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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
_______________ ___________________________________________________________

FORM 10-K/AForm 10-K
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2012
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011transition period from            to            
Commission file numberFile Number 001-08454
___________________________
ACCO Brands Corporation
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Its Charter)
Delaware36-2704017
(State or Other Jurisdiction
of Incorporation)Incorporation or Organization)
36-2704017
(I.R.S. Employer
Identification No.)Number)

300 Tower Parkway
Lincolnshire, Illinois 60069
(Address of Registrant’s Principal Executive Office, Including Zip Code)
(847) 541-9500
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassName of Each Exchange on Which Registered
Common Stock, par value $0.01$.01 per shareNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 Yes ¨No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. 
Yes ¨No þ
Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ    No
¨
Indicate 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 and posted 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).     Yes þ    No
¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A10-K or any amendmentsamendment to this Form 10-K/A. 10-K. þ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer ¨þ
Accelerated filer þ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨No þ
As of June 30, 2011,2012, the aggregate market value of the shares of Common Stock held by non-affiliates of the registrant was approximately $282 million.
$1.026 billion. As of February 1, 2012,2013, the registrant had outstanding 55,480,751113,193,057 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE
Portions 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 7, 2013 are incorporated by reference into Part III of this report.

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TABLE OF CONTENTS
 
EXPLANATORY NOTE
ACCO Brands Corporation (“ACCO Brands” or the “Company”) is filing this Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2011 (the “2011 Annual Report”) to include certain information required to be contained in Part III, Items 10, 11, 12, 13 and 14, of Form 10-K.  ACCO Brands had previously reported that information to be contained therein would be incorporated by reference to its definitive proxy statement for its 2012 annual meeting of stockholders.  However, in connection with the proposed merger of the Consumer & Office Products Business of MeadWestvaco Corporation (“MCOP”) into the Company, the Company hereby amends its previously filed Annual Report on Form 10-K to include the information required by Part III in order to permit such information to be incorporated by reference, as applicable, into the Company’s Registration Statement on Form S-4 related to the MCOP merger.  This Amendment to the 2011 Annual Report contains only Items 10, 11, 12, 13 and 14 of Form 10-K, and ACCO Brands is not amending or supplementing any other information in its previously filed 2011 Annual Report.
Table of Contents
PART III
1
PART I
ITEM 1.
Business
1
ITEM 1A.
Risk Factors
8
ITEM 1B.
Unresolved Staff Comments
15
ITEM 2.
Properties
16
ITEM 3.
Legal Proceedings
16
ITEM 4.
Mine Safety Disclosures
17
PART II
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
18
ITEM 6.
Selected Financial Data
20
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
22
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
44
ITEM 8.
Financial Statements and Supplementary Data
46
ITEM 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
91
ITEM 9A.
Controls and Procedures
91
ITEM 9B.
Other Information
91
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance
1
91
ITEM 11.
Executive Compensation
ITEM 11. Executive Compensation7
91
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
38
92
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
41
92
ITEM 14.
Principal Accountant Fees and Services
43
92
SIGNATURESPART IV44
ITEM 15.
Exhibits and Financial Statement Schedules
93
Signatures
99

EXHIBIT INDEX


PART IIII
ITEM 10.  Directors, Executive Officers and Corporate Governance
Information with Respect to Directors
Our BoardCautionary Statement Regarding Forward-Looking Statements. Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” within the meaning of Directors currently consists of nine members.  Our By-laws provide that the Board of Directors may consist of not less than eight nor more than eleven members.  It is anticipated that each of our currently serving directors will be nominees for election as a director at the 2012 annual meeting of stockholders.
The following paragraphs provide information asSection 21E of the dateSecurities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this Form 10-K/A about each memberstatement for purposes of invoking these safe harbor provisions. These forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from those predicted by such forward-looking statements, you should not place undue reliance on such forward-looking statements when deciding whether to buy, sell or hold the Company’s securities. We undertake no obligation to update these forward-looking statements in the future. The factors that could affect our Board of Directors.  The information presented includes information about each director’s age, positions held, principal occupationresults or cause plans, actions and business experience for the past five years, the year first elected as a director of ACCO Brandsresults to differ materially from current expectations are detailed in this report, including under “Item 1. Business,” “Item 1A. Risk Factors” and the namesfinancial statement line item discussions set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and from time to time in our other publicly held companiesSEC filings.
Website Access to Securities and Exchange Commission Reports
The Company’s Internet website can be found at www.accobrands.com. The Company makes available free of which hecharge on or she currently servesthrough its website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as a directorsoon as practicable after the Company files them with, or has served as a director during the past five years.  In addition, the information presented below includes details on each director’s specific experience, qualifications, attributes, and skills that led our Boardfurnishes them to, the conclusion that he or she should serve as a director in light of our businessSecurities and structure.Exchange Commission. We also believe thatmake available the following documents on our Internet website: the Audit Committee Charter; the Compensation Committee Charter; the Corporate Governance and Nominating Committee Charter; our Corporate Governance Principles; and our Code of Business Conduct and Ethics. The Company’s Code of Business Conduct and Ethics applies to all of our directors, haveofficers (including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer) and employees. You may obtain a reputationcopy of any of the foregoing documents, free of charge, if you submit a written request to ACCO Brands Corporation, 300 Tower Parkway, Lincolnshire, IL. 60069, Attn: Investor Relations. After April 16, 2013 please send all requests to ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047-2997, Attn: Investor Relations.
ITEM 1.BUSINESS

As used in this Annual Report on Form 10-K for integrity, honesty,the fiscal year ended December 31, 2012, the terms "ACCO Brands," "ACCO", the "Company," "we" "us," and adherence to high ethical standards.  They each have business acumen and an ability to exercise sound judgment and a commitment of service"our" refer to ACCO Brands Corporation and its Board.consolidated domestic and international subsidiaries.

