of December 31, 2018, the commitment fee rate was 0.30%.The New Notes have a fixed interest rate 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 our fixed interest rate debt and any repurchases of these New Notes, but do not impactour earnings or cash flow.The following table summarizes information about our major debt components as of December 31, 2018, including the principal cash payments andinterest rates.Debt Obligations Stated Maturity Date (in millions)2019 2020 2021 2022 2023 Thereafter Total Fair ValueLong term debt: Fixed rate Senior Unsecured Notes, dueDecember 2024$— $— $— $— $— $375.0 $375.0 $335.6Fixed interest rate 5.25% Variable rate Euro Senior Secured TermLoan A, due January 2022$14.6 $40.7 $42.9 $190.8 $— $— $289.0 $289.0Variable rate Australian Dollar SeniorSecured Term Loan A, due January 2022$— $5.7 $6.0 $31.3 $— $— $43.0 $43.0Variable rate U.S. Dollar Senior SecuredRevolving Credit Facility, due January2022$24.8 $— $— $82.0 $— $— $106.8 $106.8Variable rate Australian Dollar SeniorSecured Revolving Credit Facility, dueJanuary 2022$— $— $— $73.9 $— $— $73.9 $73.9Average variable interest rate(1)2.37% 2.47% 2.55% 2.60% —% (1)Rates presented are as of December 31, 2018.45ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm47Consolidated Balance Sheets49Consolidated Statements of Income50Consolidated Statements of Comprehensive Income51Consolidated Statements of Cash Flows52Consolidated Statements of Stockholders’ Equity53Notes to Consolidated Financial Statements5546Report of Independent Registered Public Accounting FirmTo the Stockholders and Board of DirectorsACCO Brands Corporation:Opinions on the Consolidated Financial Statements and Internal Control Over Financial ReportingWe have audited the accompanying consolidated balance sheets of ACCO Brands Corporation and subsidiaries (the Company) as ofDecember 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cashflows for each of the years in the three-year period ended December 31, 2018 and the related notes and financial statement schedule II -Valuation and Qualifying Accounts and Reserves (collectively, the consolidated financial statements). We also have audited theCompany’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-yearperiod ended December 31, 2018, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Companymaintained, in all material respects, effective internal control over financial reporting as of December 31, 2018 based on criteriaestablished in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission.The Company acquired GOBA Internacional, S.A. de C.V. ("GOBA") during 2018, and management excluded from its assessment ofthe effectiveness of the Company’s internal control over financial reporting as of December 31, 2018, GOBA’s internal control overfinancial reporting associated with total assets of $35.0 million and total revenues of $19.7 million included in the consolidatedfinancial statements of the Company as of and for the year ended December 31, 2018. Our audit of internal control over financialreporting of the Company also excluded an evaluation of the internal control over financial reporting of GOBA.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’sconsolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. Weare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsto obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due toerror or fraud, and whether effective internal control over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of theconsolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as wellas evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonablebasis for our opinions.47Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effecton the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate./s/ KPMG LLPWe have served as the Company’s auditor since 2009.Chicago, IllinoisFebruary 27, 201948ACCO Brands Corporation and SubsidiariesConsolidated Balance Sheets(in millions)December 31, 2018 December 31, 2017Assets Current assets: Cash and cash equivalents$67.0 $76.9Accounts receivable less allowances for discounts and doubtful accounts of $16.0 and Accounts receivable lessallowances for discounts, doubtful accounts and returns of $18.1, respectively428.4 469.3Inventories340.6 254.2Other current assets44.2 29.2Total current assets880.2 829.6Total property, plant and equipment618.7 645.2Less: accumulated depreciation(355.0) (366.7)Property, plant and equipment, net263.7 278.5Deferred income taxes115.1 137.9Goodwill708.9 670.3Identifiable intangibles, net of accumulated amortization of $236.4 and $203.7, respectively787.0 839.9Other non-current assets31.5 42.9Total assets$2,786.4 $2,799.1Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt$39.5 $43.2Accounts payable274.6 178.2Accrued compensation41.6 60.9Accrued customer program liabilities114.5 141.1Accrued interest1.2 1.2Other current liabilities127.8 113.8Total current liabilities599.2 538.4Long-term debt, net of debt issuance costs of $5.5 and $7.1, respectively843.0 889.2Deferred income taxes176.2 177.1Pension and post-retirement benefit obligations257.2 275.5Other non-current liabilities121.1 144.8Total liabilities1,996.7 2,025.0Stockholders' 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; 106,249,322 and 109,597,197 shares issued and102,748,700 and 106,684,084 outstanding, respectively1.1 1.1Treasury stock, 3,500,622 and 2,913,113 shares, respectively(33.9) (26.4)Paid-in capital1,941.0 1,999.7Accumulated other comprehensive loss(461.7) (461.1)Accumulated deficit(656.8) (739.2)Total stockholders' equity789.7 774.1Total liabilities and stockholders' equity$2,786.4 $2,799.1See notes to consolidated financial statements.49ACCO Brands Corporation and SubsidiariesConsolidated Statements of Income Year Ended December 31,(in millions, except per share data)2018 2017 2016Net sales$1,941.2 $1,948.8 $1,557.1Cost of products sold1,313.4 1,291.5 1,042.2Gross profit627.8 657.3 514.9Operating costs and expenses: Selling, general and administrative expenses392.4 415.5 328.8Amortization of intangibles36.7 35.6 21.6Restructuring charges11.7 21.7 5.4Total operating costs and expenses440.8 472.8 355.8Operating income187.0 184.5 159.1Non-operating expense (income): Interest expense41.2 41.1 49.3Interest income(4.4) (5.8) (6.4)Equity in earnings of joint venture— — (2.1)Non-operating pension income(9.3) (8.5) (8.2)Other expense (income), net1.6 (0.4) 1.4Income before income tax157.9 158.1 125.1Income tax expense51.2 26.4 29.6Net income$106.7 $131.7 $95.5 Per share: Basic income per share$1.02 $1.22 $0.89Diluted income per share$1.00 $1.19 $0.87 Weighted average number of shares outstanding: Basic104.8 108.1 107.0Diluted107.0 110.9 109.2See notes to consolidated financial statements.50ACCO Brands Corporation and SubsidiariesConsolidated Statements of Comprehensive Income Year Ended December 31,(in millions)2018 2017 2016Net income$106.7 $131.7 $95.5Other comprehensive income (loss), net of tax: Unrealized income (loss) on derivative instruments, net of tax (expense) benefit of $(0.8),$1.0 and $(0.7), respectively1.9 (2.3) 1.7 Foreign currency translation adjustments, net of tax (expense) benefit of $(0.6), $5.0 and$0.0, respectively6.2 (19.5) 16.8 Recognition of deferred pension and other post-retirement items, net of tax benefit of $2.2,$5.8 and $0.6, respectively(8.7) (19.9) (8.7)Other comprehensive (loss) income, net of tax(0.6) (41.7) 9.8 Comprehensive income$106.1 $90.0 $105.3See notes to consolidated financial statements.51ACCO Brands Corporation and SubsidiariesConsolidated Statements of Cash Flows Year Ended December 31,(in millions)2018 2017 2016Operating activities Net income$106.7 $131.7 $95.5Gain on revaluation of previously held joint venture equity interest— — (28.9)Amortization of inventory step-up0.1 0.9 0.4Loss (gain) on disposal of assets0.2 (1.3) (0.3)Deferred income tax expense (benefit)22.7 (45.2) 6.0Insurance claims, net of proceeds— (0.4) —Depreciation34.0 35.6 30.4Amortization of debt issuance costs2.1 2.9 3.8Amortization of intangibles36.7 35.6 21.6Stock-based compensation8.8 17.0 19.4Loss on debt extinguishment0.3 — 29.9Other non-cash items— — 0.1Equity in earnings of joint venture, net of dividends received— — (1.6)Changes in balance sheet items: Accounts receivable46.0 10.2 13.4Inventories(92.9) 2.5 16.7Other assets5.5 4.6 5.5Accounts payable101.0 (18.7) (19.3)Accrued expenses and other liabilities(72.5) (8.3) (31.2)Accrued income taxes(3.9) 37.8 5.7Net cash provided by operating activities194.8 204.9 167.1Investing activities Additions to property, plant and equipment(34.1) (31.0) (18.5)Proceeds from the disposition of assets0.2 4.2 0.7Cost of acquisitions, net of cash acquired(38.0) (292.3) (88.8)Other— — 0.2Net cash used by investing activities(71.9) (319.1) (106.4)Financing activities Proceeds from long-term borrowings225.3 484.1 587.4Repayments of long-term debt(249.5) (296.5) (685.1)Borrowings of notes payable, net— — 51.5Payment for debt premium— — (25.0)Payments for debt issuance costs(0.6) (3.6) (6.9)Repurchases of common stock(75.0) (36.6) —Dividends paid(25.1) — —Payments related to tax withholding for stock-based compensation(7.5) (9.4) (5.1)Proceeds from the exercise of stock options6.8 4.2 6.8Net cash (used) provided by financing activities(125.6) 142.2 (76.4)Effect of foreign exchange rate changes on cash and cash equivalents(7.2) 6.0 3.2Net (decrease) increase in cash and cash equivalents(9.9) 34.0 (12.5)Cash and cash equivalents Beginning of the period76.9 42.9 55.4End of the period$67.0 $76.9 $42.9Cash paid during the year for: Interest$37.9 $38.0 $50.1Income taxes$33.7 $34.8 $16.9See notes to consolidated financial statements.52ACCO Brands Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity(in millions)CommonStock Paid-inCapital AccumulatedOtherComprehensiveIncome (Loss) TreasuryStock AccumulatedDeficit TotalBalance at December 31, 2015$1.1 $1,988.3 $(429.2) $(11.8) $(967.2) $581.2Net income— — — — 95.5 95.5Gain on derivative financial instruments,net of tax— — 1.7 — — 1.7Translation impact— — 16.8 — — 16.8Pension and post-retirement adjustment,net of tax— — (8.7) — — (8.7)Stock-based compensation— 19.4 — — — 19.4Common stock issued, net of shareswithheld for employee taxes— 6.8 — (5.2) — 1.6Excess tax benefit on stock-basedcompensation— 1.2 — — — 1.2Balance at December 31, 20161.1 2,015.7 (419.4) (17.0) (871.7) 708.7Net income— — — — 131.7 131.7Loss on derivative financial instruments,net of tax— — (2.3) — — (2.3)Translation impact— — (19.5) — — (19.5)Pension and post-retirement adjustment,net of tax— — (19.9) — — (19.9)Common stock repurchases— (36.6) — — — (36.6)Stock-based compensation— 17.0 — — — 17.0Common stock issued, net of shareswithheld for employee taxes— 4.2 — (9.4) — (5.2)Cumulative effect due to the adoption ofASU 2016-09— (0.6) — — 0.8 0.2Balance at December 31, 20171.1 1,999.7 (461.1) (26.4) (739.2) 774.1Net income— — — — 106.7 106.7Gain on derivative financial instruments,net of tax— — 1.9 — — 1.9Translation impact— — 6.2 — — 6.2Pension and post-retirement adjustment,net of tax— — (8.7) — — (8.7)Common stock repurchases— (75.0) — — — (75.0)Stock-based compensation— 9.5 — — (0.7) 8.8Common stock issued, net of shareswithheld for employee taxes— 6.8 — (7.5) — (0.7)Dividends declared, $0.24 per share— — — — (25.1) (25.1)Cumulative effect due to the adoption ofASU 2014-09— — — — 1.6 1.6Other— — — — (0.1) (0.1)Balance at December 31, 2018$1.1 $1,941.0 $(461.7) $(33.9) $(656.8) $789.7See notes to consolidated financial statements.53ACCO Brands Corporation and SubsidiariesConsolidated Statements of Stockholders’ Equity (Continued)Shares of Capital Stock CommonStock TreasuryStock NetSharesShares at December 31, 2015107,129,051 1,489,048 105,640,003Common stock issued, net of shares withheld for employee taxes2,957,232 690,591 2,266,641Shares at December 31, 2016110,086,283 2,179,639 107,906,644Common stock issued, net of shares withheld for employee taxes2,778,795 733,474 2,045,321Common stock repurchases(3,267,881) — (3,267,881)Shares at December 31, 2017109,597,197 2,913,113 106,684,084Common stock issued, net of shares withheld for employee taxes2,646,084 587,509 2,058,575Common stock repurchases(5,993,959) — (5,993,959)Shares at December 31, 2018106,249,322 3,500,622 102,748,700See notes to consolidated financial statements.54ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements1. Basis of PresentationAs used in this Annual Report on Form 10-K for the fiscal year ended December 31, 2018, 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.The 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 on Form 10-K.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.On July 2, 2018, we completed the acquisition (the "GOBA Acquisition") of GOBA Internacional, S.A. de C.V. ("GOBA"), a leading provider of schooland craft products in Mexico under the Barrilito® brand, for a preliminary purchase price of approximately $38.0 million, net of cash acquired, and subject toworking capital and other adjustments. The GOBA Acquisition is expected to increase the breadth and depth of our distribution, especially with wholesalersand retailers throughout Mexico and complement our existing office products portfolio with a strong offering of school and craft products. The results ofGOBA are included in the ACCO Brands International segment from July 2, 2018.On January 31, 2017, we completed the acquisition (the "Esselte Acquisition") of Esselte Group Holdings AB ("Esselte"). Accordingly, the financialresults of Esselte are included in the Company's consolidated financial statements from February 1, 2017, and are reflected in all three of the Company'sreportable business segments.On May 2, 2016, we completed the acquisition of Australia Stationery Industries, Inc. (the "PA Acquisition"), which indirectly owned the 50% of thePelikan Artline joint venture and the issued capital stock of Pelikan Artline Pty Limited (collectively, "Pelikan Artline") that was not already owned by theCompany. Prior to the PA Acquisition, the Pelikan Artline joint venture was accounted for under the equity method. From the date of the PA Acquisition, theresults of Pelikan Artline are included in the Company's consolidated financial statements and are reported in the ACCO Brands International segment.Accordingly, we no longer separately report equity in earnings from this joint venture.For more information on these acquisitions, see "Note 3. Acquisitions."In accordance with the adoption of the Accounting Standard Update ("ASU") No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improvingthe Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, the Company retrospectively revised its presentation of pensioncosts, reclassifying the non-service components of periodic pension income/cost to "Non-operating pension income" in the Consolidated Statements ofIncome for the years ended December 31, 2017 and 2016. For more information, see "Note 2. Significant Accounting Policies, Recent AccountingPronouncements and Adopted Accounting Standards."On January 1, 2018, the Company adopted accounting standard ASU 2014-09, Revenue from Contracts with Customers and all related amendments(Topic 606), applying the modified retrospective transition method to all customer contracts that were not completed as of January 1, 2018. Results forreporting periods beginning after December 31, 2017 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to bereported under the accounting standards in effect for the prior period. For more information, see "Note 2. Significant Accounting Policies, Recent AccountingPronouncements and Adopted Accounting Standards" and "Note 5. Revenue Recognition."Certain prior year amounts have been reclassified for consistency with the current year presentation in "Note 17. Information on Business Segments."2. Significant Accounting Policies, Recent Accounting Pronouncements and Adopted Accounting StandardsNature of BusinessACCO Brands is a designer, marketer and manufacturer of recognized consumer and end-user demanded brands used in businesses, schools, and homes.55ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)ACCO Brands has three reportable business segments each of which is comprised of different geographic regions. Each of the Company's threereportable business segments designs, markets, sources, manufactures and sells recognized consumer and other end-user demanded brands used in businesses,schools and homes. Product designs are tailored based on end-user preferences in each geographic region.Our product categories include school products; storage and organization; laminating, binding and shredding machines and related consumablesupplies; calendars; stapling and punching; whiteboards; computer accessories; and do-it-yourself tools, among others. Our portfolio of consumer and otherend-user demanded brands includes both globally and regionally recognized brands.ACCO Brands markets and sells its strong multi-product offering broadly and is not dependent on any one channel. Our products are sold through allrelevant channels, namely retailers, including: mass retailers; e-tailers; discount, drug/grocery and variety chains; warehouse clubs; hardware and specialtystores; independent office product dealers; office superstores; wholesalers; and contract stationers. We also sell directly to commercial and consumer end-users through our e-commerce platform and our direct sales organization.Use of EstimatesOur financial statements are prepared in conformity with U.S. GAAP. Preparation of our financial statements requires us to make judgments, estimatesand assumptions that affect the reported amounts of assets, liabilities, revenues and expenses presented for each reporting period in the financial statementsand the related accompanying notes. Actual results could differ significantly from those estimates. We regularly review our assumptions and estimates, whichare based on historical experience and, where appropriate, current business trends. We believe that the following discussion addresses our critical accountingpolicies, which require significant, subjective and complex judgments to be made by our management.Cash and Cash EquivalentsHighly liquid investments with an original maturity of three months or less are included in cash and cash equivalents.Accounts Receivables and Allowances for Sales/Pricing/Cash Discounts and Doubtful AccountsTrade receivables are recorded at the stated amount, less allowances for sales/pricing discounts and doubtful accounts. The allowance forsales/pricing/cash discounts represents estimated uncollectible receivables associated with the products previously sold to customers, and is recorded at thesame time that the sales are recognized. The allowance is based on historical trends.The allowance for doubtful accounts represents estimated uncollectible receivables associated with potential customer defaults on contractualobligations, usually due to a customer's potential insolvency. The allowance includes amounts for certain customers where a risk of default has beenspecifically identified. In addition, the allowance includes a provision for customer defaults on a general formulaic basis when it is determined the risk ofsome default is probable and estimable, but cannot yet be associated with a specific customer. The assessment of the likelihood of customer defaults is basedon various factors, including the length of time the receivables are past due, historical experience and existing economic conditions.The allowances are recorded as reductions to "Net sales" and "Accounts receivable, net."InventoriesInventories are priced at the lower of cost (principally first-in, first-out) or net realizable value. Inventory reserves are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specificidentification of items, such as product discontinuance or engineering/material changes. These estimates could vary significantly, either favorably orunfavorably, from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from our 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 and56ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)renewals, which improve and extend the life of an asset are capitalized; maintenance and repair costs are expensed. Purchased computer software iscapitalized and amortized over the software’s useful life. The following table shows estimated useful lives of property, plant and equipment:Property, plant and equipment Useful LifeBuildings 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 10 yearsWe capitalize interest for major capital projects. Capitalized interest is added to the cost of the underlying assets and is depreciated over the useful livesof those assets. We capitalized interest of $0.6 million, $0.1 million and $0.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.Long-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 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 test indefinite-lived intangibles for impairment at least annually, normally in the second quarter, and whenever market or business events indicatethere may be a potential adverse impact on a particular intangible. The test may be on a qualitative or quantitative basis as allowed by GAAP. We considerthe implications of both external factors (e.g., market growth, pricing, competition, and technology) and internal factors (e.g., product costs, margins, supportexpenses, and capital investment) and their potential impact on cash flows in both the near and long term, as well as their impact on any identifiableintangible asset associated with the business. Based on recent business results, consideration of significant external and internal factors, and the resultingbusiness projections, indefinite-lived intangible assets are reviewed to determine whether they are likely to remain indefinite-lived, or whether a finite life ismore appropriate. In addition, based on events in the period and future expectations, management considers whether the potential for impairment exists.Finite lived intangibles are amortized over 10, 15, 23 or 30 years.We performed our annual assessment, on a qualitative basis, as allowed by GAAP, for the majority of our indefinite-lived trade names in the secondquarter of 2018 and concluded that no impairment existed. For one of our indefinite-lived trade names that was not substantially above its carrying value,Mead®, we performed a quantitative test in the second quarter of 2018. A 1.5% long-term growth rate and an 11.5% discount rate were used. We concludedthat the Mead® trade name was not impaired.As of June 30, 2018, we changed the indefinite-lived Mead® trade name to an amortizable intangible asset. The change was made as a result ofdecisions regarding the Company's future use of the trade name. The Company began amortizing the Mead® trade name on a straight-line basis over a life of30 years on July 1, 2018.57ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)GoodwillGoodwill has been recorded on our balance sheet and represents the excess of the cost of an acquisition 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 EMEA and ACCO Brands International.We test goodwill for impairment at least annually and whenever events or circumstances make it more likely than not that an impairment may haveoccurred. As permitted by GAAP, we may perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit isless than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test as required by GAAP. Weperformed our annual assessment in the second quarter of 2018, on a qualitative basis, and concluded that it was not more likely than not that the fair value ofany reporting unit is less than its carrying amount.If the qualitative assessment determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or if it isdetermined that a qualitative assessment is not appropriate, we would perform a quantitative goodwill impairment test where we calculate the fair value of thereporting units. When applying a fair-value-based test, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unitexceeds the carrying value of the net assets assigned to a reporting unit, goodwill is considered not impaired and no further testing is required. If the carryingvalue of the net assets assigned to a reporting unit exceeds the fair value of a reporting unit, an impairment charge is recognized, however, the loss recognizedis not to exceed the total amount of goodwill allocated to the reporting unit.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 specified by GAAP, which include various actuarial assumptions, including discountrates, assumed rates of return, mortality rate tables, compensation increases, turnover rates and health care cost trends. Actuarial assumptions are reviewed onan annual basis and modifications to these assumptions are made based on current rates and trends when it is deemed appropriate. As required by GAAP, theeffect of our modifications and unrecognized actuarial gains and losses are generally recorded to a separate component of accumulated other comprehensiveincome (loss) ("AOCI") in stockholders’ equity 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 any assessments are received, revised or resolved.On December 22, 2017, the U.S. Tax Act was signed into law. The U.S. Tax Act made broad and complex changes to the U.S. tax code, including, butnot limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax oncertain undistributed earnings of foreign subsidiaries (the "Transition Toll Tax"); (iii) bonus depreciation that will allow for full expensing of qualifiedproperty; (iv) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (v) a new provision designed to tax global intangiblelow-taxed income ("GILTI"); (vi) the repeal of domestic production activity deductions; (vii) limitations on the deductibility of certain executivecompensation expenses; (viii) limitations on the use of foreign tax credits to reduce U.S. income tax liability; and (ix) a new provision that allows a domesticcorporation an immediate deduction for a portion of its foreign derived intangible income ("FDII"). The Company has elected to treat taxes due on taxableincome related to GILTI as a current period expense when incurred.58ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)With the enactment of the U.S. Tax Act, we believe that our offshore cash can be accessed without adverse U.S. tax consequences. After analyzing ourglobal working capital and cash requirements, the Company has reassessed and updated its indefinite reinvestment assertion under ASC 740. As ofDecember 31, 2018, the Company has recorded $1.4 million of deferred taxes on approximately $369 million of unremitted earnings of non-U.S. subsidiariesthat may be remitted to the U.S. The Company has $106 million of additional unremitted earnings of non-U.S. subsidiaries, which are indefinitely reinvestedand for which no deferred taxes have been provided.For further information on the U.S. Tax Act, see "Note 12. Income Taxes" to the consolidated financial statements contained in Item 8. of this report.Revenue RecognitionRevenue is recognized when control of the promised goods or services is transferred to our customers in an amount reflective of the consideration weexpect to receive in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue.Incidental items incurred that are immaterial in the context of the contract are expensed.At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. Toidentify the performance obligations, the Company considers all products and services promised regardless of whether they are explicitly stated or impliedwithin the contract or by standard business practices.Products: For our products, we transfer control and recognize a sale primarily when we either ship the product from our manufacturing facility ordistribution center, or upon delivery to a customer specified location depending upon the terms in the customer agreement. In addition, we recognize revenuefor private label products as the product is manufactured (or over-time) when a contract has an enforceable right to payment. For consignment arrangements,revenue is not recognized until the products are sold to the end customer.Customer Program Costs: Customer programs and incentives ("Customer Program Costs") are a common practice in our industry. We incur CustomerProgram Costs to obtain favorable product placement, to promote sell-through of products and to maintain competitive pricing. The amount of considerationwe receive and revenue we recognize is impacted by Customer Program Costs, including sales rebates (which are generally tied to achievement of certainsales volume levels); in-store promotional allowances; shared media and customer catalog allowances; other cooperative advertising arrangements; freightallowance programs offered to our customers; allowances for discounts and reserves for returns. We recognize Customer Program Costs, primarily as adeduction to gross sales, at the time that the associated revenue is recognized. Customer Program Costs are based on management's best estimates using themost likely amount method and is an amount that is unlikely to be reversed. In the absence of a signed contract, estimates are based on historical or projectedexperience for each program type or customer. We adjust our estimate of revenue when the most likely amount of consideration we expect to receive changes.Service or Extended Maintenance Agreements ("EMAs"): Depending on the terms of the EMA, we may defer recognition of the consideration receivedfor any unsatisfied obligations. We use an observable price to determine the stand-alone selling price for separate performance obligations or an estimatedcost plus margin approach, for our separately priced service/maintenance agreements that extend mechanical and maintenance coverage beyond our basewarranty coverage to our Print Finishing Solutions customers. These agreements range in duration from three to sixty months, however, most agreements areone year or less. We generally receive payment at inception of the EMAs and recognize revenue over the term of the agreement on a straight line basis.Shipping and Handling: Freight and distribution activities performed before the customer obtains control of the goods are not considered promisedservices under customer contracts and therefore are not distinct performance obligations. The Company has chosen to account for shipping and handlingactivities as a fulfillment activity, and therefore accrues the expense of freight and distribution in "Cost of products sold" when products are shipped.We reflect all amounts billed to customers for shipping and handling in net sales and the costs we incurred for shipping and handling (including coststo 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.59ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Reserve for Sales Returns: The reserve for sales returns represents estimated uncollectible receivables associated with the potential return of productspreviously sold to customers, and is recorded at the same time that the sales are recognized. The reserve includes a general provision for product returns basedon historical trends. In addition, the reserve includes amounts for currently authorized customer returns that are considered to be abnormal in comparison tothe historical trends. We record the returns reserve, on a gross basis, as a reduction to "Net sales" and "Cost of products sold" with increases to "Other currentliabilities" and "Inventories."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 freight,shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes.Selling, General and Administrative ExpensesSelling, general and administrative expenses ("SG&A") include advertising, marketing, and selling (including commissions) expenses, 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, and corporate expenses).Advertising ExpensesAdvertising expenses were $105.5 million, $114.8 million and $110.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.These costs primarily include, but are not limited to, cooperative advertising and promotional allowances as described in "Customer Program Costs" above,and are principally expensed as incurred.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 same period in which the related revenue is recognized.Research and Development ExpensesResearch and development expenses were $23.8 million, $23.5 million and $21.0 million for the years ended December 31, 2018, 2017 and 2016,respectively, are classified as SG&A expenses and are charged to expense as incurred.Stock-Based CompensationOur primary types of share-based compensation consist of stock options, restricted stock unit awards and performance stock unit awards. Stock-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 due to retirement eligibility), we estimate andrecognize expense based on the period from the grant date to the date on which the employee is retirement eligible. The Company accounts for forfeitures asthey occur.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 of AOCIin stockholders’ equity. Some transactions are made in currencies different from an entity’s functional currency, gains and losses on these foreign currencytransactions are included in income as they occur.60ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Derivative Financial InstrumentsWe recognize all derivatives as either assets or liabilities on the balance sheet and record those instruments at fair value. If the derivative is designatedas a fair value hedge and is effective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized inearnings in the same period. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative arerecorded in AOCI and are recognized in the Consolidated Statements of Income when the hedged item affects earnings. Ineffective portions of changes in thefair value of cash flow hedges are recognized in earnings.Certain forecasted transactions, assets and liabilities are exposed to foreign currency risk. We continually monitor our foreign currency exposures inorder to maximize the overall effectiveness of our foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australiandollar, Canadian dollar, Swedish krona, British pound and Japanese yen.Recent Accounting PronouncementsIn August 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-UseSoftware (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ThisASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements forcapitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use softwarelicense). The Company is currently in the process of evaluating the impact of adoption of ASU 2018-15 on the Company’s consolidated financial statements.ASU 2018-015 is effective for fiscal years ending after December 15, 2019. Early adoption of the standard is permitted, including adoption in any interimperiod for which financial statements have not been issued.In August 2017, the FASB issued ASU No. 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for HedgingActivities. This ASU improves certain aspects of the hedge accounting model, including making more risk management strategies eligible for hedgeaccounting and simplifying the assessment of hedge effectiveness. The Company is currently in the process of assessing the impact of adoption of ASU 2017-12 on the Company's consolidated financial statements. The Company will adopt ASU 2017-12 at the beginning of its 2019 fiscal year.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU amends the existing accounting standard for leases. Theamendments are intended to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on thebalance sheet and disclosure of key information about leasing arrangements. The new standard is effective for annual periods beginning after December 15,2018. The Company will conclude its evaluation on the new guidance in the first quarter of 2019. The Company expects the impact to the Company’sConsolidated Balance Sheet to be material, but at this time, the Company does not expect the adoption of ASU 2016-02 to have a material impact on itsConsolidated Statements of Income. A net cumulative effect adjustment will be recorded upon adoption, however it is not expected to be material. TheCompany is in the process of analyzing existing leases, practical expedients, and deploying its implementation strategy. The Company is also in the processof updating its accounting policies, business process, systems, controls, and disclosures. The Company will adopt ASU 2016-02 at the beginning of its 2019fiscal year.In July 2018, the FASB issued ASU 2018-11 Leases (Topic 842), Targeted Improvements. With this ASU, the FASB decided to provide anothertransition method in addition to the existing transition method by allowing entities to initially apply ASU 2016-02 at the adoption date (January 1, 2019 forthe Company) and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. An entity that elects thisadditional (and optional) transition method must provide the required Topic 840 disclosures for all periods that continue to be in accordance with Topic 840.The amendments do not change the existing disclosure requirements in Topic 840 (for example, they do not create interim disclosure requirements thatentities previously were not required to provide). The Company will apply this new transition method upon adoption of ASU 2016-02.There are no other recently issued accounting standards that are expected to have a material effect on the Company’s financial condition, results ofoperations or cash flow.Recently Adopted Accounting StandardsIn August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20),Disclosure Framework - Changes to the Disclosures Requirements for Defined Benefit Plans. This ASU removes61ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified asrelevant. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. Early adoption is permitted for all entities and is to be applied on aretrospective basis. The Company adopted ASU 2018-14 and its related disclosures in the fourth quarter of its 2018 fiscal year. The adoption of ASU 2018-14did not have a material impact on its consolidated financial statements.In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). Prior to ASU 2018-02, GAAPrequired deferred tax assets and deferred tax liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income fromcontinuing operations in the reporting period including the enactment date. The U.S. Tax Act reduces the historical U.S. corporate tax rate and the effect ofthat change is required to be included in income from continuing operations, even if the original tax effects were recorded in AOCI. This could cause sometax effects to become stranded in AOCI as they are not updated to reflect the new tax rate. This new standard allows a company to elect to reclass the strandedtax effects resulting from the U.S. Tax Act from AOCI to retained earnings. ASU 2018-02 is effective for fiscal years and interim periods within those fiscalyears beginning after December 15, 2018. The Company adopted ASU 2018-02 in the fourth quarter of its 2018 fiscal year and has elected not to reclass thestranded tax effects resulting from the U.S. Tax Act from AOCI to retained earnings.On January 1, 2018, we adopted the accounting standard ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving thePresentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires presentation of all components of netperiodic pension and postretirement benefit costs, other than service costs, in an income statement line item included in "Non-operating expense (income)."The service cost component will continue to be presented in SG&A. The Company used the practical expedient which permits an employer to use theamounts disclosed in its pension disclosures as the basis for applying the retrospective presentation requirements. On this basis, the Company restated itsoperating income, which was reduced by $8.5 million and $8.2 million for the years ended December 31, 2017 and 2016, respectively.On January 1, 2018, we adopted the accounting standard ASU 2014-09, Revenue from Contracts with Customers and all the related amendments (Topic606) and applied it to contracts which were not completed as of January 1, 2018 using the modified retrospective method. A completed contract is one whereall (or substantially all) of the revenue was recognized in accordance with the revenue guidance that was in effect before the date of initial application of ASU2014-09. We recognized the cumulative effect of $1.6 million, net of tax, upon adopting ASU 2014-09 as an addition to opening retained earnings as ofJanuary 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.The majority of our revenue is recognized at a point in time when control is transferred to our customer, which is usually when products are shipped ordelivered based upon the specific terms contained within the agreement. Our general payment terms are usually within 30-90 days. We do not have anysignificant financing components.The cumulative effect of the changes on our January 1, 2018 opening Consolidated Balance Sheet due to the adoption of ASU 2014-09 was as follows:(in millions)Balance atDecember 31,2017 Adjustments dueto ASU 2014-09 Balance atJanuary 1,2018Assets: Inventories$254.2 $(3.5) $250.7Other current assets29.2 6.9 36.1 Liabilities and stockholders' equity: Accrued customer program liabilities141.1 1.1 142.2Other current liabilities113.8 0.1 113.9Deferred income taxes177.1 0.6 177.7Accumulated deficit(739.2) 1.6 (737.6)62ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The impact of the adoption of ASU 2014-09 on our Consolidated Statements of Income and Consolidated Balance Sheet for the year endedDecember 31, 2018 was as follows:(in millions)As Reported Balanceswithoutadoption ofASU 2014-09 Effect of ChangeHigher/(Lower)Consolidated Statements of Income: Net sales$1,941.2 $1,943.4 $(2.2)Cost of products sold1,313.4 1,314.7 (1.3)Income tax expense51.2 51.4 (0.2)Net income106.7 107.4 (0.7) Consolidated Balance Sheet: Assets: Accounts receivable, net428.4 425.7 2.7Inventories340.6 342.8 (2.2)Other current assets44.2 39.1 5.1 Liabilities and stockholders' equity: Accrued customer program liabilities114.5 115.6 (1.1)Other current liabilities127.8 122.4 5.4Deferred income taxes176.2 175.8 0.4Accumulated deficit(656.8) (657.7) 0.9See "Note 5. Revenue Recognition" for the required disclosures related to ASU 2014-09.3. AcquisitionsAcquisition of GOBA (the "GOBA Acquisition")On July 2, 2018, the Company completed the GOBA Acquisition. GOBA is a leading provider of school and craft products in Mexico under theBarrilito® brand. The GOBA Acquisition is expected to increase the breadth and depth of our distribution, especially with wholesalers and retailersthroughout Mexico and complement our existing office products portfolio with a strong offering of school and craft products. The results of GOBA areincluded in the ACCO Brands International segment from July 2, 2018.The purchase price paid at closing was Mex$796.8 million (US$39.9 million based on July 2, 2018 exchange rates), subject to working capital andother adjustments. The preliminary purchase price, net of cash acquired of $1.9 million, was $38.0 million. A portion of the purchase price (Mex$115.0million ($5.8 million based on July 2, 2018 exchange rates)) is being held in an escrow account for a period of up to 5 years after closing in the event of anyclaims against the sellers under the stock purchase agreement. The Company may also make claims against the sellers directly, subject to limitations in thestock purchase agreement, if the escrow is depleted. The GOBA Acquisition and related expenses were funded by increased borrowing under our revolvingfacility.63ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)For accounting purposes, the Company was the acquiring enterprise. The GOBA Acquisition is being accounted for as a purchase business combinationand GOBA's results are included in the Company’s consolidated financial statements from July 2, 2018. The net sales for GOBA for the year endedDecember 31, 2018 were $19.7 million for the period from July 2, 2018 through December 31, 2018.The following table presents the preliminary allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at thedate of GOBA Acquisition:(in millions)At July 2, 2018Calculation of Goodwill: Purchase price, net of working capital adjustment$39.9 Plus fair value of liabilities assumed: Accounts payable and accrued liabilities9.8Deferred tax liabilities3.1Other non-current liabilities5.6 Fair value of liabilities assumed$18.5 Less fair value of assets acquired: Cash acquired1.9Accounts receivable30.0Inventory7.1Property and equipment0.6Identifiable intangibles10.3Deferred tax assets1.9Other assets4.2 Fair value of assets acquired$56.0 Goodwill$2.4We are continuing our review of our fair value estimate of assets acquired and liabilities assumed during the measurement period, which will concludeas soon as we receive the information we are seeking about facts and circumstances that existed as of the acquisition date or learn that more information is notavailable. This measurement period will not exceed one year from the acquisition date. The excess of the purchase price over the fair value of net assetsacquired is allocated to goodwill.Our fair value estimate of assets acquired and liabilities assumed is pending the completion of several elements, including the final determination ofpurchase price related to the settlement of differences in working capital, and the valuation of the fair value of the assets acquired and liabilities assumed andfinal review by our management. The primary areas that are not yet finalized relate to property, plant and equipment, contingent liabilities and income andother taxes. Accordingly, there could be material adjustments to our consolidated financial statements.The final determination of the purchase price, fair values and resulting goodwill may differ significantly from what is reflected in these consolidatedfinancial statements.64ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)For the year ended December 31, 2018, transaction costs related to the GOBA Acquisition were $1.1 million. These costs were reported as interest andSG&A expenses in the Company's Consolidated Statements of Income.Pro forma financial information is not presented due to immateriality.Acquisition of Esselte Group Holdings AB (the "Esselte Acquisition")On January 31, 2017, ACCO Europe Limited ("ACCO Europe"), an indirect wholly-owned subsidiary of the Company, completed the EsselteAcquisition. The Esselte Acquisition was made pursuant to the share purchase agreement, dated October 21, 2016, as amended (the "Purchase Agreement"),among ACCO Europe, the Company and an entity controlled by J. W. Childs (the "Seller").As a result of the acquisition of Esselte, ACCO Brands become a leading European manufacturer and marketer of branded consumer and office products.The Esselte acquisition added the Leitz®, Rapid® and Esselte® brands in the storage and organization, stapling, punching, business machines and do-it-yourself tools product categories to the Company's portfolio. The combination improved ACCO Brands’ scale and enhanced its position as an industry leaderin Europe.The purchase price paid at closing was €302.9 million (US$326.8 million based on January 31, 2017 exchange rates) and was subject to a workingcapital adjustment that reduced it by $0.3 million. The purchase price, net of cash acquired of $34.2 million, was $292.3 million. A warranty and indemnityinsurance policy held by the Company and ACCO Europe insures certain of Seller’s contractual obligations to ACCO Europe under the Purchase Agreementfor up to €40.0 million (US$43.2 million based on January 31, 2017 exchange rates) for a period of up to seven years, subject to certain deductibles andlimitations set forth in the policy.The Esselte Acquisition and related expenses were funded through a term loan of €300.0 million (US$320.8 million based on January 27, 2017exchange rates) and cash on hand. See "Note 4. Long-term Debt and Short-term Borrowings" for details on these additional borrowings.For accounting purposes, the Company was the acquiring enterprise. The Esselte Acquisition was accounted for as a purchase business combination andEsselte's results are included in the Company’s consolidated financial statements as of February 1, 2017. The January 2018 net sales for Esselte were $44.2million.65ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table presents the allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date ofEsselte Acquisition:(in millions)At January 31, 2017Calculation of Goodwill: Purchase price, net of working capital adjustment$326.5 Plus fair value of liabilities assumed: Accounts payable and accrued liabilities121.9Deferred tax liabilities83.6Pension obligations174.1Other non-current liabilities5.8 Fair value of liabilities assumed$385.4 Less fair value of assets acquired: Cash acquired34.2Accounts receivable60.0Inventory41.9Property, plant and equipment75.6Identifiable intangibles277.0Deferred tax assets106.3Other assets10.4 Fair value of assets acquired$605.4 Goodwill$106.5In the fourth quarter of 2017, we finalized our fair value estimate of assets acquired and liabilities assumed as of the acquisition date.The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill. The goodwill of $106.5 million is primarilyattributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from theexistence of an assembled workforce.For the years ended December 31, 2017 and 2016, transaction costs related to the Esselte Acquisition were $5.0 million and $9.2 million, respectively.These costs were reported as SG&A expenses in the Company's Consolidated Statements of Income.Acquisition of Australia Stationery Industries, Inc. (the "PA Acquisition")On May 2, 2016, the Company completed the PA Acquisition, purchasing the remaining 50% interest in the former Pelikan Artline joint venture, whichit did not already own. Prior to the PA Acquisition, the Company's investment in the Pelikan Artline joint venture was accounted for under the equitymethod. Pelikan Artline's product categories include writing instruments, notebooks, binding and lamination, visual communication, cleaning and janitorialsupplies, as well as general stationery. Its industry-leading brands include Artline®, Quartet®, GBC®, Spirax® and Texta®, among others.In the PA Acquisition, ACCO Brands Australia Pty Limited and Bigadale Pty Limited (collectively, ''ACCO Australia"), two wholly-owned indirectsubsidiaries of the Company, entered into a Share Sale Agreement (the "Agreement") with Andrew Kaldor, Cherington Investments Pty Ltd, FreiburgNominees Proprietary Limited, Enora Pty Ltd and Bruce Haynes and certain Guarantors named therein (collectively, the "Seller Parties") to purchase directlyor indirectly 100% of the capital stock of Australia Stationery Industries, Inc., which indirectly owned the 50% of the Pelikan Artline joint venture and theissued capital stock of Pelikan Artline Pty Limited (collectively "Pelikan Artline") that was not already owned by ACCO Brands Australia Pty Limited.66ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The purchase price was $103.7 million, net of working capital adjustments, and was $88.8 million, net of cash acquired.Following completion of the PA Acquisition, ACCO Australia owns, directly and indirectly, 100% of Pelikan Artline. In addition to representations,warranties and covenants, the Agreement contains indemnification obligations and certain non-competition and non-solicitation covenants made by theSeller Parties in favor of ACCO Australia. A portion of the purchase price was allocated to fund the redemption of a 19.83% minority interest from ashareholder of a subsidiary of Pelikan Artline (the "Minority Interest Redemption"), which occurred shortly following the closing of the PA Acquisition.The Company financed the PA Acquisition through increased borrowings under its then existing credit facility. See "Note 4. Long-term Debt and Short-term Borrowings" for details on these additional borrowings.For accounting purposes, the Company is the acquiring enterprise. The PA Acquisition was accounted for as a purchase business combination andPelikan Artline's results are included in the Company’s consolidated financial statements from the date of the PA Acquisition, May 2, 2016.The Company’s previously held equity interest in the Pelikan Artline joint venture was remeasured to fair value at the date the controlling interest wasacquired. The fair value of the previously held equity interest in the Pelikan Artline joint venture was determined by applying the income approach andusing significant inputs that market participants would consider, including: revenue growth rates, operating margins, a discount rate and an adjustment forlack of control. The $28.9 million excess of the fair value of the previously held equity interest when compared to the carrying value was recognized as again in "Other expense (income), net” in the Consolidated Statements of Income.The calculation of consideration given in the PA Acquisition is described in the following table.(in millions)At May 2, 2016Purchase price, net of working capital adjustment$103.7Fair value of previously held equity interest69.3Consideration for Pelikan Artline$173.067ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table presents the allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of PAAcquisition:.(in millions)At May 2, 2016Calculation of Goodwill: Purchase price, net of working capital adjustment$103.7 Fair value of previously held equity interest69.3 Plus fair value of liabilities assumed: Accounts payable and accrued liabilities21.7Deferred tax liabilities0.2Debt24.7Other non-current liabilities1.4 Fair value of liabilities assumed$48.0 Less fair value of assets acquired: Cash acquired14.9Accounts receivable27.0Inventory24.1Property and equipment2.2Identifiable intangibles58.0Deferred tax assets5.7Other assets8.6 Fair value of assets acquired$140.5 Goodwill$80.5In the fourth quarter of 2016 we finalized our fair value estimate of assets acquired and liabilities assumed as of the acquisition date.The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill. The goodwill of $80.5 million is primarilyattributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from theexistence of an assembled workforce.For the year ended December 31, 2016, transaction costs related to the PA Acquisition were $1.3 million. These costs were reported as SG&A expensesin the Company's Consolidated Statements of Income.68ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)4. Long-term Debt and Short-term BorrowingsNotes payable and long-term debt, listed in order of the priority of security interests in assets of the Company, consisted of the following as ofDecember 31, 2018 and 2017:(in millions)2018 2017Euro Senior Secured Term Loan A, due January 2022 (floating interest rate of 1.50% at December 31,2018 and 1.50% at December 31, 2017)$289.0 $345.0Australian Dollar Senior Secured Term Loan A, due January 2022 (floating interest rate of 3.56% atDecember 31, 2018 and 3.29% at December 31, 2017)43.0 60.0U.S. Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 4.36% atDecember 31, 2018 and 3.53% at December 31, 2017)106.8 48.9Australian Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of3.54% at December 31, 2018 and 3.28% at December 31, 2017)73.9 85.0Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)375.0 400.0Other borrowings0.3 0.6Total debt888.0 939.5Less: Current portion39.5 43.2 Debt issuance costs, unamortized5.5 7.1Long-term debt, net$843.0 $889.2As of December 31, 2018, there were $180.7 million in borrowings outstanding under the 2017 Revolving Facility. The remaining amount available forborrowings was $309.0 million (allowing for $10.3 million of letters of credit outstanding on that date).Third Amended and Restated Credit AgreementThe Company is party to a Third Amended and Restated Credit Agreement, dated as of January 27, 2017, among the Company, certain subsidiaries ofthe Company, Bank of America, N.A., as administrative agent, and the other agents and various lenders party thereto, which was subsequently amendedeffective July 26, 2018 (the "Credit Agreement"). The Credit Agreement provides for a five-year senior secured credit facility, which consists of a €300.0million (US$320.8 million based on January 27, 2017 exchange rates) term loan facility (the "Euro Term Loan A"), a A$80.0 million (US$60.4 million basedon January 27, 2017 exchange rates) term loan facility (the "AUD Term Loan A" and, together with the Euro Term Loan A, the "Term A Loan Facility"), and aUS$500.0 million multi-currency revolving credit facility (the "Revolving Facility").Maturity and AmortizationBorrowings under the Revolving Facility and the Term A Loan Facility mature on January 27, 2022. Amounts under the Revolving Facility are non-amortizing. Beginning June 30, 2017, the outstanding principal amounts under the Term A Loan Facility are payable in quarterly installments in an amountrepresenting, on an annual basis, 5.0% of the initial aggregate principal amount of such loan facility and increasing to 12.5% on an annual basis by June 30,2020.69ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Interest RatesAmounts outstanding under the Credit Agreement bear interest at a rate per annum equal to the Euro Rate with a 0% floor, the Australian BBSR Rate,the Canadian BA Rate or the Base Rate, as applicable and as each such rate is defined in the Credit Agreement, plus an "applicable rate." The applicable rateapplied to outstanding Euro, Australian and Canadian dollar denominated loans and Base Rate loans is based on the Company’s Consolidated LeverageRatio (as defined in the Credit Agreement) as follows:Consolidated Leverage Ratio Applicable Rate onEuro/AUD/CDN DollarLoans Applicable Rate on BaseRate Loans> 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 > 3.00 to 1.00 2.00% 1.00%≤ 3.00 to 1.00 and > 2.00 to 1.00 1.50% 0.50%≤ 2.00 to 1.00 1.25% 0.25%As of December 31, 2018, the applicable rate on Euro, Australian and Canadian dollar loans was 1.50% and the applicable rate on Base Rate loans was0.50%. Undrawn amounts under the Revolving Facility are subject to a commitment fee rate of 0.25% to 0.40% per annum, depending on the Company’sConsolidated Leverage Ratio. As of December 31, 2018, the commitment fee rate was 0.30%.PrepaymentsSubject to certain conditions and specific exceptions, the Credit Agreement requires the Company to prepay outstanding amounts under the CreditAgreement under various circumstances, including (a) if sales or dispositions of certain property or assets in any fiscal year result in the receipt of net cashproceeds of $12.0 million, then an amount equal to 100% of the net cash proceeds received in excess of such $12.0 million, and (b) with respect to the AUDTerm Loan A, in an amount equal to 100% of the net cash proceeds received from the disposition of any real property located in Australia. The Company alsowould be required to make prepayments in the event it receives proceeds related to certain property insurance or condemnation awards, from additional debtother than debt permitted under the Credit Agreement and from excess cash flow as determined under the Credit Agreement. The Credit Agreement alsocontains other customary prepayment obligations and provides for voluntary commitment reductions and prepayment of loans, subject to certain conditionsand exceptions.Dividends and Share RepurchasesUnder the Credit Agreement, the Company may pay dividends and/or repurchase shares in an aggregate amount not to exceed the sum of: (i) the greaterof $30.0 million and 1% of the Company’s Consolidated Total Assets (as defined in the Credit Agreement); plus (ii) an additional amount not to exceed$75.0 million in any fiscal year (provided the Company’s Consolidated Leverage Ratio after giving pro forma effect to the restricted payment would begreater than 2.50:1.00 and less than or equal to 3.75:1.00); plus (iii) an additional amount so long as the Consolidated Leverage Ratio after giving pro formaeffect to the restricted payment would be less than or equal to 2.50:1.00; plus (iv) any Net Equity Proceeds (as defined in the Credit Agreement).Financial CovenantsThe Company’s Consolidated Leverage Ratio as of the end of any fiscal quarter may not exceed 3.75:1.00; provided that following the consummationof a Material Acquisition (as defined in the Credit Agreement), and as of the end of the fiscal quarter in which such Material Acquisition occurred and as ofthe end of the three fiscal quarters thereafter, the maximum Consolidated Leverage Ratio level above will increase by 0.50:1.00, provided that no more thanone such increase can be in effect at any time. The Esselte Acquisition qualified as a Material Acquisition under the Credit Agreement.The Credit Agreement requires the Company to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) as of theend of any fiscal quarter at or above 1.25 to 1.00.As of December 31, 2018, our Consolidated Leverage Ratio was approximately 2.8 to 1 and our Fixed Charge Coverage Ratio was approximately 2.0 to1.70ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Other Covenants and RestrictionsThe Credit Agreement contains customary affirmative and negative covenants as well as events of default, including payment defaults, breach ofrepresentations and warranties, covenant defaults, cross-defaults, certain bankruptcy or insolvency events, certain ERISA-related events, changes in control orownership and invalidity of any loan document. The Credit Agreement also establishes limitations on the aggregate amount of Permitted Acquisitions andInvestments (each as defined in the Credit Agreement) that the Company and its subsidiaries may make during the term of the Credit Agreement.Incremental FacilitiesThe Credit Agreement permits the Company to seek increases in the size of the Revolving Facility and the Term A Facility prior to maturity by up to$500.0 million in the aggregate, subject to lender commitment and the conditions set forth in the Credit Agreement.Senior Unsecured Notes due December 2024On December 22, 2016, the Company completed a private offering of $400.0 million in aggregate principal amount of 5.25% senior notes dueDecember 2024 (the "New Notes"), which we issued under an indenture, dated December 22, 2016 (the "New Indenture"), among the Company, as issuer, theguarantors named therein (the "Guarantors") and Wells Fargo Bank, National Association, as trustee. Pursuant to the New Indenture, the Company paysinterest on the New Notes semiannually on June 15 and December 15 of each year, beginning on June 15, 2017.During the second quarter of 2018, the Company repurchased $25.0 million of the New Notes at par.The New Indenture contains covenants that could limit the ability of the Company and its restricted subsidiaries to, among other things: (i) incuradditional indebtedness or issue disqualified stock or, in the case of the Company’s restricted subsidiaries, preferred stock; (ii) create liens; (iii) paydividends, make certain investments or make other restricted payments; (iv) sell certain assets or merge with or into other companies; (v) enter intotransactions with affiliates; and (vi) allow any restricted subsidiary to pay dividends, loans, or assets to the Company or other restricted subsidiaries. Thesecovenants are subject to a number of important limitations and exceptions. The New Indenture also provides for events of default, which, if any of themoccurs, would permit or require the principal, premium, if any, and accrued but unpaid interest on all the then outstanding New Notes to be immediately dueand payable.In the fourth quarter of 2016, the Company borrowed $73.9 million under its revolving credit facility and applied the funds, together with the netproceeds from the issuance of the New Notes and cash on hand, toward the payment of the redemption price for all of the 6.75% Senior Notes due 2020 (the"Old Notes"). The aggregate redemption price of $531.5 million consisted of principal due and payable on the Old Notes, a "make-whole" call premium of$25.0 million (included in "Other expense (income), net"), and accrued and unpaid interest of $6.5 million (included in "Interest expense").Also included in "Other expense (income), net" in 2016 was a $4.9 million charge for the write-off of debt issuance costs associated with the Old Notes.Additionally, we incurred and capitalized approximately $6.1 million in bank, legal and other fees associated with the issuance of the New Notes in 2016.Second Amended and Restated Credit AgreementDuring 2016, the Company’s credit facilities were governed by a Second Amended and Restated Credit Agreement, dated April 28, 2015 (assubsequently amended, the "2015 Credit Agreement"), among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrativeagent, and the other agents and lenders party thereto.The 2015 Credit Agreement provided for a $600.0 million five-year senior secured credit facility, which consisted of a $300.0 million revolving creditfacility (the "2015 Revolving Facility") and a $300.0 million term loan (the "2015 Term Loan A"). Borrowings under the 2015 Credit Agreement were dueApril 2020.71ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)In connection with the PA Acquisition, effective May 1, 2016, the Company entered into a Second Amendment and Additional Borrower Consent,among the Company, certain guarantor subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto,which amended the 2015 Credit Agreement. Among other things, the Second Amendment amended the 2015 Credit Agreement to include ACCO BrandsAustralia Holding Pty. Ltd. ("ACCO Australia Holdings") as a foreign borrower and, together with a related incremental joinder agreement, facilitatedborrowings under the 2015 Credit Agreement by ACCO Australia Holdings.Financing of PA AcquisitionThe PA Acquisition, which closed in the second quarter of 2016, was financed through a borrowing under the 2015 Credit Agreement of A$100.0million (US$76.6 million based on May 2, 2016 exchange rates) by ACCO Australia Holdings in the form of an incremental Australian Dollar Senior SecuredTerm A loan, along with additional borrowings of A$152.0 million (US$116.4 million based on May 2, 2016 exchange rates) under the 2015 RevolvingFacility. The Company used some of the proceeds from the borrowings to reduce the then existing U.S. Dollar Senior Secured Term Loan A due April 2020 by$78.0 million and to pay off the debt assumed in the PA Acquisition of A$32.1 million (US$24.5 million based on May 2, 2016 exchange rates).Compliance with Loan CovenantsAs of and for the periods ended December 31, 2018 and December 31, 2017, the Company was in compliance with all applicable loan covenants.Guarantees and SecurityGenerally, obligations under the Credit Agreement are guaranteed by certain of the Company's existing and future subsidiaries, and are secured bysubstantially all of the Company's and certain guarantor subsidiaries' assets, subject to certain exclusions and limitations.The New 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 New Notes and the related guarantees rank equally in right of payment with all of theexisting 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 New 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.5. Revenue RecognitionOn January 1, 2018, the Company adopted accounting standard ASU 2014-09, Revenue from Contracts with Customers and all related amendments(Topic 606), applying the modified retrospective transition method to all customer contracts that were not completed as of January 1, 2018. Results forreporting periods beginning after December 31, 2017 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to bereported under the accounting standards in effect for the prior period. The Company recorded a net increase to beginning retained earnings of $1.6 million asof January 1, 2018 due to the cumulative impact of adopting ASU 2014-09. The impact of adopting ASU 2014-09 to our financial statements as of, and forthe year ended December 31, 2018 was immaterial.Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount reflective of the consideration weexpect to be received in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue.Incidental items incurred that are immaterial in the context of the contract are expensed.At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. Toidentify the performance obligations, the Company considers all products and services promised regardless of whether they are explicitly stated or impliedwithin the contract or by standard business practices.72ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Service or Extended Maintenance Agreements ("EMAs") As of January 1, 2018, there was $5.2 million of unearned revenue associated withoutstanding EMAs, primarily reported in "Other current liabilities." During the year ended December 31, 2018, $4.5 million of the unearned revenue as ofJanuary 1, 2018 from EMAs was recognized. As of December 31, 2018, the amount of unearned revenue from EMAs was $5.0 million. We expect to recognizeapproximately $4.3 million of the unearned amount in the next 12 months and $0.7 million in future periods beyond the next 12 months.The following tables presents our net sales disaggregated by regional geography(1), based upon our reporting business segments for the years endedDecember 31, 2018 and 2017 and our net sales disaggregated by the timing of revenue recognition for the year ended December 31, 2018:(in millions)2018 2017United States$819.7 $880.4Canada121.0 118.6ACCO Brands North America940.7 999.0 ACCO Brands EMEA(2)605.2 542.8 Australia/N.Z.169.2 187.9Latin America178.0 173.3Asia-Pacific48.1 45.8ACCO Brands International395.3 407.0Net sales$1,941.2 $1,948.8(1) Net sales are attributed to geographic areas based on the location of the selling entities.(2) ACCO Brands EMEA is comprised largely of Europe, but also includes export sales to the Middle East and Africa.(in millions)2018Product and services transferred at a point in time$1,862.2Product and services transferred over time79.0Net sales$1,941.2For more information, see "Note 2. Significant Accounting Policies, Recent Accounting Pronouncements and Adopted Accounting Standards - RevenueRecognition."6. Pension and Other Retiree BenefitsWe have a number of pension plans, principally in Germany, the U.K. and the U.S. The plans provide for payment of retirement benefits, primarilycommencing between the ages of 60 and 65, and also for payment of certain disability and severance benefits. After meeting certain qualifications, anemployee acquires a vested right to future benefits. The benefits payable under the plans are generally determined based on an employee’s length of serviceand earnings. The majority of these plans have been frozen and are no longer accruing additional service benefits. Cash contributions to the plans are made asnecessary to ensure legal funding requirements are satisfied.In the Esselte Acquisition, we acquired numerous pension plans, primarily in Germany and the U.K. The Esselte U.K. plan is frozen.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 and, as of December 31, 2014, we have permanently frozen a portion of our U.S. pension plan for certain bargainedhourly employees.73ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)On September 30, 2012, our legacy U.K. pension plan was frozen. As of December 31, 2016, all of our Canadian pension plans were frozen.We also provide post-retirement health care and life insurance benefits to certain employees and retirees in the U.S., U.K. and Canada. All but one ofthese benefit plans have been frozen to new participants. Many employees and retirees outside of the U.S. are covered by government health care programs.74ACCO 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 Post-retirement U.S. International (in millions)2018 2017 2018 2017 2018 2017Change in projected benefit obligation(PBO) Projected benefit obligation at beginning ofyear$206.5 $200.1 $695.0 $345.1 $6.8 $6.7Service cost1.6 1.4 1.9 1.9 0.1 —Interest cost6.7 7.1 12.9 13.4 0.2 0.2Actuarial (gain) loss(15.6) 14.7 (26.6) 13.2 (0.3) —Participants’ contributions— — 0.1 0.1 0.1 0.1Benefits paid(10.9) (16.8) (26.9) (26.5) (0.4) (0.5)Curtailment gain— — (0.9) — — —Settlement gain— — (2.0) — — —Plan amendments— — 6.8 — — —Foreign exchange rate changes— — (35.3) 59.8 (0.3) 0.3Esselte Acquisition— — — 288.0 — —Other items— — 2.3 — — —Projected benefit obligation at end of year188.3 206.5 627.3 695.0 6.2 6.8Change in plan assets Fair value of plan assets at beginning ofyear162.1 150.5 463.8 302.7 — —Actual return on plan assets(15.8) 21.1 (10.0) 21.3 — —Employer contributions5.7 7.3 14.9 14.0 0.3 0.4Participants’ contributions— — 0.1 0.1 0.1 0.1Benefits paid(10.9) (16.8) (26.9) (26.5) (0.4) (0.5)Settlement gain— — (2.0) — — —Foreign exchange rate changes— — (24.6) 38.2 — —Esselte Acquisition— — — 114.0 — —Other items— — 2.3 — — —Fair value of plan assets at end of year141.1 162.1 417.6 463.8 — —Funded status (Fair value of plan assets lessPBO)$(47.2) $(44.4) $(209.7) $(231.2) $(6.2) $(6.8)Amounts recognized in the ConsolidatedBalance Sheets consist of: Other non-current assets$— $— $1.4 $0.6 $— $—Other current liabilities— — 6.7 6.9 0.6 0.6Pension and post-retirement benefitobligations(1)47.2 44.4 204.4 224.9 5.6 6.2Components of accumulated othercomprehensive income, net of tax: Unrecognized actuarial loss (gain)64.7 56.9 97.1 100.5 (3.5) (3.6)Unrecognized prior service cost (credit)1.5 1.7 5.0 (0.2) (0.2) (0.2)(1)Pension and post-retirement benefit obligations of $257.2 million as of December 31, 2018, decreased from $275.5 million as of December 31, 2017,primarily due to cash contributions and favorable foreign currency translation.75ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The accumulated benefit obligation for all pension plans was $806.1 million and $887.9 million at December 31, 2018 and 2017, 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)2018 2017 2018 2017Accumulated benefit obligation$188.3 $205.4 $564.6 $662.8Fair value of plan assets141.1 162.1 362.9 443.5The following table sets out information for pension plans with a projected benefit obligation in excess of plan assets: U.S. International(in millions)2018 2017 2018 2017Projected benefit obligation$188.3 $206.5 $574.0 $675.3Fair value of plan assets141.1 162.1 362.9 443.5The components of net periodic benefit (income) expense for pension and post-retirement plans for the years ended December 31, 2018, 2017, and2016, were as follows: Pension Post-retirement U.S. International (in millions)2018 2017 2016 2018 2017 2016 2018 2017 2016Service cost$1.6 $1.4 $1.3 $1.9 $1.9 $0.8 $0.1 $— $0.1Interest cost6.7 7.1 7.3 12.9 13.4 10.3 0.2 0.2 0.2Expected return on plan assets(11.8) (12.3) (11.9) (22.7) (21.8) (17.6) — — —Amortization of net loss (gain)2.7 2.0 1.8 3.4 3.0 2.3 (0.4) (0.4) (0.4)Amortization of prior servicecost0.4 0.4 0.4 — — — (0.1) — —Curtailment gain— — — (0.6) — — — — (0.6)Net periodic benefit income(2)$(0.4) $(1.4) $(1.1) $(5.1) $(3.5) $(4.2) $(0.2) $(0.2) $(0.7)(2)The components, other than service cost, are included in the line "Non-operating pension income" in the Consolidated Statements of Income.76ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Other changes in plan assets and benefit obligations that were recognized in accumulated other comprehensive income (loss) during the years endedDecember 31, 2018, 2017, and 2016 were as follows: Pension Post-retirement U.S. International (in millions)2018 2017 2016 2018 2017 2016 2018 2017 2016Current year actuarial loss(gain)$12.0 $5.9 $0.9 $5.3 $14.3 $27.9 $(0.3) $— $(1.0)Amortization of actuarial(loss) gain(2.7) (2.0) (1.8) (3.4) (3.0) (2.3) 0.4 0.4 1.0Current year prior service cost— — — 6.5 — — — — —Amortization of prior service(cost) credit(0.4) (0.4) (0.4) 0.3 — — 0.1 — —Foreign exchange ratechanges— — — (7.1) 10.7 (15.5) 0.1 (0.2) 0.5Total recognized in othercomprehensive income (loss)$8.9 $3.5 $(1.3) $1.6 $22.0 $10.1 $0.3 $0.2 $0.5Total recognized in netperiodic benefit cost (income)and other comprehensiveincome (loss)$8.5 $2.1 $(2.4) $(3.5) $18.5 $5.9 $0.1 $— $(0.2)AssumptionsThe weighted average assumptions used to determine benefit obligations for the years ended December 31, 2018, 2017, and 2016 were as follows: Pension Post-retirement U.S. International 2018 2017 2016 2018 2017 2016 2018 2017 2016Discount rate4.6% 3.7% 4.3% 2.5% 2.3% 2.7% 3.7% 3.2% 3.4%Rate of compensationincreaseN/A N/A N/A 3.0% 2.8% 3.1% N/A N/A N/AThe weighted average assumptions used to determine net periodic benefit (income) expense for the years ended December 31, 2018, 2017, and 2016were as follows: Pension Post-retirement U.S. International 2018 2017 2016 2018 2017 2016 2018 2017 2016Discount rate3.5% 3.8% 4.6% 2.1% 2.3% 3.7% 3.2% 3.4% 3.9%Expected long-term rate ofreturn7.4% 7.8% 7.8% 5.0% 5.5% 6.0% N/A N/A N/ARate of compensationincreaseN/A N/A N/A 2.8% 3.1% 3.0% N/A N/A N/A77ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The weighted average health care cost trend rates used to determine post-retirement benefit obligations and net periodic benefit (income) expense as ofDecember 31, 2018, 2017, and 2016 were as follows: Post-retirement 2018 2017 2016Health care cost trend rate assumed for next year7% 7% 8%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 rate2026 2025 2025Plan 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 60% in equity securities, 28% in fixed income securities and 12% 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, 2018 and 2017 were as follows: 2018 2017 U.S. International U.S. InternationalAsset category Equity securities58% 16% 57% 26%Fixed income27 20 30 29Real estate3 5 6 5Other(3) 12 59 7 40Total100% 100% 100% 100%(3)Multi-strategy hedge funds, insurance contracts 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, 2018 were as follows:(in millions)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2018Mutual funds$77.1 $— $— $77.1Exchange traded funds54.0 — — 54.0Common collective trust funds— 1.7 — 1.7Investments measured at net asset value(4) Multi-strategy hedge funds 8.3Total$131.1 $1.7 $— $141.1(4)Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair valuehierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented inthe table that presents our defined benefit pension and post-retirement plans funded status.78ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2017 were as follows:(in millions)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2017Mutual funds$94.8 $— $— $94.8Exchange traded funds56.6 — — 56.6Common collective trust funds— 1.7 — 1.7Investments measured at net asset value(4) Multi-strategy hedge funds 9.0Total$151.4 $1.7 $— $162.1Mutual funds and exchange traded funds: The fair values of mutual fund and common stock fund investments are determined by obtaining quotedprices on nationally 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).International Pension Plans AssetsThe fair value measurements of our international pension plans assets by asset category as of December 31, 2018 were as follows:(in millions)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2018Cash and cash equivalents$2.7 $— $— $2.7Equity securities65.7 — — 65.7Exchange traded funds0.3 — — 0.3Corporate debt securities— 71.7 — 71.7Multi-strategy hedge funds— 196.3 — 196.3Insurance contracts— 25.4 — 25.4Government debt securities— 14.0 — 14.0Investments measured at net asset value(4) Multi-strategy hedge funds 21.0Real estate 20.5Total$68.7 $307.4 $— $417.679ACCO 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, 2017 were as follows:(in millions)Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Fair Valueas ofDecember 31,2017Cash and cash equivalents$2.2 $— $— $2.2Equity securities102.0 — — 102.0Exchange traded funds16.9 — — 16.9Corporate debt securities— 72.2 — 72.2Multi-strategy hedge funds— 133.4 — 133.4Insurance contracts— 24.4 — 24.4Government debt securities— 61.0 — 61.0Investments measured at net asset value(4) Multi-strategy hedge funds 30.5Real estate 21.2Total$121.1 $291.0 $— $463.8Equity securities and exchange traded funds: The fair values of equity securities are determined by obtaining quoted prices on nationally recognizedsecurities exchanges (level 1 inputs).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).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 $20.9 million to our pension and post-retirement plans in 2018 and expect to contribute approximately $21 million in 2019.The following table presents estimated future benefit payments to participants for the next ten fiscal years: Pension Post-retirement(in millions)Benefits Benefits2019$38.0 $0.6202038.6 0.6202139.5 0.6202240.3 0.5202341.1 0.5Years 2024 - 2028213.5 2.2We also sponsor a number of defined contribution plans. Contributions are determined under various formulas. Costs related to such plans amounted to$13.3 million, $13.4 million and $11.3 million for the years ended December 31, 2018, 2017, and 2016,80ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)respectively. The $2.1 million increase in defined contribution plan costs in 2017 compared to 2016 was due to the Esselte Acquisition and additionalmatching contributions in the U.S.Multi-Employer Pension PlanWe are a participant in a multi-employer pension plan. The plan has reported significant underfunded liabilities and declared itself in critical anddeclining status (red). As a result, the trustees of the plan adopted a rehabilitation plan (RP) in an effort to forestall insolvency. Our required contributions tothis plan could increase due to the shrinking contribution base resulting from the insolvency of or withdrawal of other participating employers, from theinability or the failure of withdrawing participating employers to pay their withdrawal liability, from lower than expected returns on pension fund assets, andfrom other funding deficiencies. In the event that we withdraw from participation in the plan, we will be required to make withdrawal liability payments for aperiod of 20 years or longer in certain circumstances. The present value of our withdrawal liability payments would be recorded as an expense in ourConsolidated Statements of Income and as a liability on our Consolidated Balance Sheets in the first year of our withdrawal. The most recent PensionProtection Act (PPA) zone status available in 2018 and 2017 is for the plan’s years ended December 31, 2017 and 2016, respectively. The zone status is basedon information that we received from the plan and is certified by the plan’s actuary. Plans in the red zone are generally less than 65 percent funded, plans inthe yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The Company's contributions are not more than5% of the total contributions to the plan. Details regarding the plan are outlined in the table below. Pension ProtectionAct Zone Status FIP/RP StatusPending/Implemented Contributions Expiration Date ofCollective-BargainingAgreement Year Ended December 31, Pension Fund EIN/Pension PlanNumber 2018 2017 2018 2017 2016 SurchargeImposed PACE IndustryUnion-ManagementPension Fund 11-6166763 / 001 Red Red Implemented $0.3 $0.2 $0.3 Yes 6/30/20237. Stock-Based CompensationThe ACCO Brands Corporation Incentive Plan (the "Plan") provides for stock based awards generally 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 up to 13,118,430 shares may be issued under awards tokey employees and non-employee directors.Beginning in 2018, the Company initiated a cash dividend to stockholders and began accruing dividend equivalents (“DEs") on all outstanding RSU'sand PSUs as permitted by the Plan. DEs entitle holders of RSUs and PSUs to the same dividend value per share as holders of common stock. RSUs and PSUsare credited with DEs that are converted to RSUs at the fair market value of our common stock on the dates the dividend payments are made and are subject tothe same terms and conditions as the underlying award. DEs credited to RSUs and PSUs will only be paid to the extent the awards vest and any performancegoals are achieved.Beginning in 2017, per ASU No. 2016-09 Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting, the Company made the allowed accounting policy election to account for forfeitures as they occur, which affects the timing of stockcompensation expense. Prior to 2017, forfeitures were estimated at the time of grant in order to calculate the amount of share-based payment awardsultimately expected to vest and the forfeiture rate was based on historical experience.We will satisfy the requirement for delivering shares of our common stock for our Plan by issuing new shares.81ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table summarizes the impact of all stock-based compensation expense on our Consolidated Statements of Income for the years endedDecember 31, 2018, 2017 and 2016:(in millions)2018 2017 2016Selling, general and administrative expense$8.8 $17.0 $19.4Loss before income tax(8.8) (17.0) (19.4)Income tax benefit(2.2) (6.1) (7.0)Net loss$(6.6) $(10.9) $(12.4)There was no capitalization of stock-based compensation expense.Stock-based compensation expense by award type for the years ended December 31, 2018, 2017 and 2016 was as follows:(in millions)2018 2017 2016Stock option compensation expense$2.0 $2.4 $2.9RSU compensation expense4.7 4.3 4.5PSU compensation expense2.1 10.3 12.0Total stock-based compensation expense$8.8 $17.0 $19.4Stock OptionsThe exercise price of each stock option equals or exceeds the fair market price of our stock on the date of grant. Options can generally be exercised overa maximum term of up to seven years. Stock options outstanding as of December 31, 2018 generally vest ratably over three years. In 2016, no stock optionawards were made. SSARs were last issued in 2009 and expired in 2016. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and the weighted average assumptions as outlined in the following table: Year Ended December 31, 2018 2017Weighted average expected lives4.8years 4.8yearsWeighted average risk-free interest rate2.62% 2.04%Weighted average expected volatility36.4% 39.7%Expected dividend yield1.87% 0.00%Weighted average grant date fair value$3.76 $4.70 Volatility was calculated using ACCO Brands' historic volatility. The weighted average expected option term reflects ACCO Brands' historic life for alloption 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 of grant.82ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)A summary of the changes in stock options outstanding under the Plan during the year ended December 31, 2018 is presented below: NumberOutstanding WeightedAverageExercisePrice Weighted AverageRemainingContractual Term AggregateIntrinsicValueOutstanding at December 31, 20174,272,651 $8.68 Granted769,477 $12.82 Exercised(825,186) $8.22 Forfeited(91,875) $12.19 Outstanding at December 31, 20184,125,067 $9.46 3.3 years $0.5 millionExercisable shares at December 31, 20182,942,466 $8.12 2.2 years $0.5 millionWe received cash of $6.8 million, $4.2 million and $6.8 million from the exercise of stock options during the years ended December 31, 2018, 2017and 2016, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2018, 2017 and 2016 totaled $4.1 million,$2.8 million and $3.5 million, respectively.The aggregate intrinsic value of SSARs exercised during the year ended December 31, 2016 totaled $2.9 million. As of December 31, 2016, there wereno longer any SSARs outstanding.The fair value of options vested during the years ended December 31, 2018, 2017 and 2016 was $2.3 million, $2.6 million and $4.1 million,respectively. As of December 31, 2018, we had unrecognized compensation expense related to stock options of $3.3 million, which will be recognized over aweighted-average period of 1.8 years.Stock Unit AwardsRSUs vest over a pre-determined period of time, generally three years from the date of grant. Stock-based compensation expense for the years endedDecember 31, 2018, 2017 and 2016 includes $1.1 million, $0.8 million and $0.9 million, respectively, of expense that consisted of shares of stock (includedin RSU compensation expense) and RSUs granted to non-employee directors. The non-employee director RSU's became fully vested on the grant date. PSUsalso vest over a pre-determined period of time, minimally three years, but are further subject to the achievement of certain business performance criteria beingmet during the vesting period. Based upon the level of achieved performance, the number of shares actually awarded can vary from 0% to 150% of theoriginal grant.There were 1,446,634 RSUs outstanding as of December 31, 2018. All outstanding RSUs as of December 31, 2018 vest within three years of their dateof grant. We generally recognize compensation expense for our RSU awards ratably over the service period. Also outstanding as of December 31, 2018 were1,604,394 PSUs. All outstanding PSUs as of December 31, 2018 vest at the end of their respective performance periods subject to the level of achievement ofthe performance targets associated with such awards. Upon vesting, all of the remaining RSU and PSU awards will be converted into the right to receive oneshare of common stock of the Company for each unit that vests. The cost of these awards is determined using the fair value of the shares on the date of grant,and compensation expense is generally recognized over the period during which the employee provides the requisite service to the Company. We generallyrecognize compensation expense for our PSU awards ratably over the vesting period based on management’s judgment of the likelihood that performancemeasures will be attained.83ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)A summary of the changes in the RSUs outstanding under the Plan during 2018 is presented below: StockUnits WeightedAverageGrantDate FairValueOutstanding at December 31, 20171,534,058 $9.10Granted465,378 $12.71Vested and distributed(493,003) $7.60Forfeited and cancelled(59,799) $10.52Outstanding at December 31, 20181,446,634 $10.72Vested and deferred at December 31, 2018(1)405,925 $9.76(1)Included in outstanding at December 31, 2018. Vested and deferred RSUs are primarily related to deferred compensation for non-employeedirectors.For the years ended December 31, 2017 and 2016, we granted 438,521 and 516,739 RSUs, respectively. The weighted-average grant date fair value ofour RSUs was $12.71, $12.65, and $8.05 for the years ended December 31, 2018, 2017 and 2016, respectively. The fair value of RSUs that vested during theyears ended December 31, 2018, 2017 and 2016 was $4.7 million, $5.5 million and $5.2 million, respectively. As of December 31, 2018, we haveunrecognized compensation expense related to RSUs of $5.3 million, which will be recognized over a weighted-average period of 1.8 years.A summary of the changes in the PSUs outstanding under the Plan during 2018 is presented below: StockUnits WeightedAverageGrantDate FairValueOutstanding at December 31, 20173,531,312 $8.82Granted747,996 $12.82Vested(1,327,613) $7.54Forfeited and cancelled(140,521) $10.63Other - decrease due to performance of PSU's(1,206,780) $11.57Outstanding at December 31, 20181,604,394 $9.46For the years ended December 31, 2017 and 2016 we granted 706,732 and 1,013,242 PSUs, respectively. For the years ended December 31, 2018, 2017and 2016, 1,327,613, 1,502,327 and 1,072,692 PSUs vested, respectively. The weighted-average grant date fair value of our PSUs was $12.82, $12.75, and$7.65 for the years ended December 31, 2018, 2017 and 2016, respectively. The fair value of PSUs that vested during the years ended December 31, 2018,2017 and 2016 was $10.0 million, $9.3 million and $8.1 million respectively. As of December 31, 2018, we have unrecognized compensation expenserelated to PSUs of $3.1 million, which will be recognized over a weighted-average period of 1.3 years.8. InventoriesThe components of inventories were as follows: December 31,(in millions)2018 2017Raw materials$55.4 $38.2Work in process4.3 4.1Finished goods280.9 211.9Total inventories$340.6 $254.284ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)9. Property, Plant and Equipment, NetThe components of net property, plant and equipment were as follows: December 31,(in millions)2018 2017Land and improvements$25.2 $28.0Buildings and improvements to leaseholds144.2 152.6Machinery and equipment440.7 453.5Construction in progress8.6 11.1 618.7 645.2Less: accumulated depreciation(355.0) (366.7)Property, plant and equipment, net(1)$263.7 $278.5(1)Net property, plant and equipment as of December 31, 2018 and 2017 contained $51.9 million and $42.1 million, respectively of computer softwareassets, respectively, which are classified within machinery and equipment and construction in progress. Amortization expense for software was $8.2million, $7.1 million and $7.0 million for the years ended December 31, 2018, 2017 and 2016, respectively.10. Goodwill and Identifiable Intangible AssetsGoodwillChanges in the net carrying amount of goodwill by segment were as follows: (in millions)ACCOBrandsNorth America ACCOBrandsEMEA ACCOBrandsInternational Total Balance at December 31, 2016$380.7 $39.5 $166.9 $587.1 Esselte Acquisition(5.1) 113.2 (1.6) 106.5 Foreign currency translation— (23.3) — (23.3) Balance at December 31, 2017$375.6 $129.4 $165.3 $670.3 GOBA Acquisition— — 2.4 2.4 Foreign currency translation— 36.2 — 36.2 Balance at December 31, 2018$375.6 $165.6 $167.7 $708.9The goodwill balance includes $215.1 million of accumulated impairment losses, which occurred prior to December 31, 2016.Goodwill has been recorded on our Consolidated Balance Sheet related to the Esselte Acquisition and represents the excess of the cost of the EsselteAcquisition when compared to the fair value estimate of the net assets acquired on January 31, 2017 (the date of the Esselte Acquisition). Goodwill has beenrecorded on our Consolidated Balance Sheet related to the GOBA Acquisition and represents the excess of the cost of the GOBA Acquisition when comparedto the fair value estimate of the net assets acquired on July 2, 2018 (the date of the GOBA Acquisition). See "Note 3. Acquisitions" for details on thecalculation of the goodwill acquired in the acquisitions.The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. We havedetermined that our reporting units are ACCO Brands North America, ACCO Brands EMEA and ACCO Brands International. We test goodwill for impairmentat least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. TheCompany performed this annual assessment, on a qualitative basis, as allowed by GAAP, in the second quarter of 2018 and concluded that no impairmentexisted.85ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 futureimpairment charges.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, on a qualitative basis, as allowed by GAAP, for the majority ofindefinite-lived trade names in the second quarter of 2018 and concluded that no impairment existed. For one of our indefinite-lived trade names that was notsubstantially above its carrying value, Mead®, we performed a quantitative test in the second quarter of 2018. A 1.5% long-term growth and an 11.5%discount rate were used. We concluded that the Mead® trade name was not impaired.As of June 30, 2018, we changed the indefinite-lived Mead® trade name to an amortizable intangible asset. The change was made as a result ofdecisions regarding the Company's future use of the trade name. The Company began amortizing the Mead® trade name on a straight-line basis over a life of30 years on July 1, 2018.Acquired Identifiable IntangiblesGOBA AcquisitionThe valuation of identifiable intangible assets of $10.3 million acquired in the GOBA Acquisition include an amortizable trade name and amortizablecustomer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royaltymethod, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determinedusing the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows.The amortizable trade name is expected to be amortized over 15 years on a straight-line basis, while the customer relationships will be amortized on anaccelerated basis over 10 years, from July 2, 2018 the date GOBA was acquired by the Company. The allocations of the acquired identifiable intangiblesacquired in the GOBA Acquisition were as follows:(in millions)Fair Value Remaining UsefulLife RangesTrade name - amortizable$3.8 15 yearsCustomer relationships6.5 10 yearsTotal identifiable intangibles acquired$10.3 Esselte AcquisitionThe identifiable intangible assets of $277.0 million acquired in the Esselte Acquisition include amortizable customer relationships, indefinite livedand amortizable trade names and patents, which have been recorded at their estimated fair values. The fair value of the trade names and patents wasdetermined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of thecustomer relationships was determined using the multi-period excess earnings method, which is based on the present value of the projected after-tax cashflows.86ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Amortizable customer relationships, trade names and patents are expected to be amortized over lives ranging from 10 to 30 years from the EsselteAcquisition date of January 31, 2017. The customer relationships will be amortized on an accelerated basis. The allocations of the acquired identifiableintangibles acquired in the Esselte Acquisition were as follows:(in millions)Fair Value Remaining UsefulLife RangesTrade name - indefinite lived$116.8 IndefiniteTrade names - amortizable53.2 15-30 YearsCustomer relationships102.4 15 YearsPatents4.6 10 YearsTotal identifiable intangibles acquired$277.0 PA AcquisitionThe identifiable intangible assets of $58.0 million acquired in the PA Acquisition include amortizable customer relationships and trade names and wererecorded at their estimated fair values. The values assigned were based on the estimated future discounted cash flows attributable to the assets. These futurecash flows were estimated based on the historical cash flows and then adjusted for anticipated future changes, primarily expected changes in sales volume orprice.Amortizable customer relationships and trade names are being amortized over lives ranging from 12 to 30 years from the PA Acquisition date of May 2,2016. The customer relationships are being amortized on an accelerated basis. The allocations of the identifiable intangibles acquired in the PA Acquisitionwere as follows:(in millions)Fair Value Remaining UsefulLife RangesTrade names - amortizable$22.0 12-30 YearsCustomer relationships36.0 12 YearsTotal identifiable intangibles acquired$58.0 The gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2018 and 2017 were as follows: December 31, 2018 December 31, 2017(in millions)GrossCarryingAmounts AccumulatedAmortization NetBookValue GrossCarryingAmounts AccumulatedAmortization NetBookValueIndefinite-lived intangible assets: Trade names$471.7 $(44.5)(1) $427.2 $599.5 $(44.5)(1) $555.0Amortizable intangible assets: Trade names306.0 (70.5) 235.5 195.3 (59.4) 135.9Customer and contractualrelationships240.2 (120.5) 119.7 243.0 (99.3) 143.7Patents5.5 (0.9) 4.6 5.8 (0.5) 5.3Subtotal551.7 (191.9) 359.8 444.1 (159.2) 284.9Total identifiable intangibles$1,023.4 $(236.4) $787.0 $1,043.6 $(203.7) $839.9(1)Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time further amortizationceased.87ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The Company’s intangible amortization was $36.7 million, $35.6 million and $21.6 million for the years ended December 31, 2018, 2017 and 2016,respectively.Estimated amortization expense for amortizable intangible assets for the next five years is as follows:(in millions)2019 2020 2021 2022 2023Estimated amortization expense(2)$34.9 $31.4 $27.8 $24.3 $22.1(2)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.11. RestructuringThe Company recorded restructuring expense of $11.7 million for the year ended December 31, 2018, primarily related to additional changes in theoperating structure of its North America segment and the continued integration of Esselte within its EMEA segment. The $11.7 million of restructuringexpense included $8.3 million of severance costs, $3.2 million of lease abandonment costs and $0.2 million of other expenses. The Company currentlyexpects to record approximately $0.4 million of additional restructuring expenses primarily for lease abandonment during 2019.During 2017, the Company initiated cost savings plans related to the consolidation and integration of Esselte affecting all three of the Company'ssegments, but primarily the EMEA segment. The cost savings initiatives undertaken by the Company in 2016 to further enhance its operations in the NorthAmerica segment were expanded during 2017 to include the change in the operating structure in North America, including integration of our formerComputer Products Group.During 2016, the Company initiated cost savings plans related to the consolidation and integration of the acquired Pelikan Artline business into theCompany's already existing Australia and New Zealand businesses within the International segment.For the years ended December 31, 2018, 2017 and 2016, we recorded restructuring charges of $11.7 million, $21.7 million and $5.4 million,respectively.The summary of the activity in the restructuring liability (which is included in "Other current liabilities") for the year ended December 31, 2018 was asfollows:(in millions)Balance atDecember 31,2017 Provision CashExpenditures Non-cashItems/Currency Change Balance atDecember 31,2018Employee termination costs(1)$12.0 $8.3 $(12.1) $(0.3) $7.9Termination of lease agreements(2)0.8 3.2 (2.0) (0.2) 1.8Other0.5 0.2 (0.6) (0.1) —Total restructuring liability$13.3 $11.7 $(14.7) $(0.6) $9.7(1) We expect the remaining $7.9 million employee termination costs to be substantially paid within the next twelve months.(2) We expect the remaining $1.8 million termination of lease costs to be substantially paid within the next three months.88ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The summary of the activity in the restructuring accounts for the year ended December 31, 2017 was as follows:(in millions)Balance atDecember 31,2016 Esselte Acquisition(3) Provision CashExpenditures Non-cashItems/Currency Change Balance atDecember 31,2017Employee termination costs$1.4 $1.5 $18.2 $(9.6) $0.5 $12.0Termination of lease agreements0.1 1.2 2.4 (3.1) 0.2 0.8Other— 0.1 1.1 (0.7) — 0.5Total restructuring liability$1.5 $2.8 $21.7 $(13.4) $0.7 $13.3(3) Restructuring liabilities assumed in the Esselte Acquisition.During the fourth quarter of 2017, in connection with the Pelikan Artline integration, the Company sold its building and related assets in New Zealandfor net proceeds of $3.9 million and recorded a gain on sale of $1.5 million as a reduction of SG&A expense in its Consolidated Statements of Income withinthe ACCO Brands International segment. The sale was not included in the Company’s restructuring liability activity presented above.The summary of the activity in the restructuring accounts for the year ended December 31, 2016 was as follows:(in millions)Balance atDecember 31, 2015 Provision CashExpenditures Balance atDecember 31, 2016Employee termination costs$0.9 $5.2 $(4.7) $1.4Termination of lease agreements0.1 0.2 (0.2) 0.1Total restructuring liability$1.0 $5.4 $(4.9) $1.5Restructuring charges for the years ended December 31, 2018, 2017 and 2016 by reporting segment were as follows: December 31,(in millions)2018 2017 2016ACCO Brands North America$6.2 $5.5 $1.1ACCO Brands EMEA4.9 11.2 —ACCO Brands International0.6 5.0 4.3 Total restructuring charges$11.7 $21.7 $5.489ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)12. Income TaxesThe components of income before income tax were as follows:(in millions)2018 2017 2016Domestic operations$37.0 $68.7 $33.9Foreign operations120.9 89.4 91.2Total$157.9 $158.1 $125.1The reconciliation of income taxes computed at the U.S. federal statutory income tax rate of 21% for 2018 and 35% for 2017 and 2016 to our effectiveincome tax rate was as follows:(in millions)2018 2017 2016Income tax at U.S. statutory rate; 21%, 35% and 35%, respectively$33.2 $55.3 $43.8Effect of the U.S. Tax Act3.1 (25.7) —State, local and other tax, net of federal benefit2.2 3.6 2.4GILTI/FDII3.7 — —U.S. effect of foreign dividends and withholding taxes2.2 4.9 4.6Realized foreign exchange net loss on intercompany loans— — (9.6)Revaluation of previously held equity interest— — (12.0)Foreign income taxed at a higher (lower) effective rate0.9 (6.9) (4.6)Net Brazilian Tax Assessment impact(4.4) 2.2 2.8Expiration of tax credits— — 10.9Increase (decrease) in valuation allowance5.2 (0.6) (9.9)Excess benefit from stock-based compensation(2.5) (5.6) —Other7.6 (0.8) 1.2Income taxes as reported$51.2 $26.4 $29.6Effective tax rate32.4% 16.7% 23.7%2018For 2018, we recorded income tax expense of $51.2 million on income before taxes of $157.9 million. The higher effective rate for 2018 of 32.4%compared to the 2017 effective tax rate, is primarily due to the one-time 2017 beneficial effects of the U.S. Tax Act discussed below under "Tax Reform."Tax ReformOn December 22, 2017, the U.S. Tax Act was signed into law. The U.S. Tax Act made broad and complex changes to the U.S. tax code, including, butnot limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax oncertain undistributed earnings of foreign subsidiaries (the "Transition Toll Tax"); (iii) bonus depreciation that will allow for full expensing of qualifiedproperty; (iv) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (v) a new provision designed to tax global intangiblelow-taxed income ("GILTI"); (vi) the repeal of domestic production activity deductions; (vii) limitations on the deductibility of certain executivecompensation expenses; (viii) limitations on the use of foreign tax credits to reduce U.S. income tax liability; and (ix) a new provision that allows a domesticcorporation an immediate deduction for a portion of its foreign derived intangible income ("FDII").The SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects of the U.S. Tax Act. SAB 118provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the related accounting underASC 740, Accounting for Income Taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the U.S. Tax Act forwhich the accounting under ASC 740 is complete. To the extent that a company’s accounting for a certain income tax effect of the U.S. Tax Act isincomplete, but it is90ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisionalestimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effectimmediately before the enactment of the U.S. Tax Act.The Company was able to make reasonable estimates of the effects and recorded provisional estimates for these items. Changes in tax rates and tax lawsare accounted for in the period of enactment. Therefore, during the year ended December 31, 2017, we recorded a net tax benefit totaling $25.7 millionrelated to our provisional estimate of the impact of the U.S. Tax Act. The benefit consisted of an expense of $24.0 million, net of foreign tax creditcarryforwards of $14.0 million, for the one-time Transition Toll Tax and a net benefit of $49.7 million in connection with the revaluation of the deferred taxassets and liabilities resulting from the decrease in the U.S. corporate tax rate.As of December 31, 2018, the Company has revised these estimated amounts and recognized additional net tax expense in the amount of $3.1 million.The Company recognized additional expenses of $0.3 million related to the Transition Toll Tax. The Company recognized additional expense of $3.3million related to limitations on deductibility of executive compensation expenses including $1.5 million of unrecognized tax benefits and $1.8 millionimpairment of deferred tax assets. The Company recognized a tax benefit of $0.5 million on the difference between the 2017 U.S. enacted rate of 35% and the2018 enacted rate of 21%, primarily related to a $4.1 million deductible pension plan contribution included on the Company’s 2017 U.S. Corporationincome tax return. As of December 31, 2018, the Company has completed its accounting for the tax effects of the enactment of the U.S. Tax Act; however weexpect the U.S. Treasury to issue additional regulations that could have a material financial statement impact on the Company’s effective tax rates in futureperiods.Transition Toll TaxThe U.S. Tax Act eliminates the deferral of U.S. income tax on the historical undistributed earnings foreign by imposing the Transition Toll Tax, whichis a one-time mandatory deemed repatriation tax on undistributed foreign earnings. The Transition Toll Tax is assessed on the U.S. shareholder's share of theforeign corporation's accumulated foreign earnings that have not previously been taxed in the U.S. Earnings in the form of cash and cash equivalents aretaxed at a rate of 15.5% and all other earnings are taxed at a rate of 8.0%.As of December 31, 2017, we were able to reasonably estimate income tax liabilities of $38.0 million under the Transition Toll Tax, of which $3.0million was expected to be paid within one year. The Transition Toll Tax is to be paid over an eight-year period, which began in 2018, and will not accrueinterest. The Transition Toll Tax expense, net of foreign tax credit carryforwards of $14.0 million, was estimated to be $24.0 million.On the basis of revised earnings and profits and foreign tax credit computations completed during 2018, the Company recognized additional expense of$0.3 million related to the Transition Toll Tax. The revised Transition Toll Tax is $38.3 million, of which $3.1 million was paid during 2018. The finalamount of the Transition Toll Tax, net of tax credit carryforwards of $14.0 million, is $24.3 million.Effect on Deferred Tax Assets and LiabilitiesOur deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporary differences are expected to berealized or settled.As our deferred tax liabilities exceed the balance of our deferred tax assets as of the date of enactment of the U.S. Tax Act, we recorded a tax benefit of$49.7 million, reflecting the decrease in the U.S. corporate income tax rate. The Company recorded an additional $0.5 million of benefit during 2018primarily related to a $4.1 million deductible pension plan contribution included on the Company's 2017 U.S. income tax return bringing the total benefitresulting from the reduction in the U.S. corporate income tax rate to $50.2 million.GILTIBeginning in 2018, the U.S. Tax Act includes the GILTI provision. The GILTI provision requires that income from non-U.S. subsidiaries be included inthe U.S. taxable income if in excess of an allowable return on the non-U.S. subsidiary tangible assets. The Company has elected to treat taxes due on taxableincome related to GILTI as a current period expense when incurred. For 2018, we recorded an income tax expense of $4.2 million related to GILTI.91ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)2017 and 2016For 2017, we recorded income tax expense of $26.4 million on income before taxes of $158.1 million. The low effective rate for 2017 of 16.7% wasprimarily driven by a $25.7 million benefit resulting from the U.S. Tax Act, and a $5.6 million benefit due to the impact of the Company's adoption of ASUNo. 2016-9, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-9 in 2017.For 2016, we recorded income tax expense of $29.6 million on income before taxes of $125.1 million. The lower effective rate for 2016 of 23.7% wasdue to the following: 1) a tax benefit of $12.0 million resulting from the fact that no Australian taxes were due on the $28.9 million non-cash gain arisingfrom the PA Acquisition due to the revaluation of the Company's previously held equity interest to fair value and as well as to the release of a deferred taxliability related to a tax basis difference in the Pelikan Artline joint venture assets, 2) a tax benefit of $9.6 million on a net foreign exchange loss on therepayment of intercompany loans, for which the pre-tax effect was recorded in equity and 3) earnings from foreign jurisdictions which are taxed at a lowerrate. In addition, in 2016, the Foreign Tax Credit Carryover from 2007 of $10.9 million expired, and the associated valuation allowance on the carryover wasremoved; the combination of these two items did not affect income tax expense.The components of the income tax expense were as follows:(in millions)2018 2017 2016Current expense Federal and other$2.7 $41.1 $0.7 Foreign25.8 30.5 22.9Total current income tax expense28.5 71.6 23.6Deferred expense Federal and other11.1 (47.4) 3.5 Foreign11.6 2.2 2.5Total deferred income tax expense (benefit)22.7 (45.2) 6.0Total income tax expense$51.2 $26.4 $29.692ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The components of deferred tax assets (liabilities) were as follows:(in millions)2018 2017Deferred tax assets Compensation and benefits$17.2 $18.5 Pension46.1 49.6 Inventory10.7 10.6 Other reserves15.7 15.2 Accounts receivable6.1 5.7 Foreign tax credit carryforwards25.2 29.1 Net operating loss carryforwards101.8 126.6 Other9.6 5.6Gross deferred income tax assets232.4 260.9 Valuation allowance(50.8) (45.0)Net deferred tax assets181.6 215.9Deferred tax liabilities Depreciation(19.3) (17.2) Unremitted non-U.S. earnings accrual(1.4) — Identifiable intangibles(219.0) (237.9) Other(3.0) —Gross deferred tax liabilities(242.7) (255.1)Net deferred tax liabilities$(61.1) $(39.2)We continually review the need for establishing or releasing valuation allowances on our deferred tax assets. In 2018, the Company had a net taxexpense from the generation and release of valuation allowances in U.S. federal, state and certain foreign jurisdictions of $6.9 million. In 2017, the Companyhad a net tax benefit from the release and generation of valuation allowances in U.S. state and certain foreign jurisdictions of $0.7 million. In 2016, theCompany had a net tax expense from the generation and release of valuation allowances in U.S. state and certain foreign jurisdictions of $0.7 million.As of December 31, 2018, $443.8 million of net operating loss carryforwards are available to reduce future taxable income of domestic andinternational companies. These loss carryforwards expire in the years 2019 through 2031 or have an unlimited carryover period.With the enactment of the U.S. Tax Act, we believe that our offshore cash can be accessed without adverse U.S. tax consequences. After analyzing ourglobal working capital and cash requirements, the Company has reassessed and updated its indefinite reinvestment assertion under ASC 740. As ofDecember 31, 2018, the Company has recorded $1.4 million of deferred taxes on approximately $369 million of unremitted earnings of non-U.S. subsidiariesthat may be remitted to the U.S. The Company has $106 million of additional unremitted earnings of non-U.S. subsidiaries, which are indefinitely reinvestedand for which no deferred taxes have been provided.A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:(in millions)2018 2017 2016Balance at beginning of year$47.2 $43.7 $34.8 Additions for tax positions of prior years3.1 2.9 3.0 Additions for tax positions of current year1.5 — — Reductions for tax positions of prior years(8.2) (0.7) (0.5)Acquisitions5.3 1.6 — Increase resulting from foreign currency translation— — 6.4 Decrease resulting from foreign currency translation(5.2) (0.3) —Balance at end of year$43.7 $47.2 $43.793ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)As of December 31, 2018, the amount of unrecognized tax benefits decreased to $43.7 million, of which $42.0 million would impact 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.Interest and penalties related to unrecognized tax benefits are recognized within "Income tax expense" in the Consolidated Statements of Income. As ofDecember 31, 2018, we have accrued a cumulative $13.0 million for interest and penalties on the unrecognized tax benefits.As of December 31, 2018, the U.S. federal statute of limitations remains open for the year 2015 and forward. Foreign and U.S. state jurisdictions havestatutes of limitations generally ranging from 2 to 5 years. As of December 31, 2018, years still open to examination by foreign tax authorities in majorjurisdictions include Australia (2014 forward), Brazil (2013 forward), Canada (2009 forward), Germany (2013 forward), Sweden (2012 forward) and the U.K.(2017 forward). We are currently under examination in various foreign jurisdictions.Brazil Tax AssessmentIn connection with our May 1, 2012 acquisition of the Mead Consumer and Office Products business ("Mead C&OP"), we assumed all of the taxliabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Departmentof the Ministry of Finance of Brazil ("FRD") issued a tax assessment (the "Brazilian Tax Assessment") against Tilibra, which challenged the tax deduction ofgoodwill from Tilibra's taxable income for the year 2007 (the "First Assessment"). A second assessment challenging the deduction of goodwill from Tilibra'staxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013 (the "Second Assessment"). Tilibra is disputing both of the taxassessments.The final administrative appeal of the Second Assessment was decided against the Company in 2017. We are challenging this decision in court. Inconnection with the judicial challenge, we are required to provide security to guarantee payment of the Second Assessment, which represents $21.0 millionof the current reserve, should we not prevail. The First Assessment is still being challenged through established administrative procedures.We believe we have meritorious defenses and intend to vigorously contest these matters; however, there can be no assurances that we will ultimatelyprevail. The ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a number of years. If theFRD's initial position is ultimately sustained, the amount assessed 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 2012, we recorded a reserve in the amount of $44.5 million (atDecember 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price andwhich included the 2007-2012 tax years plus penalties and interest through December 2012. Included in this reserve is an assumption of penalties at 75%,which is the standard penalty. While there is a possibility that a penalty of 150% could be imposed in connection with the First Assessment, based on thefacts in our case and existing precedent, we believe the likelihood of a 150% penalty is not more likely than not as of December 31, 2018. We will continueto actively monitor administrative and judicial court decisions and evaluate their impact, if any, on our legal assessment of the ultimate outcome of our case.In addition, we will continue to accrue interest related to this contingency until such time as the outcome is known or until evidence is presented that we aremore likely than not to prevail. The time limit for issuing an assessment for 2011 expired in January 2018 and we did not receive an assessment; we thereforereversed $5.6 million of reserves related to 2011 in the first quarter of 2018. During the years ended December 31, 2018, 2017 and 2016, we accruedadditional interest as a charge to current tax expense of $1.1 million, $2.2 million and $2.8 million, respectively. At current exchange rates, our accrualthrough December 31, 2018, including tax, penalties and interest is $29.4 million. The time limit for issuing an assessment for 2012 expired in January 2019and we did not receive an assessment.94ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)13. Earnings per ShareTotal outstanding shares as of December 31, 2018, 2017 and 2016 were 102.7 million, 106.7 million and 107.9 million respectively. Under our stockrepurchase program, for the years ended December 31, 2018 and 2017, we repurchased and retired 6.0 million and 3.3 million shares of common stock,respectively. No shares were repurchased during the year ended December 31, 2016. For the years ended December 31, 2018, 2017 and 2016, we acquired 0.6million, 0.7 million and 0.7 million shares, respectively, related to tax withholding for share-based compensation.The calculation of basic earnings per common share is based on the weighted average number of common shares outstanding in the year, or period, overwhich they were outstanding. Our calculation of diluted earnings per common share assumes that any common shares outstanding were increased by sharesthat would be issued upon exercise of those stock units for which the average market price for the period exceeds the exercise price less the shares that couldhave been purchased by the Company with the related proceeds, including compensation expense measured but not yet recognized.Our weighted-average shares outstanding for the years ended December 31, 2018, 2017 and 2016 was as follows:(in millions)2018 2017 2016Weighted-average number of shares of common stock outstanding - basic104.8 108.1 107.0Stock options1.0 1.3 0.8Restricted stock units1.2 1.5 1.4Adjusted weighted-average shares and assumed conversions - diluted107.0 110.9 109.2Awards of potentially dilutive shares of common stock, which have exercise prices that were higher than the average market price during the period, arenot included in the computation of dilutive earnings per share as their effect would have been anti-dilutive. For the years ended December 31, 2018, 2017and 2016, these shares were approximately 4.0 million, 3.1 million and 3.6 million, respectively.14. 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, Swedish krona, British pound and Japaneseyen. We are subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performance by counterparties to financial instrument contracts. Management continues to monitor the status of our counterparties and will take action, asappropriate, to further manage our counterparty credit risk. There are no credit contingency features in our derivative financial instruments.When hedge accounting is applicable, on the date we enter into a derivative, the derivative is designated as a hedge of the identified exposure. Wemeasure the effectiveness of our hedging relationships both at hedge inception and on an ongoing basis.Forward Currency ContractsWe enter into forward foreign currency contracts with third parties to reduce the effect of fluctuating foreign currencies, primarily on foreigndenominated inventory purchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe (the Euro, theSwedish krona and the British pound), Australia, Canada, Brazil, and Mexico.Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada, Japan and New Zealand, and aredesignated as cash flow hedges. Unrealized gains and losses on these contracts are deferred in AOCI until the contracts are settled and the underlying hedgedtransactions relating to inventory purchases are recognized, at which time the deferred gains or losses will be reported in the "Cost of products sold" line inthe Consolidated Statements of Income. As of December 31, 2018 and 2017, we had cash flow designated foreign exchange contracts outstanding with a U.S.dollar equivalent notional value of $98.7 million and $93.5 million, respectively.95ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)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 (income), net" in the Consolidated Statements of Income and are largely offset by thechange in the current translated value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedgedtransactions, and do not extend beyond December 2019, except for one relating to intercompany loans which extends to December 2020. As of December 31,2018 and 2017, we had undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $113.3 million and $95.0million, respectively.The following table summarizes the fair value of our derivative financial instruments as of December 31, 2018 and 2017: Fair Value of Derivative Instruments Derivative Assets Derivative Liabilities(in millions)Balance SheetLocation December 31, 2018 December 31, 2017 Balance SheetLocation December 31, 2018 December 31, 2017Derivatives designated ashedging instruments: Foreign exchange contractsOther current assets $3.3 $0.5 Other currentliabilities $0.1 $0.5Derivatives not designated ashedging instruments: Foreign exchange contractsOther current assets 0.6 0.4 Other currentliabilities 1.7 0.7Foreign exchange contractsOther non-currentassets 12.7 24.2 Other non-currentliabilities 12.7 24.2Total derivatives $16.6 $25.1 $14.5 $25.4The following tables summarize the pre-tax effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for theyears ended December 31, 2018, 2017 and 2016: The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Financial Statements Amount of Gain (Loss) Recognized inAOCI (Effective Portion) Location of (Gain) LossReclassified from AOCI to Income Amount of (Gain) LossReclassified from AOCI to Income(Effective Portion)(in millions)2018 2017 2016 2018 2017 2016Cash flow hedges: Foreign exchange contracts$9.1 $(4.9) $(0.1) Cost of products sold $(6.4) $1.6 $2.5 The Effect of Derivatives Not Designated as Hedging Instrumentson the Consolidated Statements of Operations Location of (Gain) Loss RecognizedinIncome on Derivatives Amount of (Gain) LossRecognized in Income year ended December 31,(in millions) 2018 2017 2016Foreign exchange contractsOther expense (income), net $0.7 $(1.5) $(2.0)96ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)15. 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.We have determined that our financial assets and liabilities described in "Note 14. 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, 2018and 2017:(in millions)December 31, 2018 December 31, 2017Assets: Forward currency contracts$16.6 $25.1Liabilities: Forward currency contracts14.5 25.4Our forward currency contracts are included in "Other current assets," "Other non-current assets," "Other current liabilities," or "Other non-currentliabilities" and do not extend beyond December 2019, except for one relating to intercompany loans which extends to December 2020. 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 $888.0 million and $939.5 million and the estimated fair value of total debt was$848.6 million and $951.5 million as of December 31, 2018 and 2017, respectively. The fair values are determined from quoted market prices, whereavailable, and from using current interest rates based on credit ratings and the remaining terms of maturity.97ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)16. Accumulated Other Comprehensive Income (Loss)Accumulated Other Comprehensive income is defined as net income (loss) and other changes in stockholders’ equity from transactions and other eventsfrom sources other than stockholders. The components of, and changes in, accumulated other comprehensive income (loss) were as follows:(in millions)DerivativeFinancialInstruments ForeignCurrencyAdjustments UnrecognizedPension and OtherPost-retirementBenefit Costs AccumulatedOtherComprehensiveIncome (Loss)Balance at December 31, 2016$2.5 $(285.9) $(136.0) $(419.4)Other comprehensive loss before reclassifications, net of tax(3.6) (19.5) (23.4) (46.5)Amounts reclassified from accumulated other comprehensiveincome, net of tax1.3 — 3.5 4.8Balance at December 31, 20170.2 (305.4) (155.9) (461.1)Other comprehensive income (loss) before reclassifications, netof tax6.5 6.2 (13.4) (0.7)Amounts reclassified from accumulated other comprehensive(loss) income, net of tax(4.6) — 4.7 0.1Balance at December 31, 2018$2.1 $(299.2) $(164.6) $(461.7)The reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2018, 2017 and 2016 were as follows: Year Ended December 31, (in millions) 2018 2017 2016 Details about Accumulated OtherComprehensive Income ComponentsAmount Reclassified from Accumulated OtherComprehensive Income (Loss)Location on Income StatementGain on cash flow hedges: Foreign exchange contracts $6.4 $(1.6) $(2.4) Cost of products soldTax benefit (1.8) 0.3 0.7 Income tax expenseNet of tax $4.6 $(1.3) $(1.7) Defined benefit plan items: Amortization of actuarial loss $(5.1) $(4.6) $(3.1) (1)Amortization of prior service cost (0.3) (0.4) (0.4) (1)Total before tax (5.4) (5.0) (3.5) Tax benefit 0.7 1.5 0.7 Income tax expenseNet of tax $(4.7) $(3.5) $(2.8) Total reclassifications for the period, net oftax $(0.1) $(4.8) $(4.5) (1)These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (income) for pension andpost-retirement plans (See "Note 6. Pension and Other Retiree Benefits" for additional details).98ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)17. Information on Business SegmentsThe Company has three reportable business segments each of which is comprised of different geographic regions. The Company's three reportablebusiness segments are as follows:Reportable Business Segment Geographic Regions Primary BrandsACCO Brands North America United States and Canada AT-A-GLANCE®, Five Star®, GBC®, Hilroy®, Kensington®,Mead®, Quartet®, and Swingline® ACCO Brands EMEA Europe, Middle East and Africa Derwent®, Esselte®, GBC®, Kensington®, Leitz®, NOBO®,Rapid®, and Rexel® ACCO Brands International Australia/N.Z., Latin America andAsia-Pacific Artline®, Barrilito®, GBC®, Kensington®, Marbig®, Quartet®,Rexel®, Tilibra®, and Wilson Jones®Each of the Company's three reportable business segments designs, markets, sources, manufactures and sells recognized consumer and other end-userdemanded brands used in businesses, schools and homes. Product designs are tailored based on end-user preferences in each geographic region.Our product categories include school products; storage and organization; laminating, binding and shredding machines and related consumablesupplies; calendars; stapling and punching; whiteboards; computer accessories; and do-it-yourself tools, among others. Our portfolio of consumer and otherend-user demanded brands includes both globally and regionally recognized brands.ACCO Brands North AmericaThe ACCO Brands North America segment is comprised of the United States and Canada where the Company is a leading branded supplier of consumerand business products under brands such as AT-A-GLANCE®, Five Star®, GBC®, Hilroy®, Kensington®, Mead®, Quartet®, and Swingline®. The ACCO BrandsNorth America segment designs, sources or manufactures and distributes school products (such as notebooks); calendars; laminating, binding and shreddingmachines and related consumable supplies; whiteboards; storage and organization products (such as three-ring binders, sheet protectors and indexes),stapling and punching products; computer accessories, among others, which are primarily used in schools, homes and businesses. The majority of revenue inthis segment is related to consumer and home products and is associated with the "back-to-school" season and calendar year-end purchases; we expect salesof consumer products to become an increasingly greater percentage of our revenue as demand for consumer products is growing faster than most business-related products.ACCO Brands EMEAThe ACCO Brands EMEA segment is comprised largely of Europe, but also includes export sales to the Middle East and Africa. The Company is aleading branded supplier of consumer and business products under brands such as Derwent®, Esselte®, GBC®, Kensington®, Leitz®, NOBO®, Rapid®, andRexel®. The ACCO Brands EMEA segment designs, manufactures or sources and distributes storage and organization products (such as lever-arch binders,sheet protectors and indexes); stapling and punching products; laminating, binding and shredding products and related consumable supplies; do-it-yourselftools; computer accessories, among others, which are primarily used in businesses, homes and schools.99ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)ACCO Brands InternationalThe ACCO Brands International segment is comprised of Australia/New Zealand (N.Z.), Latin America and Asia-Pacific where the Company is a leadingbranded supplier of consumer and business products. These brands include Artline®, Barrilito®, GBC®, Kensington®, Marbig®, Quartet®, Rexel®, Tilibra®,and Wilson Jones®, among others. The ACCO Brands International segment designs, sources or manufactures and distributes school products (such asnotebooks); storage and organization products (such as three-ring binders, sheet protectors and indexes); laminating, binding and shredding products andrelated consumable supplies; writing instruments; computer accessories; whiteboards; stapling and punching products; calendars and janitorial supplies,among others, which are primarily used in schools, businesses and homes. The majority of revenue in this segment is related to consumer products and isassociated with the "back-to-school" season and calendar year-end purchases. We expect sales of consumer products to become an increasingly greaterpercentage of our revenue as demand for consumer products is growing faster than most business-related products.CustomersACCO Brands markets and sells its strong multi-product offering broadly and is not dependent on any one channel. Our products are sold through allrelevant channels, namely retailers, including: mass retailers; e-tailers; discount, drug/grocery and variety chains; warehouse clubs; hardware and specialtystores; independent office product dealers; office superstores; wholesalers; and contract stationers. We also sell directly to commercial and consumer end-users through our e-commerce platform and our direct sales organization.Net sales by reportable business segment for the years ended December 31, 2018, 2017 and 2016 were as follows:(in millions)2018 2017 2016ACCO Brands North America$940.7 $999.0 $1,016.1ACCO Brands EMEA605.2 542.8 171.8ACCO Brands International395.3 407.0 369.2Net sales$1,941.2 $1,948.8 $1,557.1Operating income by reportable business segment for the years ended December 31, 2018, 2017 and 2016 was as follows:(in millions)2018 2017 2016ACCO Brands North America$116.6 $152.4 $149.8ACCO Brands EMEA59.4 32.0 8.0ACCO Brands International49.2 50.9 49.4Segment operating income225.2 235.3 207.2Corporate(1)(38.2) (50.8) (48.1)Operating income(2)187.0 184.5 159.1Interest expense41.2 41.1 49.3Interest income(4.4) (5.8) (6.4)Non-operating pension income(9.3) (8.5) (8.2)Equity in earnings of joint venture— — (2.1)Other expense (income), net1.6 (0.4) 1.4Income before income tax$157.9 $158.1 $125.1(1)Corporate operating loss in 2018, 2017 and 2016 includes transaction costs of $0.5 million, $5.0 million and $10.5 million respectively, primarily forlegal and due diligence expenditures associated with the GOBA, Esselte and Pelikan Artline acquisitions.(2)Operating income as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less selling, general andadministrative expenses; iv) less amortization of intangibles; and v) less restructuring charges.100ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)The following table presents the measure of reportable business segment assets used by the Company’s chief operating decision maker: December 31,(in millions)2018 2017ACCO Brands North America(3)$456.1 $413.9ACCO Brands EMEA(3)276.7 287.6ACCO Brands International(3)341.3 338.2 Total segment assets1,074.1 1,039.7Unallocated assets1,711.0 1,758.6Corporate(3)1.3 0.8 Total assets$2,786.4 $2,799.1(3)Represents total assets, excluding goodwill and identifiable intangibles resulting from business acquisitions, intercompany balances, cash, deferredtaxes, derivatives, prepaid pension assets and prepaid debt issuance costs.As a supplement to the presentation of reportable business segment assets presented above, the table below presents reportable business segment assets,including the allocation of identifiable intangible assets and goodwill resulting from business combinations. December 31,(in millions)2018 2017ACCO Brands North America(4)$1,231.0 $1,204.3ACCO Brands EMEA(4)709.2 711.7ACCO Brands International(4)629.8 634.0 Total segment assets2,570.0 2,550.0Unallocated assets215.1 248.3Corporate(4)1.3 0.8 Total assets$2,786.4 $2,799.1(4)Represents total assets, excluding intercompany balances, cash, deferred taxes, derivatives, prepaid pension assets and prepaid debt issuance costs.Capital spend by reportable business segment was as follows: December 31,(in millions)2018 2017 2016ACCO Brands North America$24.3 $16.3 $10.3ACCO Brands EMEA6.1 5.1 2.9ACCO Brands International3.7 9.6 5.3 Total capital spend$34.1 $31.0 $18.5Depreciation expense by reportable business segment was as follows: December 31,(in millions)2018 2017 2016ACCO Brands North America$15.9 $17.7 $19.7ACCO Brands EMEA12.6 11.9 5.0ACCO Brands International5.5 6.0 5.7 Total depreciation$34.0 $35.6 $30.4101ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)Property, plant and equipment, net by geographic region was as follows: December 31,(in millions)2018 2017U.S.$111.7 $102.4Canada1.9 2.4ACCO Brands North America113.6 104.8 ACCO Brands EMEA100.0 115.4 Australia/N.Z.13.1 16.0Latin America35.1 40.3Asia-Pacific1.9 2.0ACCO Brands International50.1 58.3 Property, plant and equipment, net$263.7 $278.5Top CustomersNet sales to our five largest customers totaled $577.3 million, $615.1 million and $663.5 million for the years ended December 31, 2018, 2017 and2016, respectively. Net sales to no customer exceeded 10% of net sales for the years ended December 31, 2018 and 2017. For the year ended December 31,2016, net sales to Staples, our largest customer, were $210.5 million (14%) and net sales to Walmart were $161.7 million (10%). Except as disclosed, no othercustomer represented more than 10% of net sales in any of the last three years.As of December 31, 2018 and 2017, our top five trade account receivables totaled $125.0 million and $148.4 million, respectively.18. Joint Venture InvestmentSummarized below is the financial information for the Pelikan Artline joint venture, in which we owned a 50% non-controlling interest through May1, 2016, which was accounted for using the equity method. Accordingly, we recorded our proportionate share of earnings or losses on the line entitled"Equity in earnings of joint venture" in the Consolidated Statements of Income. Year Ended December 31,(in millions)2016Net sales$34.9Gross profit14.1Net income4.1On May 2, 2016, the Company completed the PA Acquisition and accordingly, the results of Pelikan Artline are included in the Company'sconsolidated financial statements from the date of the PA Acquisition, May 2, 2016. For further information, see "Note 3. Acquisitions" for details on the PAAcquisition.19. Commitments and ContingenciesPending LitigationIn connection with our May 1, 2012 acquisition of the Mead C&OP business, we assumed all of the tax liabilities for the acquired foreign operationsincluding Tilibra Produtos de Papelaria Ltda. ("Tilibra"). For further information see "Note 12. Income Taxes - Income Tax Assessment" for details on taxassessments issued by the FRD against Tilibra, which challenged the tax deduction of goodwill from Tilibra's taxable income for the years 2007 through2010.102ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)We are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement as well as other claims incidental to ourbusiness. In addition, we may be unaware of third party claims of intellectual property infringement relating to our technology, brands or products and wemay face other claims related to business operations. Any litigation regarding patents or other intellectual property could be costly and time-consuming andmight require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale ofcertain of our products.It is the opinion of management that (other than the Brazilian Tax Assessment) the ultimate resolution of currently outstanding matters will not have amaterial adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful inour defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further,future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations and financial condition.Lease CommitmentsFuture minimum rental payments for all non-cancelable operating leases (reduced by minor amounts from subleases) as of December 31, 2018 were asfollows:(in millions) 2019$29.7202024.6202120.6202216.5202310.9Thereafter19.6Total minimum rental payments121.9Less minimum rentals to be received under non-cancelable subleases3.9Future minimum payments for operating leases, net of sublease rental income$118.0Total rental expense reported in our Consolidated Statements of Income for all non-cancelable operating leases (reduced by minor amounts forsubleases) amounted to $33.0 million, $30.9 million and $24.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.Unconditional Purchase CommitmentsFuture minimum payments under unconditional purchase commitments, primarily for inventory purchase commitments as of December 31, 2018 wereas follows:(in millions) 2019$89.120201.320210.620220.22023—Thereafter—Total unconditional purchase commitments$91.2EnvironmentalWe are subject to national, state, provincial and/or local environmental laws and regulations concerning the discharge of materials into theenvironment and the handling, disposal and clean-up of waste materials and otherwise relating to the protection of the environment. This includesenvironmental laws and regulations that affect the design and composition of certain of our products. It is not possible to quantify with certainty the potentialimpact of actions regarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future. In the opinionof management, compliance with103ACCO Brands Corporation and SubsidiariesNotes to Consolidated Financial Statements (Continued)the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material adverse effect upon ourcapital expenditures, financial condition and results of operations or competitive position.20. Quarterly Financial Information (Unaudited)The following is an analysis of certain line items in the Consolidated Statements of Income by quarter for 2018 and 2017:(in millions, except per share data)1st Quarter 2nd Quarter 3rd Quarter 4th Quarter2018 Net sales(1)$405.8 $498.8 $507.3 $529.3Gross profit127.5 162.4 160.8 177.1Operating income11.7 51.8 57.5 66.0Net income$10.4 $25.7 $35.6 $35.0Per share: Basic income per share (2)$0.10 $0.24 $0.34 $0.34Diluted income per share (2)$0.09 $0.24 $0.34 $0.342017 Net sales(1)$359.8 $490.0 $532.2 $566.8Gross profit110.9 168.8 178.2 199.4Operating income7.2 43.3 56.7 77.3Net income$3.6 $23.5 $30.6 $74.0Per share: Basic income per share (2)$0.03 $0.21 $0.28 $0.69Diluted income per share (2)$0.03 $0.21 $0.28 $0.68(1)Historically, our business has experienced higher sales and earnings in the third and fourth quarters of the calendar year and we expect these trends tocontinue. Two principal factors contribute to this seasonality: (1) we are a major supplier of products related to the back-to-school season, whichoccurs principally from June through September for our businesses in North America and from November through February for our Australian andBrazilian businesses; and (2) several product categories we sell lend themselves to calendar year-end purchase timing, including planners, paperstorage and organization products (including bindery) and Kensington® computer accessories, which have higher sales in the fourth quarter driven bytraditionally 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, dilution as a result of issuingshares of common stock and repurchasing of shares of common stock during the year.21. Subsequent EventsDividendsOn February 13, 2019, the Company's Board of Directors declared a cash dividend of $0.06 per share on its common stock. The dividend is payable onMarch 26, 2019 to stockholders of record as of the close of business on March 15, 2019. The continued declaration and payment of dividends is at thediscretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results of operations, cash flows andother factors.104ITEM 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 Annual Report on Form 10-K, we carried out an evaluation under the supervision of the Chief ExecutiveOfficer and the Chief Financial Officer, and with the participation of our Disclosure Committee, of the effectiveness of the design and operation of ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief ExecutiveOfficer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2018.(b) Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the quarter ended December 31, 2018 that have materially affected or arereasonably 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 Exchange Act. Our internal control over financial reporting is designed by and under the supervision of our Chief Executive Officer andChief Financial Officer and effected by management and our board of directors to provide reasonable assurance regarding the reliability of the Company’sfinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the U.S.In July 2018, we completed the GOBA Acquisition, which represented $19.7 million of our consolidated net sales for the year ended December 31,2018 and $35.0 million of consolidated assets as of December 31, 2018. As the GOBA Acquisition occurred in the third quarter of 2018, the scope of ourevaluation of the effectiveness of internal control over financial reporting does not include GOBA. This exclusion is in accordance with the SEC's generalguidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.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, 2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission in Internal Control-Integrated Framework (2013). Our management concluded that our internal control over financial reporting waseffective as of December 31, 2018.The effectiveness of the Company’s internal control over financial reporting as of December 31, 2018 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.ITEM 9B. OTHER INFORMATIONNot applicable.105PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEInformation required under this Item with respect to the executive officers of the Company is incorporated by reference to "Item 1. Business" of thisForm 10-K. Except as provided below, all other information required by this Item is contained in the Company’s 2019 Definitive Proxy Statement, which isto be filed with the Securities and Exchange Commission prior to April 4, 2019, 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 stockholder who requests such information from ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047-2997,Attn: Office of the General Counsel.ITEM 11. EXECUTIVE COMPENSATIONInformation required under this Item is contained in the Company’s 2019 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 4, 2019, 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, 2018, about our common stock that may be issued upon the exercise of options and otherequity 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 holders4,125,067 $9.46 2,913,102(1) Equity compensation plans not approved by security holders— — — Total4,125,067 $9.46 2,913,102(1) (1)These are shares available for grant as of December 31, 2018 under the ACCO Brands Corporation Incentive Plan (the "Plan") pursuant to which theCompensation Committee of the Board of Directors or the Board of Directors may make various stock-based awards, including grants of stock options,stock-settled appreciation rights, restricted stock, restricted stock units and performance stock units. In addition to these shares, shares covered byoutstanding awards under the Plan that were forfeited or otherwise terminated may become available for grant under the Plan and, to the extent suchshares have become available as of December 31, 2018, they are included in the table as available for grant.Other information required under this Item is contained in the Company’s 2019 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 4, 2019, 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 2019 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 4, 2019, and is incorporated herein by reference.106ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESInformation required under this Item is contained in the Company’s 2019 Definitive Proxy Statement, which is to be filed with the Securities andExchange Commission prior to April 4, 2019, and is incorporated herein by reference.PART 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 Firm47Consolidated Balance Sheets as of December 31, 2018 and 201749Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 201650Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 201651Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 201652Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018, 2017 and 201653Notes to Consolidated Financial Statements552.Financial Statement Schedule:Schedule II - Valuation and Qualifying Accounts and Reserves for each of the years ended December 31, 2018, 2017 and 2016.3.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.ITEM 16. FORM 10-K SUMMARYNone.107EXHIBIT INDEXNumber Description of ExhibitPlans of acquisition, reorganization, arrangement, liquidation or succession2.1Share Sale Agreement, dated as of March 22, 2016, among ACCO Brands Australia Pty Limited, Bigadale Pty Limited, AndrewKaldor, Cherington Investments Pty Ltd, Freiburg Nominees Proprietary Limited and Enora Pty Ltd and certain Guarantors named therein(incorporated by reference to Exhibit 2.1 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on March 21, 2016 (FileNo. 001-08454))2.2Share Purchase Agreement, dated as of October 21, 2016, among ACCO Brands Corporation, ACCO Europe Limited and Esselte GroupHoldings (Luxembourg) S.A. (incorporated by reference to Exhibit 2.1 to ACCO Brands Corporation's Current Report on Form 8-K filed with theSEC on October 24, 2016 (File No. 001-08454))2.3Amendment Deed, dated as of January 31, 2017, to Share Purchase Agreement among ACCO Brands Corporation, ACCO EuropeLimited and Esselte Group Holdings (Luxembourg) S.A. (incorporated by reference to Exhibit 2.3 to ACCO Brands Corporation's Annual Report onForm 10-K filed with the SEC on February 27, 2017 (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 ACCOBrands Corporation's Current Report on Form 8-K filed with the SEC 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 ACCO BrandsCorporation's Current Report on Form 8-K filed the SEC on August 17, 2005 (File No. 001-08454))3.3Certificate of Elimination of the Series A Junior Participating Preferred Stock of the Company, as filed with the Secretary of State of theState of Delaware on September 11, 2015 (incorporated by reference to Exhibit 3.2 to ACCO Brands Corporation's Current Report on Form 8-K filedwith the SEC on September 11, 2015 (File No. 001-08454))3.4By-laws of ACCO Brands Corporation, as amended through December 9, 2015 (incorporated by reference to Exhibit 3.1 to ACCOBrands Corporation's Current Report on Form 8-K filed with the SEC on December 14, 2015 (File No. 001-08454))Instruments defining the rights of security holders, including indentures4.1Indenture, dated as of December 22, 2016, among ACCO Brands Corporation, as issuer, the guarantors named therein, and Wells FargoBank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to ACCO Brands Corporation's Annual Report on Form 10-K filedwith the SEC on February 27, 2017 (File No. 001-08454))Material Contracts10.1Separation Agreement, dated November 17, 2011, by and between MeadWestvaco and Monaco SpinCo Inc. (incorporated by referenceto Exhibit 10.1 of ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on November 22, 2011 (File No. 001-08454))10.2Amendment No. 1, dated as of March 19, 2012, to the Separation Agreement, dated as of November 17, 2011, by and amongMeadWestvaco Corporation and Monaco SpinCo Inc. (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation's Current Report onForm 8-K filed with the SEC on March 22, 2012 (File No. 001-08454))10.3Tax Matters Agreement, effective as of May 1, 2012, among the Company, MeadWestvaco Corporation and Monaco SpinCo Inc.(incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 7, 2012 (File No.001-08454))10.4Third Amended and Restated Credit Agreement, dated as of January 27, 2017, among the Company, certain subsidiaries of theCompany, Bank of America, N.A., as administrative agent, and the other agents and various lenders party hereto (incorporated by reference toExhibit 10.11 to ACCO Brands Corporation's Annual Report on Form 10-K filed with the SEC on February 27, 2017 (File No. 001-08454))108EXHIBIT INDEXNumber Description of Exhibit10.5First Amendment to the Third Amended and Restated Credit Agreement, dated as of January 27, 2017, among the Company, certainsubsidiaries of the Company, Bank of America, N.A., as administrative agent and the other agents and various lenders party hereto (incorporated byreference to Exhibit 10.1 to ACCO Brands Corporation's Quarterly Report on Form 10-Q filed with the SEC on October 30, 2018 (File No. 001-08454))Executive Compensation Plans and Management Contracts10.6ACCO Brands Corporation Executive Severance Plan (effective December 1, 2007) (incorporated by reference to Exhibit 10.1 toACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on November 29, 2007 (File No. 001-08454))10.7Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation's Current Report on Form8-K filed with the SEC on December 24, 2008 (File No. 001-08454))10.8Amended and Restated ACCO Brands Deferred Compensation Plan for Non-Employee Directors, effective December 14, 2009(incorporated by reference to Exhibit 10.41 to ACCO Brands Corporation's Annual Report on Form 10-K filed with the SEC on February 26, 2010(File No. 001-089454))10.92011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO BrandsCorporation's Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454))10.10Form of Nonqualified Stock Option Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan(incorporated by reference to Exhibit 10.3 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No.001-08454))10.11Amendment of 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 toACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on April 24, 2012 (File No. 001-08454))10.12Amendment of the ACCO Brands Corporation Executive Severance Plan, adopted as of October 23, 2012 (incorporated by referenceto Exhibit 10.1 to ACCO Brands Corporation's Quarterly Report on Form 10-Q filed with the SEC on October 31, 2012 (File No. 001-08454))10.13Form of Non-qualified Stock Option Agreement (Robert J. Keller) under the 2011 Amended and Restated Incentive Plan (incorporatedby reference to Exhibit 10.2 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on February 26, 2013 (File No. 001-08454))10.14Amendment to Deferred Compensation Plan for Non-Employee Directors, effective January 1, 2014 (incorporated by reference toExhibit 10.15 to ACCO Brands Corporation's Annual Report on Form 10-K filed with the SEC on February 25, 2014 (File No. 001-089454))10.15Form of 2011 Amended and Restated Incentive Plan Directors Restricted Stock Unit Award Agreement (incorporated by reference toExhibit 10.16 to ACCO Brands Corporation's Annual Report on Form 10-K filed with the SEC on February 25, 2014 (File No. 001-089454))10.16Form of Non-qualified Stock Option Agreement under the 2011 Amended and Restated Incentive Plan (incorporated by reference toExhibit 10.2 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on March 10, 2014 (File No. 001-08454))10.17SecondAmendment of 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.4 to ACCO BrandsCorporation's Quarterly Report on Form 10-Q filed with the SEC on April 30, 2014 (File No. 001-08454))10.18ACCO Brands Corporation Annual Incentive Plan, which is an amendment and restatement of the Amended and Restated ACCOBrands Corporation 2011 Incentive Plan, as amended (incorporated by reference to Exhibit 4.4 to ACCO Brands Corporation's RegistrationStatement on Form S-8 filed with the SEC on May 12, 2015 (File No. 001-08454))109EXHIBIT INDEXNumber Description of Exhibit10.19Formof Directors Restricted Stock Unit Award Agreement under the ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 18, 2015 (File No. 001-08454))10.20Formof Restricted Stock Unit Award Agreement under the ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.2 to ACCOBrands Corporation's Current Report on Form 8-K filed with the SEC on May 18, 2015 (File No. 001-08454))10.21Formof Performance Stock Unit Award Agreement under the ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.3 toACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 18, 2015 (File No. 001-08454))10.22Formof Nonqualified Stock Option Award Agreement under the ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.4 toACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 18, 2015 (File No. 001-08454))10.23Formof 2016-2018 Performance-Based Cash Award Agreement under the ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit10.35 to ACCO Brands Corporation's Annual Report on Form 10-K filed with the SEC on February 27, 2017 (File No. 001-08454))10.24Form of Executive Officer Restricted Stock Unit Award Agreement under the ACCO Brands Corporation Incentive Plan (incorporatedby reference to Exhibit 10.1 to ACCO Brands Corporation's Quarterly Report on Form 10-Q filed with the SEC on May 9, 2017 (File No. 001-08454))10.25ACCO Brands Corporation Executive Severance Plan, as amended and restated effective January 1, 2019 (incorporated by referenceto Exhibit 10.1 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on October 22, 2018 (File No. 001-09454))10.26ACCO Brands Corporation Nonqualified Deferred Compensation Plan*Other Exhibits21.1Subsidiaries of the Registrant*23.1Consent of KPMG LLP*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*101The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2018 formatted in XBRL(eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2018 and 2017, (ii) the Consolidated Statementsof Income for the years ended December 31, 2018, 2017 and 2016, (iii) the Consolidated Statements of Comprehensive Income for the years endedDecember 31, 2018, 2017 and 2016, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016, (v)Consolidated Statements of Stockholders Equity for the years ended December 31, 2018, 2017 and 2016, and (vi) related notes to those financialstatements**Filed herewith.110SIGNATURESPursuant 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 Chairman, 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/ Kathleen D. Hood Kathleen D. Hood Senior Vice President and Chief Accounting Officer (principalaccounting officer)February 27, 2019Pursuant 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 Chairman, President and Chief Executive Officer(principal executive officer)February 27, 2019Boris Elisman /s/ Neal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 27, 2019Neal V. Fenwick /s/ Kathleen D. Hood Senior Vice President and ChiefAccounting Officer(principal accounting officer) February 27, 2019Kathleen D. Hood /s/ James A. Buzzard* Director February 27, 2019James A. Buzzard /s/ Kathleen S. Dvorak* Director February 27, 2019Kathleen S. Dvorak 111Signature Title Date /s/ Pradeep Jotwani* Director February 27, 2019Pradeep Jotwani /s/ Robert J. Keller* Director February 27, 2019Robert J. Keller /s/ Thomas Kroeger* Director February 27, 2019Thomas Kroeger /s/ Ron Lombardi* Director February 27, 2019Ron Lombardi /s/ Graciela Monteagudo* Director February 27, 2019Graciela Monteagudo /s/ Hans Michael Norkus* Director February 27, 2019Hans Michael Norkus /s/ E. Mark Rajkowski* Director February 27, 2019E. Mark Rajkowski /s/ Neal V. Fenwick * Neal V. Fenwick asAttorney-in-Fact 112ACCO 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)2018 2017 2016Balance at beginning of year$5.4 $4.5 $4.8Additions charged to expense0.3 — 0.2Deductions - write offs(1.1) (1.1) (0.8)Acquisitions2.2 1.7 0.1Foreign exchange changes(0.3) 0.3 0.2Balance at end of year$6.5 $5.4 $4.5Allowances for Sales Discounts, Other Credits and ReturnsChanges in the allowances for sales discounts and returns were as follows: Year Ended December 31,(in millions)2018 2017(1) 2016(1)Balance at beginning of year$9.7 $9.4 $11.7Additions charged to expense12.7 23.7 22.5Deductions(11.1) (24.5) (24.9)Reclass to Other current liabilities(1)(3.4) — —Acquisitions0.3 0.8 —Foreign exchange changes(0.4) 0.3 0.1Balance at end of year$7.8 $9.7 $9.4(1) On January 1, 2018, the Company adopted accounting standard ASU 2014-09, Revenue from Contracts with Customers and all relatedamendments (Topic 606), applying the modified retrospective transition method to all customer contracts that were not completed as of January 1, 2018.Results for reporting periods beginning after December 31, 2017 are presented under ASU 2014-09, while prior period amounts are not adjusted and continueto be reported under the accounting standards in effect for the prior period. As a result, the allowance for returns has been reclassified from "Accountsreceivable, net" to "Other current liabilities." For more information, see "Note 2. Recent Accounting Pronouncements and Adopted Accounting Standards" tothe consolidated financial statements contained in Part II, Item 8. of this report.Allowances for Cash DiscountsChanges in the allowances for cash discounts were as follows: Year Ended December 31,(in millions)2018 2017 2016Balance at beginning of year$3.0 $1.8 $2.2Additions charged to expense19.6 22.9 13.6Deductions - discounts taken(21.3) (22.6) (14.1)Acquisitions0.5 0.8 0.2Foreign exchange changes(0.1) 0.1 (0.1)Balance at end of year$1.7 $3.0 $1.8113ACCO 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)2018 2017 2016Balance at beginning of year$4.1 $1.9 $1.7Provision for warranties issued4.1 2.8 2.2Deductions - settlements made (in cash or in kind)(3.1) (2.7) (2.2)Acquisitions— 1.8 0.3Foreign exchange changes(0.2) 0.3 (0.1)Balance at end of year$4.9 $4.1 $1.9Income Tax Valuation AllowanceChanges in the deferred tax valuation allowances were as follows: Year Ended December 31,(in millions)2018 2017 2016Balance at beginning of year$45.0 $11.7 $22.1Charge for effect of U.S. Tax Act— 15.1 —Debits (Credits) to expense6.9 (0.7) (0.7)Charged (credited) to other accounts— 1.2 (9.3)Acquisitions— 16.1 —Foreign exchange changes(1.1) 1.6 (0.4)Balance at end of year$50.8 $45.0 $11.7See accompanying report of independent registered public accounting firm.114Exhibit 10.26ACCO Brands Corporation Nonqualified DeferredCompensation PlanJanuary 1, 2019IMPORTANT NOTEThis document has not been approved by the Department of Labor, Internal Revenue Service or any other governmentalentity. An adopting Employer must determine whether the Plan is subject to the Federal securities laws and thesecurities laws of the various states. An adopting Employer may not rely on this document to ensure any particular taxconsequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferredcompensation to a select group of management or highly compensated employees” under Title I of the EmployeeRetirement Income Security Act of 1974, as amended, with respect to the Employer’s particular situation. FidelityEmployer Services Company, its affiliates and employees cannot provide you with legal advice in connection with theexecution of this document. This document should be reviewed by the Employer’s attorney prior to execution.March 2018March 2018TABLE OF CONTENTSPREAMBLEARTICLE 1 – GENERAL1.1Plan1.2Effective Dates1.3Amounts Not Subject to Code Section 409AARTICLE 2 – DEFINITIONS2.1Account2.2Administrator2.3Adoption Agreement2.4Beneficiary2.5Board or Board of Directors2.6Bonus2.7Change in Control2.8Code2.9Compensation2.10Director2.11Disability2.12Eligible Employee2.13Employer2.14ERISA2.15Identification Date2.16Key Employee2.17Participant2.18Plan2.19Plan Sponsor2.20Plan Year2.21Related Employer2.22Retirement2.23Separation from Service2.24Unforeseeable Emergency2.25Valuation Date2.26Years of ServiceARTICLE 3 – PARTICIPATION3.1Participation3.2Termination of ParticipationiiiARTICLE 4 – PARTICIPANT ELECTIONS4.1Deferral Agreement4.2Amount of Deferral4.3Timing of Election to Defer4.4Election of Payment Schedule and Form of PaymentARTICLE 5 – EMPLOYER CONTRIBUTIONS5.1Matching Contributions5.2Other ContributionsARTICLE 6 – ACCOUNTS AND CREDITS6.1Establishment of Account6.2Credits to AccountARTICLE 7 – INVESTMENT OF CONTRIBUTIONS7.1Investment Options7.2Adjustment of AccountsARTICLE 8 – RIGHT TO BENEFITS8.1Vesting8.2Death8.3DisabilityARTICLE 9 – DISTRIBUTION OF BENEFITS9.1Amount of Benefits9.2Method and Timing of Distributions9.3Unforeseeable Emergency9.4Payment Election Overrides9.5Cashouts of Amounts Not Exceeding Stated Limit9.6Required Delay in Payment to Key Employees9.7Change in Control9.8Permissible Delays in Payment9.9Permitted Acceleration of PaymentiiiARTICLE 10 – AMENDMENT AND TERMINATION10.1Amendment by Plan Sponsor10.2Plan Termination Following Change in Control or Corporate Dissolution10.3Other Plan TerminationsARTICLE 11 – THE TRUST11.1Establishment of Trust11.2Rabbi Trust11.3Investment of Trust FundsARTICLE 12 – PLAN ADMINISTRATION12.1Powers and Responsibilities of the Administrator12.2Claims and Review Procedures12.3Plan Administrative CostsARTICLE 13 – MISCELLANEOUS13.1Unsecured General Creditor of the Employer13.2Employer’s Liability13.3Limitation of Rights13.4Anti-Assignment13.5Facility of Payment13.6Notices13.7Tax Withholding13.8Indemnification13.9Successors13.10Disclaimer13.11Governing LawivPREAMBLE The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for the purpose ofproviding deferred compensation for a select group of management or highly compensated employees” within themeaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, asamended, or an “excess benefit plan” within the meaning of Section 3(36) of the Employee Retirement Income SecurityAct of 1974, as amended, or a combination of both. The Plan is further intended to conform with the requirements ofInternal Revenue Code Section 409A and the final regulations issued thereunder and shall be interpreted, implementedand administered in a manner consistent therewith. ARTICLE 1 – GENERAL1.1Plan. The Plan will be referred to by the name specified in the Adoption Agreement.1.2Effective Dates.(a)Original Effective Date. The Original Effective Date is the date as of which the Plan was initially adopted.(b)Amendment Effective Date. The Amendment Effective Date is the date specified in the Adoption Agreement asof which the Plan is amended and restated. Except to the extent otherwise provided herein or in the AdoptionAgreement, the Plan shall apply to amounts deferred and benefit payments made on or after the AmendmentEffective Date.(c)Special Effective Date. A Special Effective Date may apply to any given provision if so specified in Appendix Aof the Adoption Agreement. A Special Effective Date will control over the Original Effective Date orAmendment Effective Date, whichever is applicable, with respect to such provision of the Plan. 1.3Amounts Not Subject to Code Section 409AExcept as otherwise indicated by the Plan Sponsor in Section 1.01 of the Adoption Agreement, amounts deferredbefore January 1, 2005 that are earned and vested on December 31, 2004 will be separately accounted for andadministered in accordance with the terms of the Plan as in effect on December 31, 2004.1‑1 ARTICLE 2 – DEFINITIONSPronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearlyindicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a differentmeaning is clearly required by the context:2.1“Account” means an account established for the purpose of recording amounts credited on behalf of aParticipant and any income, expenses, gains, losses or distributions included thereon. The Account shall be abookkeeping entry only and shall be utilized solely as a device for the measurement and determination of theamounts to be paid to a Participant or to the Participant’s Beneficiary pursuant to the Plan. 2.2“Administrator” means the person or persons designated by the Plan Sponsor in Section 1.05 of the AdoptionAgreement to be responsible for the administration of the Plan. If no Administrator is designated in the AdoptionAgreement, the Administrator is the Plan Sponsor. 2.3“Adoption Agreement” means the agreement adopted by the Plan Sponsor that establishes the Plan. 2.4“Beneficiary” means the persons, trusts, estates or other entities entitled under Section 8.2 to receive benefitsunder the Plan upon the death of a Participant. 2.5“Board” or “Board of Directors” means the Board of Directors of the Plan Sponsor. 2.6“Bonus” means an amount of incentive remuneration payable by the Employer to a Participant. 2.7“Change in Control” means the occurrence of an event involving the Plan Sponsor that is described in Section9.7. 2.8“Code” means the Internal Revenue Code of 1986, as amended. 2.9“Compensation” has the meaning specified in Section 3.01 of the Adoption Agreement. 2.10“Director” means a non-employee member of the Board who has been designated by the Employer as eligible toparticipate in the Plan. 2‑1 2.11“Disability” shall have the meaning ascribed to such term in the ACCO Brands Corporation Incentive Plan, asamended and restated effective May 12, 2015, and as further amended from time to time, or any successor planthereto. As of the Original Effective Date, “Disability” means a total and permanent disability as from time to time isdefined under the long-term disability plan of ACCO Brands Corporation or a Related Employer applicable to theParticipant or, in the case in which there is no applicable plan, a total and permanent disability as defined inSection 22(e)(3) of the Code (or any successor Section); provided, however, that to the extent an amount payableunder the Plan which constitutes a deferral of compensation pursuant to Section 409A would become payableupon Disability, “Disability” for purposes of such payment shall not be deemed to have occurred unless thedisability also satisfies the requirements of Treasury Regulation Section 1.409A-3. Subject to the approval of theAdministrator, a different definition of Disability may be applicable to a Participant employed outside the UnitedStates who is subject to local disability laws and programs.2.12“Eligible Employee” means an employee of the Employer who satisfies the requirements in Section 2.01 of theAdoption Agreement. 2.13“Employer” means the Plan Sponsor and any other entity which is authorized by the Plan Sponsor to participatein and, in fact, does adopt the Plan.2.14“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.2.15“Identification Date” means the date as of which Key Employees are determined which is specified in Section1.06 of the Adoption Agreement.2.16“Key Employee” means an employee who satisfies the conditions set forth in Section 9.6.2.17“Participant” means an Eligible Employee or Director who commences participation in the Plan in accordancewith Article 3.2.18“Plan” means the unfunded plan of deferred compensation set forth herein, including the Adoption Agreementand any trust agreement, as adopted by the Plan Sponsor and as amended from time to time.2.19“Plan Sponsor” means the entity identified in Section 1.03 of the Adoption Agreement or any successor bymerger, consolidation or otherwise.2‑2 2.20“Plan Year” means the period identified in Section 1.02 of the Adoption Agreement.2.21“Related Employer” means the Employer and (a) any corporation that is a member of a controlled group ofcorporations as defined in Code Section 414(b) that includes the Employer and (b) any trade or business that isunder common control as defined in Code Section 414(c) that includes the Employer.2.22“Retirement” has the meaning specified in 6.01(f) of the Adoption Agreement.2.23“Separation from Service” means the date that the Participant dies, retires or otherwise has a termination ofemployment with respect to all entities comprising the Related Employer. A Separation from Service does notoccur if the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leavedoes not exceed six months or such longer period during which the Participant’s right to re-employment isprovided by statute or contract. If the period of leave exceeds six months and the Participant’s right to re-employment is not provided either by statute or contract, a Separation from Service will be deemed to haveoccurred on the first day following the six-month period. If the period of leave is due to any medically determinablephysical or mental impairment that can be expected to result in death or can be expected to last for a continuousperiod of not less than six months, where the impairment causes the Participant to be unable to perform the dutiesof his or her position of employment or any substantially similar position of employment, a 29 month period ofabsence may be substituted for the six month period.Whether a termination of employment has occurred is based on whether the facts and circumstances indicate thatthe Related Employer and the Participant reasonably anticipated that no further services would be performed aftera certain date or that the level of bona fide services the Participant would perform after such date (whether as anemployee or as an independent contractor) would permanently decrease to no more than 20 percent of theaverage level of bona fide services performed (whether as an employee or an independent contractor) over theimmediately preceding 36 month period (or the full period of services to the Related Employer if the employee hasbeen providing services to the Related Employer for less than 36 months).An independent contractor is considered to have experienced a Separation from Service with the RelatedEmployer upon the expiration of the contract (or, in the case of more than one contract, all contracts) under whichservices are performed for the Related Employer if the expiration2‑3 constitutes a good-faith and complete termination of the contractual relationship.If a Participant provides services as both an employee and an independent contractor of the Related Employer,the Participant must separate from service both as an employee and as an independent contractor to be treated ashaving incurred a Separation from Service. If a Participant ceases providing services as an independentcontractor and begins providing services as an employee, or ceases providing services as an employee andbegins providing services as an independent contractor, the Participant will not be considered to haveexperienced a Separation from Service until the Participant has ceased providing services in both capacities.If a Participant provides services both as an employee and as a member of the board of directors of a corporateRelated Employer (or an analogous position with respect to a noncorporate Related Employer), the servicesprovided as a director are not taken into account in determining whether the Participant has incurred a Separationfrom Service as an employee for purposes of a nonqualified deferred compensation plan in which the Participantparticipates as an employee that is not aggregated under Code Section 409A with any plan in which theParticipant participates as a director.If a Participant provides services both as an employee and as a member of the board of directors of a corporaterelated Employer (or an analogous position with respect to a noncorporate Related Employer), the servicesprovided as an employee are not taken into account in determining whether the Participant has experienced aSeparation from Service as a director for purposes of a nonqualified deferred compensation plan in which theParticipant participates as a director that is not aggregated under Code Section 409A with any plan in which theParticipant participates as an employee.All determinations of whether a Separation from Service has occurred will be made in a manner consistent withCode Section 409A and the final regulations thereunder.2.24“Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from an illness oraccident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent(as defined in Code Section 152, without regard to Code section 152(b)(1), (b)(2) and (d)(1)(B); loss of theParticipant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as aresult of events beyond the control of the Participant.2‑4 2.25“Valuation Date” means each business day of the Plan Year that the New York Stock Exchange is open.2.26“Years of Service” means each one year period for which the Participant receives service credit in accordancewith the provisions of Section 7.01(d) of the Adoption Agreement.2‑5 ARTICLE 3 – PARTICIPATION3.1Participation. The Participants in the Plan shall be those Directors and employees of the Employer who satisfythe requirements of Section 2.01 of the Adoption Agreement.3.2Termination of Participation. The Administrator may terminate a Participant’s participation in the Plan in amanner consistent with Code Section 409A. If the Employer terminates a Participant’s participation before theParticipant experiences a Separation from Service the Participant’s vested Accounts shall be paid in accordancewith the provisions of Article 9.3‑1 ARTICLE 4 – PARTICIPANT ELECTIONS4.1Deferral Agreement. If permitted by the Plan Sponsor in accordance with Section 4.01 of the AdoptionAgreement, each Eligible Employee and Director may elect to defer his Compensation within the meaning ofSection 3.01 of the Adoption Agreement by executing in writing or electronically, a deferral agreement inaccordance with rules and procedures established by the Administrator and the provisions of this Article 4.A new deferral agreement must be timely executed for each Plan Year during which the Eligible Employee orDirector desires to defer Compensation. An Eligible Employee or Director who does not timely execute a deferralagreement shall be deemed to have elected zero deferrals of Compensation for such Plan Year.A deferral agreement may be changed or revoked during the period specified by the Administrator. Except asprovided in Section 9.3 or in Section 4.01(c) of the Adoption Agreement, a deferral agreement becomesirrevocable at the close of the specified period.4.2Amount of Deferral. An Eligible Employee or Director may elect to defer Compensation in any amount permittedby Section 4.01(a) of the Adoption Agreement. 4.3Timing of Election to Defer. Each Eligible Employee or Director who desires to defer Compensation otherwisepayable during a Plan Year must execute a deferral agreement within the period preceding the Plan Yearspecified by the Administrator. Each Eligible Employee who desires to defer Compensation that is a Bonus mustexecute a deferral agreement within the period preceding the Plan Year during which the Bonus is earned that isspecified by the Administrator, except that if the Bonus can be treated as performance based compensation asdescribed in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within the period specifiedby the Administrator, which period, in no event, shall end after the date which is six months prior to the end of theperiod during which the Bonus is earned, provided the Participant has performed services continuously from thelater of the beginning of the performance period or the date the performance criteria are established through thedate the Participant executed the deferral agreement and provided further that the compensation has not yetbecome ‘readily ascertainable’ within the meaning of Reg. Sec 1.409A-2(a)(8). In addition, if the Compensationqualifies as ‘fiscal year compensation’ within the meaning of Reg. Sec.4‑1 1.409A-2(a)(6), the deferral agreement may be made not later than the end of the Employer’s taxable yearimmediately preceding the first taxable year of the Employer in which any services are performed for which suchCompensation is payable.Except as otherwise provided below, an employee who is classified or designated as an Eligible Employeeduring a Plan Year or a Director who is designated as eligible to participate during a Plan Year may elect to deferCompensation otherwise payable during the remainder of such Plan Year in accordance with the rules of thisSection 4.3 by executing a deferral agreement within the thirty (30) day period beginning on the date theemployee is classified or designated as an Eligible Employee or the date the Director is designated as eligible,whichever is applicable, if permitted by Section 4.01(b)(ii) of the Adoption Agreement. If Compensation is basedon a specified performance period that begins before the Eligible Employee or Director executes his deferralagreement, the election will be deemed to apply to the portion of such Compensation equal to the total amount ofCompensation for the performance period multiplied by the ratio of the number of days remaining in theperformance period after the election becomes irrevocable and effective over the total number of days in theperformance period. The rules of this paragraph shall not apply unless the Eligible Employee or Director can betreated as initially eligible in accordance with Reg. Sec. 1.409A-2(a)(7).4.4Election of Payment Schedule and Form of Payment. All elections of a payment schedule and a form of payment will be made in accordance with rules and proceduresestablished by the Administrator and the provisions of this Section 4.4.(a) If the Plan Sponsor has elected to permit annual distribution elections in accordance with Section 6.01(h) ofthe Adoption Agreement the following rules apply. At the time an Eligible Employee or Director completes adeferral agreement, the Eligible Employee or Director must elect a distribution event (which includes a specifiedtime) and a form of payment for the Compensation subject to the deferral agreement from among the options thePlan Sponsor has made available for this purpose and which are specified in 6.01(b) of the Adoption Agreement.Prior to the time required by Reg. Sec. 1.409A-2, the Eligible Employee or Director shall elect a distribution event(which includes a specified time) and a form of payment for any Employer contributions that may be credited to theParticipant’s Account during the Plan Year. If an Eligible Employee or Director fails to elect a distribution event, heshall be deemed to have elected Separation from Service as the distribution event. If he fails to4‑2 elect a form of payment, he shall be deemed to have elected a lump sum form of payment.(b) If the Plan Sponsor has elected not to permit annual distribution elections in accordance with Section 6.01(h)of the Adoption Agreement the following rules apply. At the time an Eligible Employee or Director first completes adeferral agreement but in no event later than the time required by Reg. Sec. 1.409A-2, the Eligible Employee orDirector must elect a distribution event (which includes a specified time) and a form of payment for amountscredited to his Account from among the options the Plan Sponsor has made available for this purpose and whichare specified in Section 6.01(b) of the Adoption Agreement. If an Eligible Employee or Director fails to elect adistribution event, he shall be deemed to have elected Separation from Service in the distribution event. If the failsto elect a form of payment, he shall be deemed to have elected a lump sum form of payment..4‑3 ARTICLE 5 – EMPLOYER CONTRIBUTIONS5.1Matching Contributions. If elected by the Plan Sponsor in Section 5.01(a) of the Adoption Agreement, theEmployer will credit the Participant’s Account with a matching contribution determined in accordance with theformula specified in Section 5.01(a) of the Adoption Agreement. The matching contribution will be treated asallocated to the Participant’s Account at the time specified in Section 5.01(a)(iii) of the Adoption Agreement.5.2Other Contributions. If elected by the Plan Sponsor in Section 5.01(b) of the Adoption Agreement, the Employerwill credit the Participant’s Account with a contribution determined in accordance with the formula or methodspecified in Section 5.01(b) of the Adoption Agreement. The contribution will be treated as allocated to theParticipant’s Account at the time specified in Section 5.01(b)(iii) of the Adoption Agreement.5‑1 ARTICLE 6 – ACCOUNTS AND CREDITS6.1Establishment of Account. For accounting and computational purposes only, the Administrator will establishand maintain an Account on behalf of each Participant which will reflect the credits made pursuant to Section 6.2,distributions or withdrawals, along with the earnings, expenses, gains and losses allocated thereto, attributable tothe hypothetical investments made with the amounts in the Account as provided in Article 7. The Administrator willestablish and maintain such other records and accounts, as it decides in its discretion to be reasonably requiredor appropriate to discharge its duties under the Plan.6.2Credits to Account. A Participant’s Account will be credited for each Plan Year with the amount of his electivedeferrals under Section 4.1 at the time the amount subject to the deferral election would otherwise have beenpayable to the Participant and the amount of Employer contributions treated as allocated on his behalf underArticle 5.6‑1 ARTICLE 7 – INVESTMENT OF CONTRIBUTIONS7.1Investment Options. The amount credited to each Account shall be treated as invested in the investment optionsdesignated for this purpose by the Administrator.7.2Adjustment of Accounts. The amount credited to each Account shall be adjusted for hypothetical investmentearnings, expenses, gains or losses in an amount equal to the earnings, expenses, gains or losses attributable tothe investment options selected by the party designated in Section 9.01 of the Adoption Agreement from amongthe investment options provided in Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, aParticipant (or the Participant’s Beneficiary after the death of the Participant) may, in accordance with rules andprocedures established by the Administrator, select the investments from among the options provided in Section7.1 to be used for the purpose of calculating future hypothetical investment adjustments to the Account or to futurecredits to the Account under Section 6.2 effective as of the Valuation Date coincident with or next following noticeto the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect: (a) the hypotheticalearnings, expenses, gains and losses described above; (b) amounts credited pursuant to Section 6.2; and (c)distributions or withdrawals. In addition, each Account may be adjusted for its allocable share of the hypotheticalcosts and expenses associated with the maintenance of the hypothetical investments provided in Section 7.1.7‑1 ARTICLE 8 – RIGHT TO BENEFITS8.1Vesting. A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to his Accountattributable to his elective deferrals made in accordance with Section 4.1.A Participant’s right to the amounts credited to his Account attributable to Employer contributions made inaccordance with Article 5 shall be determined in accordance with the relevant schedule and provisions in Section7.01 of the Adoption Agreement. Upon a Separation from Service and after application of the provisions of Section7.01 of the Adoption Agreement, the Participant shall forfeit the nonvested portion of his Account.8.2Death. The Plan Sponsor may elect to accelerate vesting upon the death of the Participant in accordance withSection 7.01(c) of the Adoption Agreement and/or to accelerate distributions upon Death in accordance withSection 6.01(b) or Section 6.01(d) of the Adoption Agreement. If the Plan Sponsor does not elect to acceleratedistributions upon death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, thevested amount credited to the Participant’s Account will be paid in accordance with the provisions of Article 9.A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of Beneficiaryor Beneficiaries in accordance with rules and procedures established by the Administrator.A copy of the death notice or other sufficient documentation must be filed with and approved by the Administrator.If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for partor all of the Participant’s vested Account, such amount will be paid to his estate (such estate shall be deemed tobe the Beneficiary for purposes of the Plan) in accordance with the provisions of Article 9.8.3Disability. If the Plan Sponsor has elected to accelerate vesting upon the occurrence of a Disability in accordancewith Section 7.01(c) of the Adoption Agreement and/or to permit distributions upon Disability in accordance withSection 6.01(b) or Section 6.01(d) of the Adoption Agreement, the determination of whether a Participant hasincurred a Disability shall be made by the Administrator in its sole discretion in a manner consistent with therequirements of Code Section 409A.8‑1 ARTICLE 9 – DISTRIBUTION OF BENEFITS9.1Amount of Benefits. The vested amount credited to a Participant’s Account as determined under Articles 6, 7and 8 shall determine and constitute the basis for the value of benefits payable to the Participant under the Plan. 9.2Method and Timing of Distributions. Except as otherwise provided in this Article 9, distributions under the Planshall be made in accordance with the elections made or deemed made by the Participant under Article 4. Subjectto the provisions of Section 9.6 requiring a six month delay for certain distributions to Key Employees,distributions following a payment event shall commence at the time specified in Section 6.01(a) of the AdoptionAgreement. If permitted by Section 6.01(g) of the Adoption Agreement, a Participant may elect, at least twelvemonths before a scheduled distribution event, to delay the payment date for a minimum period of sixty monthsfrom the originally scheduled date of payment, provided the election does not take effect for at least twelve monthsfrom the date on which the election is made. The distribution election change must be made in accordance withprocedures and rules established by the Administrator. The Participant may, at the same time the date of paymentis deferred, change the form of payment but such change in the form of payment may not effect an acceleration ofpayment in violation of Code Section 409A or the provisions of Reg. Sec. 1.409A-2(b). For purposes of thisSection 9.2, a series of installment payments is always treated as a single payment and not as a series ofseparate payments. 9.3Unforeseeable Emergency. A Participant may request a distribution due to an Unforeseeable Emergency if thePlan Sponsor has elected to permit Unforeseeable Emergency withdrawals under Section 8.01(a) of the AdoptionAgreement. The request must be in writing and must be submitted to the Administrator along with evidence thatthe circumstances constitute an Unforeseeable Emergency. The Administrator has the discretion to requirewhatever evidence it deems necessary to determine whether a distribution is warranted, and may require theParticipant to certify that the need cannot be met from other sources reasonably available to the Participant.Whether a Participant has incurred an Unforeseeable Emergency will be determined by the Administrator on thebasis of the relevant facts and circumstances in its sole discretion, but, in no event, will an UnforeseeableEmergency be deemed to exist if the hardship can be relieved: (a) through reimbursement or compensation byinsurance or otherwise, (b) by liquidation of the Participant’s assets to the extent such liquidation would not itselfcause severe financial hardship, or9‑1 (c) by cessation of deferrals under the Plan. A distribution due to an Unforeseeable Emergency must be limited tothe amount reasonably necessary to satisfy the emergency need and may include any amounts necessary to payany federal, state, foreign or local income taxes and penalties reasonably anticipated to result from thedistribution. The distribution will be made in the form of a single lump sum cash payment. If permitted by Section8.01(b) of the Adoption Agreement, a Participant’s deferral elections for the remainder of the Plan Year will becancelled upon a withdrawal due to an Unforeseeable Emergency. If the payment of all or any portion of theParticipant’s vested Account is being delayed in accordance with Section 9.6 at the time he experiences anUnforeseeable Emergency, the amount being delayed shall not be subject to the provisions of this Section 9.3until the expiration of the six month period of delay required by section 9.6.9.4Payment Election Overrides. If the Plan Sponsor has elected one or more payment election overrides inaccordance with Section 6.01(d) of the Adoption Agreement, the following provisions apply. Upon the occurrenceof the first event selected by the Plan Sponsor, the remaining vested amount credited to the Participant’s Accountshall be paid in the form designated to the Participant or his Beneficiary regardless of whether the Participant hadmade different elections of time and /or form of payment or whether the Participant was receiving installmentpayments at the time of the event. 9.5Cashouts Of Amounts Not Exceeding Stated Limit. If the vested amount credited to the Participant’s Accountdoes not exceed the limit established for this purpose by the Plan Sponsor in Section 6.01(e) of the AdoptionAgreement at the time he incurs a Separation from Service for any reason, the Employer shall distribute suchamount to the Participant at the time specified in Section 6.01(a) of the Adoption Agreement in a single lump sumcash payment following such Separation from Service regardless of whether the Participant had made differentelections of time or form of payment as to the vested amount credited to his Account or whether the Participantwas receiving installments at the time of such termination. A Participant’s Account, for purposes of this Section9.5, shall include any amounts described in Section 1.3. 9.6Required Delay in Payment to Key Employees. Except as otherwise provided in this Section 9.6, a distributionmade on account of Separation from Service (or Retirement, if applicable) to a Participant who is a Key Employeeas of the date of his Separation from Service (or Retirement, if applicable) shall not be made before the date whichis six months after the Separation from Service (or Retirement, if applicable).9‑2 (a) A Participant is treated as a Key Employee if (i) he is employed by a Related Employer any of whose stock ispublicly traded on an established securities market, and (ii) he satisfies the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii), determined without regard to Code Section 416(i)(5), at any time during the twelve monthperiod ending on the Identification Date.(b) A Participant who is a Key Employee on an Identification Date shall be treated as a Key Employee forpurposes of the six month delay in distributions for the twelve month period beginning on the first day of a monthno later than the fourth month following the Identification Date. The Identification Date and the effective date of thedelay in distributions shall be determined in accordance with Section 1.06 of the Adoption Agreement.(c) The Plan Sponsor may elect to apply an alternative method to identify Participants who will be treated as KeyEmployees for purposes of the six month delay in distributions if the method satisfies each of the followingrequirements. The alternative method is reasonably designed to include all Key Employees, is an objectivelydeterminable standard providing no direct or indirect election to any Participant regarding its application, andresults in either all Key Employees or no more than 200 Key Employees being identified in the class as of anydate. Use of an alternative method that satisfies the requirements of this Section 9.6(c ) will not be treated as achange in the time and form of payment for purposes of Reg. Sec. 1.409A-2(b).(d) The six month delay does not apply to payments described in Section 9.9(a),(b) or (d) or to payments thatoccur after the death of the Participant. If the payment of all or any portion of the Participant’s vested Account isbeing delayed in accordance with this Section 9.6 at the time he incurs a Disability which would otherwise requirea distribution under the terms of the Plan, no amount shall be paid until the expiration of the six month period ofdelay required by this Section 9.6.9.7Change in Control. If the Plan Sponsor has elected to permit distributions upon a Change in Control, thefollowing provisions shall apply. A distribution made upon a Change in Control will be made at the time specifiedin Section 6.01(a) of the Adoption Agreement in the form elected by the Participant in accordance with theprocedures described in Article 4. Alternatively, if the Plan Sponsor has elected in accordance with9‑3 Section 11.02 of the Adoption Agreement to require distributions upon a Change in Control, the Participant’sremaining vested Account shall be paid to the Participant or the Participant’s Beneficiary at the time specified inSection 6.01(a) of the Adoption Agreement as a single lump sum payment. A Change in Control, for purposes ofthe Plan, will occur upon a change in the ownership of the Plan Sponsor, a change in the effective control of thePlan Sponsor or a change in the ownership of a substantial portion of the assets of the Plan Sponsor, but only ifelected by the Plan Sponsor in Section 11.03 of the Adoption Agreement. The Plan Sponsor, for this purpose,includes any corporation identified in this Section 9.7. All distributions made in accordance with this Section 9.7are subject to the provisions of Section 9.6. If a Participant continues to make deferrals in accordance with Article 4 after he has received a distribution due toa Change in Control, the residual amount payable to the Participant shall be paid at the time and in the formspecified in the elections he makes in accordance with Article 4 or upon his death or Disability as provided inArticle 8. Whether a Change in Control has occurred will be determined by the Administrator in accordance with the rulesand definitions set forth in this Section 9.7. A distribution to the Participant will be treated as occurring upon aChange in Control if the Plan Sponsor terminates the Plan in accordance with Section 10.2 and distributes theParticipant’s benefits within twelve months of a Change in Control as provided in Section 10.3. (a)Relevant Corporations. To constitute a Change in Control for purposes of the Plan, the event must relate to(i) the corporation for whom the Participant is performing services at the time of the Change in Control,(ii) the corporation that is liable for the payment of the Participant’s benefits under the Plan (or allcorporations liable if more than one corporation is liable) but only if either the deferred compensation isattributable to the performance of services by the Participant for such corporation (or corporations) orthere is a bona fide business purpose for such corporation (or corporations) to be liable for suchpayment and, in either case, no significant purpose of making such corporation (or corporations) liablefor such payment is the avoidance of federal income tax, or (iii) a corporation that is a majorityshareholder of a corporation identified in (i) or (ii), or any corporation in a chain of corporations in whicheach corporation is a majority shareholder of another corporation in the chain, ending in a corporationidentified in (i) or (ii). A majority shareholder is defined as a shareholder owning more than fifty percent(50%) of the total fair market value and voting power of such corporation. 9‑4 (b)Stock Ownership. Code Section 318(a) applies for purposes of determining stock ownership. Stockunderlying a vested option is considered owned by the individual who owns the vested option (and thestock underlying an unvested option is not considered owned by the individual who holds the unvestedoption). If, however, a vested option is exercisable for stock that is not substantially vested (as definedby Treasury Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not treated asowned by the individual who holds the option. (c)Change in the Ownership of a Corporation. A change in the ownership of a corporation occurs on the datethat any one person or more than one person acting as a group, acquires ownership of stock of thecorporation that, together with stock held by such person or group, constitutes more than fifty percent(50%) of the total fair market value or total voting power of the stock of such corporation. If any oneperson or more than one person acting as a group is considered to own more than fifty percent (50%) ofthe total fair market value or total voting power of the stock of a corporation, the acquisition of additionalstock by the same person or persons is not considered to cause a change in the ownership of thecorporation (or to cause a change in the effective control of the corporation as discussed below inSection 9.7(d)). An increase in the percentage of stock owned by any one person, or persons acting asa group, as a result of a transaction in which the corporation acquires its stock in exchange for propertywill be treated as an acquisition of stock. Section 9.7(c) applies only when there is a transfer of stock ofa corporation (or issuance of stock of a corporation) and stock in such corporation remains outstandingafter the transaction. For purposes of this Section 9.7(c), persons will not be considered to be acting asa group solely because they purchase or own stock of the same corporation at the same time or as aresult of a public offering. Persons will, however, be considered to be acting as a group if they areowners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, orsimilar business transaction with the corporation. If a person, including an entity, owns stock in bothcorporations that enter into a merger, consolidation, purchase or acquisition of stock, or similartransaction, such shareholder is considered to be acting as a group with other shareholders in acorporation only with respect to ownership in that corporation prior to the transaction giving rise to thechange and not with respect to the ownership interest in the other corporation. (d)Change in the effective control of a corporation. A change in the effective control of a corporation occurson the date that either (i) any9‑5 one person, or more than one person acting as a group, acquires (or has acquired during the twelve monthperiod ending on the date of the most recent acquisition by such person or persons) ownership of stock ofthe corporation possessing thirty percent (30%) or more of the total voting power of the stock of suchcorporation, or (ii) a majority of members of the corporation’s board of directors is replaced during any twelvemonth period by directors whose appointment or election is not endorsed by a majority of the members of thecorporation’s board of directors prior to the date of the appointment or election, provided that for purposes ofthis paragraph (ii), the term corporation refers solely to the relevant corporation identified in Section 9.7(a) forwhich no other corporation is a majority shareholder for purposes of Section 9.7(a). In the absence of anevent described in Section 9.7(d)(i) or (ii), a change in the effective control of a corporation will not haveoccurred. A change in effective control may also occur in any transaction in which either of the twocorporations involved in the transaction has a change in the ownership of such corporation as described inSection 9.7(c) or a change in the ownership of a substantial portion of the assets of such corporation asdescribed in Section 9.7(e). If any one person, or more than one person acting as a group, is considered toeffectively control a corporation within the meaning of this Section 9.7(d), the acquisition of additional controlof the corporation by the same person or persons is not considered to cause a change in the effective controlof the corporation or to cause a change in the ownership of the corporation within the meaning of Section9.7(c). For purposes of this Section 9.7(d), persons will or will not be considered to be acting as a group inaccordance with rules similar to those set forth in Section 9.7(c) with the following exception. If a person,including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase oracquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with othershareholders in a corporation only with respect to the ownership in that corporation prior to the transactiongiving rise to the change and not with respect to the ownership interest in the other corporation. (e)Change in the ownership of a substantial portion of a corporation’s assets. A change in the ownershipof a substantial portion of a corporation’s assets occurs on the date that any one person, or more thanone person acting as a group (as determined in accordance with rules similar to those set forth inSection 9.7(d)), acquires (or has acquired during the twelve month period ending on the date of themost recent acquisition by such person or persons) assets from the corporation that have a total grossfair market value9‑6 equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of thecorporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market valuemeans the value of the assets of the corporation or the value of the assets being disposed of determinedwithout regard to any liabilities associated with such assets. There is no Change in Control event under thisSection 9.7(e) when there is a transfer to an entity that is controlled by the shareholders of the transferringcorporation immediately after the transfer. A transfer of assets by a corporation is not treated as a change inownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediatelybefore the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or moreof the total value or voting power of which is owned, directly or indirectly, by the corporation, (iii) a person, ormore than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of thetotal value or voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%)of the total value or voting power of which is owned, directly or indirectly, by a person described in Section9.7(e)(iii). For purposes of the foregoing, and except as otherwise provided, a person’s status is determinedimmediately after the transfer of assets.Notwithstanding the foregoing, a Change in Control will occur for purposes of the Plan only if it meets the specialdefinition of a “Change in Control” set forth in Section 11.03 of the Adoption Agreement.9.8Permissible Delays in Payment. Distributions may be delayed beyond the date payment would otherwise occurin accordance with the provisions of Articles 8 and 9 in any of the following circumstances as long as theEmployer treats all payments to similarly situated Participants on a reasonably consistent basis.(a)The Employer may delay payment if it reasonably anticipates that its deduction with respect to such paymentwould be limited or eliminated by the application of Code Section 162(m). Payment must be madeduring the Participant’s first taxable year in which the Employer reasonably anticipates, or shouldreasonably anticipate, that if the payment is made during such year the deduction of such payment willnot be barred by the application of Code Section 162(m) or during the period beginning with theParticipant’s Separation from Service and ending on the later of the last day of the Employer’s taxableyear in which the Participant separates from service or the 15th day of the third month following theParticipant’s Separation from Service. If a scheduled payment to a Participant is delayed in accordancewith this Section 9.8(a), all scheduled9‑7 payments to the Participant that could be delayed in accordance with this Section 9.8(a) will also bedelayed.(b)The Employer may also delay payment if it reasonably anticipates that the making of the payment will violatefederal securities laws or other applicable laws provided payment is made at the earliest date on whichthe Employer reasonably anticipates that the making of the payment will not cause such violation.(c)The Employer reserves the right to amend the Plan to provide for a delay in payment upon such other eventsand conditions as the Secretary of the Treasury may prescribe in generally applicable guidancepublished in the Internal Revenue Bulletin.9.9Permitted Acceleration of Payment. The Employer may permit acceleration of the time or schedule of anypayment or amount scheduled to be paid pursuant to a payment under the Plan provided such acceleration wouldbe permitted by the provisions of Reg. Sec. 1.409A-3(j)(4), including the following events:(a)Domestic Relations Order. A payment may be accelerated if such payment is made to an alternate payeepursuant to and following the receipt and qualification of a domestic relations order as defined in CodeSection 414(p).(b)Compliance with Ethics Agreements and Legal Requirements. A payment may be accelerated as maybe necessary to comply with ethics agreements with the Federal government or as may be reasonablynecessary to avoid the violation of Federal, state, local or foreign ethics law or conflicts of laws, inaccordance with the requirements of Code Section 409A.(c)De Minimis Amounts. A payment will be accelerated if (i) the amount of the payment is not greater thanthe applicable dollar amount under Code Section 402(g)(1)(B), (ii) at the time the payment is made theamount constitutes the Participant’s entire interest under the Plan and all other plans that are aggregatedwith the Plan under Reg. Sec. 1.409A-1(c)(2).(d)FICA Tax. A payment may be accelerated to the extent required to pay the Federal InsuranceContributions Act tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) of the Code with respectto compensation deferred under the Plan (the “FICA Amount”). Additionally, a payment may be acceleratedto pay the income tax on wages imposed under Code Section 3401 of the9‑8 Code on the FICA Amount and to pay the additional income tax at source on wages attributable to thepyramiding Code Section 3401 wages and taxes. The total payment under this subsection (d) may notexceed the aggregate of the FICA Amount and the income tax withholding related to the FICA Amount.(e)Section 409A Additional Tax. A payment may be accelerated if the Plan fails to meet the requirements ofCode Section 409A; provided that such payment may not exceed the amount required to be included inincome as a result of the failure to comply with the requirements of Code Section 409A.(f)Offset. A payment may be accelerated in the Employer’s discretion as satisfaction of a debt of theParticipant to the Employer, where such debt is incurred in the ordinary course of the service relationshipbetween the Participant and the Employer, the entire amount of the reduction in any of the Employer’staxable years does not exceed $5,000, and the reduction is made at the same time and in the same amountas the debt otherwise would have been due and collected from the Participant.(g)Other Events. A payment may be accelerated in the Administrator’s discretion in connection with suchother events and conditions as permitted by Code Section 409A.9‑9 ARTICLE 10 – AMENDMENT AND TERMINATION10.1Amendment by Plan Sponsor. The Plan Sponsor reserves the right to amend the Plan (for itself and eachEmployer) through action of its Board of Directors. No amendment can directly or indirectly deprive any current orformer Participant or Beneficiary of all or any portion of his Account which had accrued and vested prior to theamendment.10.2Plan Termination Following Change in Control or Corporate Dissolution. If so elected by the Plan Sponsor in11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to terminate the Plan and distribute allamounts credited to all Participant Accounts within the 30 days preceding or the twelve months following aChange in Control as determined in accordance with the rules set forth in Section 9.7. For this purpose, the Planwill be treated as terminated only if all agreements, methods, programs and other arrangements sponsored by theRelated Employer immediately after the Change in Control which are treated as a single plan under Reg. Sec.1.409A-1(c)(2) are also terminated so that all participants under the Plan and all similar arrangements arerequired to receive all amounts deferred under the terminated arrangements within twelve months of the date thePlan Sponsor irrevocably takes all necessary action to terminate the arrangements. In addition, the Plan Sponsorreserves the right to terminate the Plan within twelve months of a corporate dissolution taxed under Code Section331 or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section 503(b)(1)(A) provided that amountsdeferred under the Plan are included in the gross incomes of Participants in the latest of (a) the calendar year inwhich the termination and liquidation occurs, (b) the first calendar year in which the amount is no longer subject toa substantial risk of forfeiture, or (c) the first calendar year in which payment is administratively practicable.10.3Other Plan Terminations. The Plan Sponsor retains the discretion to terminate the Plan if (a) all arrangementssponsored by the Plan Sponsor that would be aggregated with any terminated arrangement under Code Section409A and Reg. Sec. 1.409A-1(c)(2) are terminated, (b) no payments other than payments that would be payableunder the terms of the arrangements if the termination had not occurred are made within twelve months of thetermination of the arrangements, (c) all payments are made within twenty-four months of the date the PlanSponsor takes all necessary action to irrevocably terminate and liquidate the arrangements, (d) the Plan Sponsordoes not adopt a new arrangement that would be aggregated with any terminated arrangement under CodeSection 409A and the regulations thereunder at any time within the three year period following the date oftermination of the arrangement, and (e) the10‑1 termination does not occur proximate to a downturn in the financial health of the Plan sponsor. The Plan Sponsoralso reserves the right to amend the Plan to provide that termination of the Plan will occur under such conditionsand events as may be prescribed by the Secretary of the Treasury in generally applicable guidance published inthe Internal Revenue Bulletin.10‑2 ARTICLE 11 – THE TRUST11.1Establishment of Trust. The Plan Sponsor may but is not required to establish a trust to hold amounts which thePlan Sponsor may contribute from time to time to correspond to some or all amounts credited to Participants underSection 6.2. In the event that the Plan Sponsor wishes to establish a trust to provide a source of funds for thepayment of Plan benefits, any such trust shall be constructed to constitute an unfunded arrangement that does notaffect the status of the Plan as an unfunded plan for purposes of Title I of ERISA and the Code. If the PlanSponsor elects to establish a trust in accordance with Section 10.01 of the Adoption Agreement, the provisions ofSections 11.2 and 11.3 shall become operative.11.2Rabbi Trust. Any trust established by the Plan Sponsor shall be between the Plan Sponsor and a trusteepursuant to a separate written agreement under which assets are held, administered and managed, subject to theclaims of the Plan Sponsor’s creditors in the event of the Plan Sponsor’s insolvency. The trust is intended to betreated as a rabbi trust in accordance with existing guidance of the Internal Revenue Service, and theestablishment of the trust shall not cause the Participant to realize current income on amounts contributed thereto.The Plan Sponsor must notify the trustee in the event of a bankruptcy or insolvency.11.3Investment of Trust Funds. Any amounts contributed to the trust by the Plan Sponsor shall be invested by thetrustee in accordance with the provisions of the trust and the instructions of the Administrator. Trust investmentsneed not reflect the hypothetical investments selected by Participants under Section 7.1 for the purpose ofadjusting Accounts and the earnings or investment results of the trust need not affect the hypothetical investmentadjustments to Participant Accounts under the Plan.11‑1 ARTICLE 12 – PLAN ADMINISTRATION12.1Powers and Responsibilities of the Administrator. The Administrator has the full power and the fullresponsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA.The Administrator’s powers and responsibilities include, but are not limited to, the following:(a)To make and enforce such rules and procedures as it deems necessary or proper for the efficientadministration of the Plan;(b)To interpret the Plan, its interpretation thereof to be final, except as provided in Section 12.2, on all personsclaiming benefits under the Plan;(c)To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;(d)To administer the claims and review procedures specified in Section 12.2;(e)To compute the amount of benefits which will be payable to any Participant, former Participant orBeneficiary in accordance with the provisions of the Plan;(f)To determine the person or persons to whom such benefits will be paid;(g)To authorize the payment of benefits;(h)To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;(i)To appoint such agents, counsel, accountants, and consultants as may be required to assist inadministering the Plan;(j)By written instrument, to allocate and delegate its responsibilities, including the formation of anAdministrative Committee to administer the Plan.12‑1 12.2Claims and Review Procedures.(a)Claims Procedure.If any person believes he is being denied any rights or benefits under the Plan, such person may file aclaim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator willnotify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial,(ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or informationnecessary for such person to perfect such claim and an explanation of why such material or information isnecessary, and (iv) a description of the Plan’s review procedures and the time limits applicable to suchprocedures, including a statement of the person’s right to bring a civil action following an adverse decisionon review. If the claim involves a Disability, the denial must also include the standards that governed thedecision, including the basis for disagreeing with any health care professionals, vocational professionals orthe Social Security Administration as well as an explanation of the scientific or clinical judgementunderlying the denial. Such notification will be given within 90 days (45 days in the case of a claimregarding Disability) after the claim is received by the Administrator. The Administrator may extend theperiod for providing the notification by 90 days (30 days in the case of a claim regarding Disability, whichmay be extended an additional 30 days) if special circumstances require an extension of time forprocessing the claim and if written notice of such extension and circumstance is given to such personwithin the initial 90 day period (45 day period in the case of a claim regarding Disability). If such notificationis not given within such period, the claim will be considered denied as of the last day of such period andsuch person may request a review of his claim.(b)Review Procedure.Within 60 days (180 days in the case of a claim regarding Disability) after the date on which a personreceives a written notification of denial of claim (or, if written notification is not provided, within 60 days (180days in the case of a claim regarding Disability) of the date denial is considered to have occurred), suchperson (or his duly authorized representative) may (i) file a written request with the Administrator for areview of his denied claim and of pertinent documents and (ii) submit written issues and comments to theAdministrator. The Administrator will notify such person of its12‑2 decision in writing. Such notification will be written in a manner calculated to be understood by suchperson and will contain specific reasons for the decision as well as specific references to pertinent Planprovisions. The notification will explain that the person is entitled to receive, upon request and free ofcharge, reasonable access to and copies of all pertinent documents and has the right to bring a civil actionfollowing an adverse decision on review. The decision on review will be made within 60 days (45 days inthe case of a claim regarding Disability). The Administrator may extend the period for making the decisionon review by 60 days (45 days in the case of a claim regarding Disability) if special circumstances requirean extension of time for processing the request such as an election by the Administrator to hold a hearing,and if written notice of such extension and circumstances is given to such person within the initial 60-dayperiod (45 days in the case of a claim regarding Disability). If the decision on review is not made withinsuch period, the claim will be considered denied. If the claim is regarding Disability, and the determination of Disability has not been made by the SocialSecurity Administration or the Railroad Retirement Board, the person may, upon written request and free ofcharge, also receive the identification of medical or vocational experts whose advice was obtained inconnection with the denial of a claim regarding Disability, even if the advice was not relied upon.Before issuing any decision with respect to a claim involving Disability, the Administrator will provide to theperson, free of charge, the following information as soon as possible and sufficiently in advance of the dateon which the response is required to be provided to the person to allow the person a reasonableopportunity to respond prior to the due date of the response:•Any new or additional evidence considered, relied upon, or generated by the Administrator or otherperson making the decision; and•A new or addition rationale if the decision will be based on that rationale.(c)Exhaustion of Claims Procedures and Right to Bring Legal Claim No action at law or equity shall be brought more than one (1) year after the Administrator’s affirmation of adenial of a claim, or, if earlier, more than four (4) years after the facts or events giving rising to theclaimant’s allegation(s) or claim(s) first occurred.12‑3 12.3Plan Administrative Costs. All reasonable costs and expenses (including legal, accounting, and employeecommunication fees) incurred by the Administrator in administering the Plan shall be paid by the Plan to theextent not paid by the Employer.12‑4 ARTICLE 13 – MISCELLANEOUS13.1Unsecured General Creditor of the Employer. Participants and their Beneficiaries, heirs, successors andassigns shall have no legal or equitable rights, interests or claims in any property or assets of the Employer. Forpurposes of the payment of benefits under the Plan, any and all of the Employer’s assets shall be, and shallremain, the general, unpledged, unrestricted assets of the Employer. Each Employer's obligation under the Planshall be merely that of an unfunded and unsecured promise to pay money in the future.13.2Employer’s Liability. Each Employer’s liability for the payment of benefits under the Plan shall be defined only bythe Plan and by the deferral agreements entered into between a Participant and the Employer. An Employer shallhave no obligation or liability to a Participant under the Plan except as provided by the Plan and a deferralagreement or agreements. An Employer shall have no liability to Participants employed by other Employers.13.3Limitation of Rights. Neither the establishment of the Plan, nor any amendment thereof, nor the creation of anyfund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other personany legal or equitable right against the Employer, the Plan or the Administrator, except as provided herein; and inno event will the terms of employment or service of the Participant be modified or in any way affected hereby.13.4Anti-Assignment. Except as may be necessary to fulfill a domestic relations order within the meaning of CodeSection 414(p), none of the benefits or rights of a Participant or any Beneficiary of a Participant shall be subject tothe claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall befree from attachment, garnishment, or any other legal or equitable process available to any creditor of theParticipant and his or her Beneficiary. Neither the Participant nor his or her Beneficiary shall have the right toalienate, anticipate, commute, pledge, encumber, or assign any of the payments which he or she may expect toreceive, contingently or otherwise, under the Plan, except the right to designate a Beneficiary to receive deathbenefits provided hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s Account maybe reduced, at the discretion of the administrator, to satisfy any debt or liability to the Employer.13.5Facility of Payment. If the Administrator determines, on the basis of medical reports or other evidence satisfactoryto the Administrator, that the recipient of13‑1 any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity orother incapacity, the Administrator may direct the Employer to disburse such payments to a person or institutiondesignated by a court which has jurisdiction over such recipient or a person or institution otherwise having thelegal authority under State law for the care and control of such recipient. The receipt by such person or institutionof any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of theEmployer, the Plan and the Administrator for the payment of benefits hereunder to such recipient.13.6Notices. Any notice or other communication to the Employer or Administrator in connection with the Plan shall bedeemed delivered in writing if addressed to the Plan Sponsor at the address specified in Section 1.03 of theAdoption Agreement and if either actually delivered at said address or, in the case or a letter, 5 business daysshall have elapsed after the same shall have been deposited in the United States mails, first-class postageprepaid and registered or certified.13.7Tax Withholding. If the Employer concludes that tax is owing with respect to any deferral or payment hereunder,the Employer shall withhold such amounts from any payments due the Participant or from amounts deferred, aspermitted by law, or otherwise make appropriate arrangements with the Participant or his Beneficiary forsatisfaction of such obligation. Tax, for purposes of this Section 13.7 means any federal, state, local or any othergovernmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing withrespect to amounts deferred, any earnings thereon, and any payments made to Participants under the Plan.13.8Indemnification. (a) Each Indemnitee (as defined in Section 13.8(e)) shall be indemnified and held harmless bythe Employer for all actions taken by him and for all failures to take action (regardless of the date of any suchaction or failure to take action), to the fullest extent permitted by the law of the jurisdiction in which the Employer isincorporated, against all expense, liability, and loss (including, without limitation, attorneys' fees, judgments, fines,taxes, penalties, and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Indemniteein connection with any Proceeding (as defined in Subsection (e)). No indemnification pursuant to this Sectionshall be made, however, in any case where (1) the act or failure to act giving rise to the claim for indemnification isdetermined by a court to have constituted willful misconduct or recklessness or (2) there is a settlement to whichthe Employer does not consent.(b) The right to indemnification provided in this Section shall include the right to have the expenses incurred bythe Indemnitee in defending any Proceeding paid by the Employer in advance of the final disposition of the13‑2 Proceeding, to the fullest extent permitted by the law of the jurisdiction in which the Employer is incorporated;provided that, if such law requires, the payment of such expenses incurred by the Indemnitee in advance of thefinal disposition of a Proceeding shall be made only on delivery to the Employer of an undertaking, by or on behalfof the Indemnitee, to repay all amounts so advanced without interest if it shall ultimately be determined that theIndemnitee is not entitled to be indemnified under this Section or otherwise.(c) Indemnification pursuant to this Section shall continue as to an Indemnitee who has ceased to be such andshall inure to the benefit of his heirs, executors, and administrators. The Employer agrees that the undertakingsmade in this Section shall be binding on its successors or assigns and shall survive the termination, amendmentor restatement of the Plan.(d) The foregoing right to indemnification shall be in addition to such other rights as the Indemnitee may enjoy asa matter of law or by reason of insurance coverage of any kind and is in addition to and not in lieu of any rights toindemnification to which the Indemnitee may be entitled pursuant to the by-laws of the Employer.(e) For the purposes of this Section, the following definitions shall apply:(1) "Indemnitee" shall mean each person serving as an Administrator (or any other person who is an employee,director, or officer of the Employer) who was or is a party to, or is threatened to be made a party to, or is otherwiseinvolved in, any Proceeding, by reason of the fact that he is or was performing administrative functions under thePlan.(2) "Proceeding" shall mean any threatened, pending, or completed action, suit, or proceeding (including, withoutlimitation, an action, suit, or proceeding by or in the right of the Employer), whether civil, criminal, administrative,investigative, or through arbitration.13.9Successors. The provisions of the Plan shall bind and inure to the benefit of the Plan Sponsor, the Employer andtheir successors and assigns and the Participant and the Participant’s designated Beneficiaries.13.10Disclaimer. It is the Plan Sponsor’s intention that the Plan comply with the requirements of Code Section 409A.Neither the Plan Sponsor nor the Employer shall have any liability to any Participant should any provision of thePlan fail to satisfy the requirements of Code Section 409A.13.11Governing Law. The Plan will be construed, administered and enforced according to the laws of the Statespecified by the Plan Sponsor in Section 12.01 of the Adoption Agreement.13‑3 13‑4 1.01 PREAMBLE By the execution of this Adoption Agreement the Plan Sponsor hereby [complete (a) or (b)](a)adopts a new plan as of January 1, 2019 [month, day, year](b)amends and restates its existing plan as of       [month, day, year] which is the Amendment Restatement Date.Except as otherwise provided in Appendix A, all amounts deferred under the Plan prior to the AmendmentRestatement Date shall be governed by the terms of the Plan as in effect on the day before the AmendmentRestatement Date. Original Effective Date:       [month, day, year]Pre-409A Grandfathering: Yes No1.02PLANPlan Name: ACCO Brands Corporation Nonqualified Deferred Compensation PlanPlan Year: December 31 ____________1.03PLAN SPONSORName:ACCO Brands USA LLCAddress:Four Corporate DriveLake Zurich, IL 60047Phone # :847 541-9500EIN:13-2657051Fiscal Yr:January 1 – December 31Is stock of the Plan Sponsor, any Employer or any Related Employer publicly traded on an established securities market?YesNo- 1 -March 2018 1.04EMPLOYERThe following entities have been authorized by the Plan Sponsor to participate in and have adopted the Plan (insert “NotApplicable” if none have been authorized):Entity Publicly Traded on Est. Securities Market Yes NoACCO Brands Corporation ACCO Brands USA LLC 1.05ADMINISTRATORThe Plan Sponsor has designated the following party or parties to be responsible for the administration of the Plan:Name:ACCO Brands Corporation or its delegatesAddress:Four Corporate DriveLake Zurich, IL 60047Note:The Administrator is the person or persons designated by the Plan Sponsor to be responsible for the administrationof the Plan. Neither Fidelity Employer Services Company nor any other Fidelity affiliate can be the Administrator.1.06KEY EMPLOYEE DETERMINATION DATESThe Employer has designated April 1 as the Identification Date for purposes of determining Key Employees.In the absence of a designation, the Identification Date is December 31.The Employer has designated April 1 as the effective date for purposes of applying the six month delay in distributions toKey Employees.In the absence of a designation, the effective date is the first day of the fourth month following the Identification Date.- 2 -March 2018 2.01PARTICIPATION(a) Employees [complete (i), (ii) or (iii)] (i) Eligible Employees are selected by the Employer.(ii) Eligible Employees are those employees of the Employer who satisfy the following criteria:U.S. Employees who are eligible for the ACCO Brands Corporation 401(k) Plan (orsuch successor plan) and who are in salary grade E1 and above.                    (iii) Employees are not eligible to participate.(b) Directors [complete (i), (ii) or (iii)](i) All Directors are eligible to participate.(ii) Only Directors selected by the Employer are eligible to participate.(iii) Directors are not eligible to participate.- 3 -March 2018 3.01COMPENSATIONFor purposes of determining Participant contributions under Article 4 and Employer contributions under Article 5,Compensation shall be defined in the following manner [complete (a) or (b) and select (c) and/or (d), if applicable]:(a) Compensation is defined as:                                     (b) Compensation as defined in the ACCO Brands Corporation 401(k) Plan withoutregard to the limitation in Section 401(a)(17) of the Code for such Plan Year. (c) Director Compensation is defined as:                   (d) Compensation shall, for all Plan purposes, be limited to $     . (e) Not Applicable.3.02BONUSESCompensation, as defined in Section 3.01 of the Adoption Agreement, includes the following type of bonuses that will be thesubject of a separate deferral election:TypeWill be treated as PerformanceBased Compensation Yes No Annual Incentive Plan (AIP)                              Not Applicable.- 4 -March 2018 4.01PARTICIPANT CONTRIBUTIONSIf Participant contributions are permitted, complete (a), (b), and (c). Otherwise complete (d).(a)Amount of DeferralsA Participant may elect within the period specified in Section 4.01(b) of the Adoption Agreement to defer the followingamounts of remuneration. For each type of remuneration listed, complete “dollar amount” and / or “percentageamount”.(i)Compensation Other than Bonuses [do not complete if you complete (iii)] Type of RemunerationDollar Amount% AmountIncrementMinMaxMinMax(a) Base Salary 1%50%1%(b) (c) Note: The increment is required to determine the permissible deferral amounts. For example, a minimum of 0% andmaximum of 20% with a 5% increment would allow an individual to defer 0%, 5%, 10%, 15% or 20%.(ii)Bonuses [do not complete if you complete (iii)]Type of BonusDollar Amount% AmountIncrementMinMaxMinMax(a) AIP 1%90%1%(b) (c) (iii)Compensation [do not complete if you completed (i) and (ii)]Dollar Amount% AmountIncrementMinMaxMinMax (iv)Director Compensation- 5 -March 2018 Type of CompensationDollar Amount% AmountIncrementMinMaxMinMaxAnnual Retainer Meeting Fees Other: Other: - 6 -March 2018 (b)Election Period(i)Performance Based CompensationA special election period Does Does Notapply to each eligible type of performance based compensation referenced in Section 3.02 of the AdoptionAgreement.The special election period, if applicable, will be determined by the Employer.(ii)Newly Eligible ParticipantsAn employee who is classified or designated as an Eligible Employee during a Plan Year May May Notelect to defer Compensation earned during the remainder of the Plan Year by completing a deferral agreementwithin the 30 day period beginning on the date he is eligible to participate in the Plan.(c)Revocation of Deferral AgreementA Participant’s deferral agreement Will Will Notbe cancelled for the remainder of any Plan Year during which he receives a hardship distribution of elective deferralsfrom a qualified cash or deferred arrangement maintained by the Employer to the extent necessary to satisfy therequirements of Reg. Sec. 1.401(k)-1(d)(3). If cancellation occurs, the Participant may resume participation inaccordance with Article 4 of the Plan.(d)No Participant ContributionsParticipant contributions are not permitted under the Plan.- 7 -March 2018 5.01EMPLOYER CONTRIBUTIONSIf Employer contributions are permitted, complete (a) and/or (b). Otherwise complete (c).(a)Matching Contributions(i)AmountFor each Plan Year, the Employer shall make a Matching Contribution on behalf of each Participant who defersCompensation for the Plan Year and satisfies the requirements of Section 5.01(a)(ii) of the Adoption Agreementequal to [complete the ones that are applicable]:(A)       [insert percentage] of the Compensation the Participant has elected to defer for the Plan Year(B) An amount determined by the Employer in its sole discretion(C) Matching Contributions for each Participant shall be limited to $      and/or      % of Compensation.(D) Other:             (E) Not Applicable [Proceed to Section 5.01(b)] (ii)Eligibility for Matching ContributionA Participant who defers Compensation for the Plan Year shall receive an allocation of Matching Contributionsdetermined in accordance with Section 5.01(a)(i) provided he satisfies the following requirements [complete theones that are applicable]:(A) Describe requirements:             (B) Is selected by the Employer in its sole discretion to receive anallocation of Matching Contributions (C) No requirements- 8 -March 2018 (iii)Time of AllocationMatching Contributions, if made, shall be treated as allocated [select one]:(A)As of the last day of the Plan Year (B)At such times as the Employer shall determine in it sole discretion (C)At the time the Compensation on account of which the MatchingContribution is being made would otherwise have been paid to theParticipant (D)Other:           (b)Other Contributions (i)AmountThe Employer shall make a contribution on behalf of each Participant who satisfies the requirements of Section5.01(b)(ii) equal to [complete the ones that are applicable]:(A) An amount equal to       [insert number] % of the Participant’sCompensation (B) An amount determined by the Employer in its sole discretion (C) Contributions for each Participant shall be limited to $      (D) Other:                  (E) Not Applicable [Proceed to Section 6.01] - 9 -March 2018 (ii)Eligibility for Other ContributionsA Participant shall receive an allocation of other Employer contributions determined in accordance with Section5.01(b)(i) for the Plan Year if he satisfies the following requirements [complete the one that is applicable]:(A) Describe requirements:             (B) Is selected by the Employer in its sole discretion to receive anallocation of other Employer contributions (C) No requirements(iii)Time of AllocationEmployer contributions, if made, shall be treated as allocated [select one]:(A) As of the last day of the Plan Year (B) At such time or times as the Employer shall determine in its solediscretion (C) Other:                 (c)No Employer ContributionsEmployer contributions are not permitted under the Plan.- 10 -March 2018 6.01DISTRIBUTIONSThe timing and form of payment of distributions made from the Participant’s vested Account shall be made in accordancewith the elections made in this Section 6.01 of the Adoption Agreement except when Section 9.6 of the Plan requires a sixmonth delay for certain distributions to Key Employees of publicly traded companies.(a)Timing of Distributions(i)All distributions shall commence in accordance with the following [choose one]: (A)As soon as administratively feasible following the distribution event but in no eventlater than the time prescribed by Treas. Reg. Sec. 1.409A-3(d). (B)Monthly on specified day       [insert day] (C)Annually on specified month and day       [insert month and day] (D)Calendar quarter on specified month and day [     month of quarter (insert 1,2 or 3); __ day (insert day)](ii)The timing of distributions as determined in Section 6.01(a)(i) shall be modified by the adoption of: (A)Event Delay – Distribution events other than those based on Specified Date orSpecified Age will be treated as not having occurred for       months [insert numberof months]. (B)Hold Until Next Year – Distribution events other than those based on Specified Dateor Specified Age will be treated as not having occurred for twelve months from thedate of the event if payment pursuant to Section 6.01(a)(i) will thereby occur in thenext calendar year or on the first payment date in the next calendar year in all othercases. (C)Immediate Processing – The timing method selected by the Plan Sponsor underSection 6.01(a)(i) shall be overridden for the following distribution events [insertevents]:             (D)Not applicable.- 11 -March 2018 (b)Distribution EventsParticipants may elect the following payment events and the associated form or forms of payment. If multiple events areselected, the earliest to occur will trigger payment. For installments, insert the range of available periods (e.g., 5-15) orinsert the periods available (e.g., 5,7,9). Lump SumInstallments (i) Specified DateX2-10 years (ii) Specified Age           years (iii) Separation from ServiceX2-10_ years (iv) Separation from Service plus 6 months           years (v) Separation from Service plus       months [not toexceed       months]           years (vi) Retirement           years (vii) Retirement plus 6 months           years (viii) Retirement plus       months [not to exceed      months]           years (ix)Disability           years (x)Death           years (xi)Change in Control           yearsThe minimum deferral period for Specified Date or Specified Age event shall be 1 year. Installments may be paid [select each that applies] Monthly Quarterly Annually- 12 -March 2018 (c)Specified Date and Specified Age elections may not extend beyond age Not Applicable [insert age or “Not Applicable” ifno maximum age applies]. - 13 -March 2018 (d)Payment Election Override Payment of the remaining vested balance of the Participant’s Account will automatically occur at the time specified inSection 6.01(a) of the Adoption Agreement in the form indicated upon the earliest to occur of the following events [checkeach event that applies and for each event include only a single form of payment]: EVENTSFORM OF PAYMENT Separation from Service Lump sum Installments Separation fromService before Retirement Lump sum Installments DeathXLump sum Installments DisabilityXLump sum Installments Not Applicable (e)Involuntary Cashouts If the Participant’s vested Account at the time of his Separation from Service does not exceed$10,000 distribution of the vested Account shall automatically be made in the form of a singlelump sum in accordance with Section 9.5 of the Plan. There are no involuntary cashouts.(f)Retirement Retirement shall be defined as a Separation from Service that occurs on orafter the Participant [insert description of requirements]:             No special definition of Retirement applies.- 14 -March 2018 (g)Distribution Election Change A Participant Shall Shall Notbe permitted to modify a scheduled distribution date and/or payment option in accordance with Section 9.2 of the Plan.A Participant shall generally be permitted to elect such modification 1 time.Administratively, allowable distribution events will be modified to reflect all options necessary to fulfill the distributionchange election provision.(h)Frequency of ElectionsThe Plan Sponsor Has Has NotElected to permit annual elections of a time and form of payment for amounts deferred under the Plan. If a singleelection of a time and/or form of payment is required, the Participant will make such election at the time he firstcompletes a deferral agreement which, in all cases, will be no later than the time required by Reg. Sec. 1.409A-2.- 15 -March 2018 7.01VESTING(a)Matching Contributions The Participant’s vested interest in the amount credited to his Account attributable to Matching Contributions shall bebased on the following schedule: Years of ServiceVesting % 0100(insert ‘100’ if there is immediate vesting) 1      2      3      4      5      6      7      8      9      Other:            Class year vesting applies. Not applicable. (b)Other Employer Contributions The Participant’s vested interest in the amount credited to his Account attributable to Employer contributions other thanMatching Contributions shall be based on the following schedule:- 16 -March 2018 Years of ServiceVesting % 0     (insert ‘100’ if there is immediate vesting) 1      2      3      4      5      6      7      8      9      Other:As determined by the Employer.       Class year vesting applies. Not applicable. - 17 -March 2018 (c)Acceleration of Vesting A Participant’s vested interest in his Account will automatically be 100% upon the occurrence of the following events:[select the ones that are applicable]:(i) Death (ii) Disability (iii) Change in Control (iv) Eligibility for Retirement (v) Other: Prorated from grant date to date of termination for Death, Disabilityand Retirement. (vi) Not applicable.(d)Years of Service (i)A Participant’s Years of Service shall include all service performed for the Employer and Shall Shall Notinclude service performed for the Related Employer. (ii)Years of Service shall also include service performed for the following entities:                         (iii)Years of Service shall be determined in accordance with (select one)- 18 -March 2018 (A) The elapsed time method in Treas. Reg. Sec. 1.410(a)-7 (B) The general method in DOL Reg. Sec. 2530.200b-1 through b-4 (C) The Participant’s Years of Service credited under [insert name of plan] (D) Other:                   (iv)Not applicable.- 19 -March 2018 8.01UNFORESEEABLE EMERGENCY(a) A withdrawal due to an Unforeseeable Emergency as defined in Section 2.24: Will Will Not [if Unforeseeable Emergency withdrawals are not permitted, proceed toSection 9.01]be allowed.(b)Upon a withdrawal due to an Unforeseeable Emergency, a Participant’s deferral election for the remainder of thePlan Year: Will Will Notbe cancelled. If cancellation occurs, the Participant may resume participation in accordance with Article 4 of thePlan.- 20 -March 2018 9.01INVESTMENT DECISIONSInvestment decisions regarding the amounts credited to a Participant’s Account shall be made by [select one]:(a)The Participant or his Beneficiary(b)The Employer- 21 -March 2018 10.01TRUSTThe Employer [select one]: Does Does Notintend to establish a rabbi trust as provided in Article 11 of the Plan.- 22 -March 2018 11.01TERMINATION UPON CHANGE IN CONTROLThe Plan Sponsor Reserves Does Not Reservethe right to terminate the Plan and distribute all vested amounts credited to Participant Accounts upon a Change in Controlas described in Section 9.7.11.02AUTOMATIC DISTRIBUTION UPON CHANGE IN CONTROLDistribution of the remaining vested balance of each Participant’s Account Shall Shall Notautomatically be paid as a lump sum payment upon the occurrence of a Change in Control as provided in Section 9.7.11.03CHANGE IN CONTROLA Change in Control for Plan purposes shall have the meaning ascribed to such term in the ACCO Brands CorporationIncentive Plan, as amended and restated effective May 12, 2015, and as further amended from time to time, or anysuccessor plan thereto. Notwithstanding the foregoing, solely for purposes of any amounts paid under the Plan that aresubject to Section 409A of the Code, if the Plan provides for a change in the time or form of payment upon a Change inControl or provides for the payment of such amounts upon a Change in Control, then no Change in Control shall be deemedto have occurred upon an event described herein unless the event would also constitute a permissible payment event underCode Section 409A and Treasury Regulation Section 1.409A-3(i).- 23 -March 2018 12.01GOVERNING STATE LAWThe laws of Illinois shall apply in the administration of the Plan to the extent not preempted by ERISA.- 24 -March 2018EXECUTION PAGEThe Plan Sponsor has caused this Adoption Agreement to be executed this _______________ day of _________,20_______.PLAN SPONSOR: By: Title: - 25 -March 2018 APPENDIX ASPECIAL EFFECTIVE DATESNot Applicable- 26 -March 2018Exhibit 21.1SUBSIDIARIESACCO Brands Corporation, a Delaware corporation, had the domestic and international subsidiaries shown below as of December 31, 2018. 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, IncorporatedDelawareACCO Brands USA LLCDelawareACCO Europe Finance Holdings, LLCDelawareACCO Europe International Holdings, LLCDelawareACCO International Holdings, Inc.DelawareGeneral Binding LLCDelawareGBC International, IncorporatedNevada International Subsidiaries: ACCO Australia Pty. LimitedAustraliaACCO Brands Australia Holding Pty. Ltd.AustraliaACCO Brands Australia Pty. Ltd.AustraliaEsselte Office Products GmbHAustriaEsselte Business BVBABelgiumTilibra Produtos de Papelaria Ltda.BrazilACCO Brands C&OP IncorporatedCanadaACCO Brands Canada IncorporatedCanadaACCO Brands Canada LPCanadaACCO Brands CDA Ltd.CanadaEsselte Rapid Stationery (Shanghai) Company LimitedChinaEsselte SROCzech RepublicEsselte ApSDenmarkACCO Brands Europe Holding LPEnglandACCO Brands Europe LimitedEnglandACCO Europe Finance LPEnglandACCO Europe LimitedEnglandACCO UK LimitedEnglandACCO-Rexel Group Services LimitedEnglandEsselte LimitedEnglandEsselte UK LimitedEnglandACCO Brands France SASFranceEsselte SASFranceACCO Deutschland GmbH & Co. KGGermanyEsselte Leitz GmbH & Co KGGermanyName of SubsidiaryJurisdiction of Organization ACCO Asia LimitedHong KongEsselte SrlItalyACCO Brands Japan K.K.JapanEsselte European Holdings (Luxembourg) SarlLuxembourgACCO Mexicana S.A. de C.V.MexicoGOBA Internacional S.A. de C.VMexicoServicios Empresariales Garantizados, S.A. de C.VMexicoServicios Empresariales Gomra, S.A. de C.VMexicoACCO Brands Benelux BVNetherlandsACCO Nederland Holding BVNetherlandsEsselte BVNetherlandsACCO Dutch Finance Holdings CVNetherlandsACCO Dutch Finance CVNetherlandsACCO Dutch International CVNetherlandsACCO Electra Dutch CVNetherlandsACCO New Zealand LimitedNew ZealandEsselte Polska Sp. z o. o.PolandACCO Brands Portuguesa LdaPortugalEsselte SASpainEsselte ABSwedenEsselte Group Holdings ABSwedenEsselte Sverige ABSwedenIsaberg Rapid ABSwedenEXHIBIT 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, 333-136662, 333-153157, 333-157726, 333-176247, 333-181430 and 333-204092) on Form S-8 of ACCO Brands Corporation of our report dated February 27, 2019, with respect to the consolidatedbalance sheets of ACCO Brands Corporation and subsidiaries (The Company) as of December 31, 2018 and 2017, and the related consolidated statements ofincome, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2018, and the relatednotes and financial statement schedule II - Valuation and Qualifying Accounts and Reserves (collectively, the consolidated financial statements) and theeffectiveness of internal control over financial reporting as of December 31, 2018, which reports appear in the December 31, 2018 annual report on Form10‑K of ACCO Brands Corporation.Our report dated February 27, 2019, on the effectiveness of internal control over financial reporting as of December 31, 2018, contains an explanatoryparagraph that states that the Company acquired GOBA Internacional, S.A. de C.V. ("GOBA") during 2018, and management excluded from its assessment ofthe effectiveness of the Company’s internal control over financial reporting as of December 31, 2018, GOBA’s internal control over financial reportingassociated with total assets of $35.0 million and total revenues of $19.7 million included in the consolidated financial statements of the Company as of andfor the year ended December 31, 2018. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internalcontrol over financial reporting of GOBA./s/ KPMG LLPChicago, IllinoisFebruary 27, 2019Exhibit 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, andKathleen D. Hood 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 andre-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 enablethe registrant to comply with the U.S. Securities and Exchange Act of 1934, as amended, and any rules, regulations and requirements of the U.S. Securities and ExchangeCommission thereunder in connection with the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the "Annual Report"), including specifically,but without limiting the generality of the foregoing, power and authority to sign the name of the registrant and the name of the undersigned, individually and in his or her capacity asa director or 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 andall instruments 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 Chairman, President andChief Executive Officer(principal executive officer) February 26, 2019Boris Elisman /s/ Neal V. Fenwick Executive Vice President andChief Financial Officer(principal financial officer) February 26, 2019Neal V. Fenwick /s/Kathleen D. Hood Senior Vice President andChief Accounting Officer(principal accounting officer) February 26, 2019Kathleen D. Hood /s/ James A. Buzzard Director February 25, 2019James A. Buzzard /s/ Kathleen S. Dvorak Director February 25, 2019Kathleen S. Dvorak /s/ Pradeep Jotwani Director February 25, 2019Pradeep Jotwani /s/ Robert J. Keller Director February 25, 2019Robert J. Keller /s/ Thomas Kroeger Director February 25, 2019Thomas Kroeger /s/ Ron Lombardi Director February 25, 2019Ron Lombardi /s/ Graciela Monteagudo Director February 25, 2019Graciela Monteagudo /s/ Hans Michael Norkus Director February 25, 2019Hans Michael Norkus /s/ E. Mark Rajkowski Director February 25, 2019E. Mark Rajkowski 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 Chairman, President andChief Executive OfficerDate: February 27, 2019Exhibit 31.2CERTIFICATIONSI, Neal V. Fenwick, certify that:1.I have reviewed this Annual Report on Form 10-K of ACCO Brands Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by 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 27, 2019Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,As adopted pursuant toSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of ACCO Brands Corporation on Form 10-K for the period ended December 31, 2018 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 Chairman, President andChief Executive OfficerDate: February 27, 2019Exhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,As adopted pursuant toSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of ACCO Brands Corporation on Form 10-K for the period ended December 31, 2018 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 27, 2019

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