Information aboutOverview

ACCO Brands is one of the world's largest suppliers of branded school and office products (excluding furniture, computers, printers and bulk paper). Approximately 80% of our net sales come from brands that occupy the number one or number two positions in the select markets in which we compete. We sell our products through many channels that include the office products resale industry as well as through mass retail distribution and e-tailers. We design, develop, manufacture and market a wide variety of sharestraditional and computer-related office products, school supplies and paper-based time management products. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of common stock beneficially ownedour consumers and commercial end-users, and support our brands. We compete through a balance of product innovation, category management, a low-cost operating model and an efficient supply chain. We sell our products primarily to markets located in the United States, Northern Europe, Canada, Australia, Brazil and Mexico.

Our office, school and calendar product lines use name brands such as AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy®, Marbig, Mead®, NOBO, Quartet®, Rexel, Swingline®, Tilibra®, Wilson Jones® and many others. Our products and brands are not confined to one channel or product category and are designed based on end-user preference in each geographic location.

The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards, are used by each director appearsbusinesses. Most of these business end-users purchase their products from our customers, which include commercial contract stationers, retail superstores, mass merchandisers, wholesalers, resellers, mail order and internet catalogs, club stores and dealers. We also supply some of our products directly to large commercial and industrial end-users. Historically, we have targeted the premium end of the product categories in which we compete. However, we also supply private label products for our customers and provide business machine maintenance and certain repair services.


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Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily through traditional and online retail mass market, grocery, drug and office superstore channels. We also supply private label products within the school products sector. Our calendar products are sold throughout all channels where we sell office or school products, and we also sell direct to consumers.

Our computer products group designs, distributes, markets and sells accessories for laptop and desktop computers, tablets and smartphones. These accessories primarily include security products, iPad® covers and keypads, smartphone accessories, power adapters, input devices such as mice, laptop computer carrying cases, hubs, and docking stations and ergonomic devices. We sell these products mostly under the caption “Security OwnershipKensington®, Microsaver® and ClickSafe® brand names. All of Certain Beneficial Owners, Directorsour computer products are manufactured by third-party suppliers, principally in Asia, and Executive Officers”are stored in and distributed from our regional facilities. Our computer products are sold primarily to consumer electronics online retailers, information technology value-added resellers, original equipment manufacturers and office products retailers.

We believe our leading product positions provide the scale to enable us to invest in product innovation and drive growth across our product categories. In addition, the expertise we use to satisfy the exacting technical specifications of our more demanding commercial customers is in many instances the basis for expanding our innovations to consumer products. We plan to grow via a strategy of organic growth supplemented by acquisitions that can leverage our existing business.

We utilize a combination of manufacturing and third-party sourcing to procure our products, depending on transportation costs, service needs and direct labor costs associated with each product. We currently manufacture approximately half of our products, and specify and source approximately half of our products, mainly from Asia.

Our priority for free cash flow over the near term is to fund the reduction of debt, invest in working capital to support organic growth and to invest in new products through both organic development and acquisitions.

On May 1, 2012, we completed the merger ("Merger") of the Mead Consumer and Office Products Business (“Mead C&OP”) with a wholly-owned subsidiary of the Company. Accordingly, the results of Mead C&OP are included in our consolidated financial statements from the date of the Merger.

On May 1, 2012, we entered into a refinancing in conjunction with the Merger. The refinancing transactions reduced our effective interest rates while increasing our borrowing capacity and extending the maturities of our credit facilities.

For further information on the Merger with Mead C&OP and refinancing see Note 3, Acquisitions and Note 4 Long-term Debt and Short-term Borrowings, to the consolidated financial statements contained in Item 128 of this report.  There

Reportable Segments

ACCO Brands is organized into three business segments: ACCO Brands North America, ACCO Brands International and Computer Products Group. During the second quarter of 2012, we implemented certain organizational changes in our business segments in conjunction with the Merger with Mead C&OP. Effective as of the second quarter of 2012, our former ACCO Brands Americas segment became ACCO Brands North America as our pre-acquisition Latin America business was moved into the ACCO Brands International segment along with Mead C&OP's Brazilian operations. Our Computer Products Group was unaffected by the realignment or the Merger.

As discussed in Note 1, Basis of Presentation, to the consolidated financial statements contained in Item 8 of this report, during the second quarter of 2011 we sold our GBC Fordigraph Pty Ltd (“GBC Fordigraph”) business which was formerly part of the ACCO Brands International segment and is included in the financial statement caption “Discontinued Operations.” The ACCO Brands International segment is now presented on a continuing operations basis excluding GBC Fordigraph.

ACCO Brands North America and ACCO Brands International

ACCO Brands North America and ACCO Brands International manufacture, source and sell traditional office products, school supplies, calendar products and document finishing solutions. ACCO Brands North America comprises the U.S. and Canada, and ACCO Brands International comprises the rest of the world, principally Europe, Latin America, Australia, and Asia-Pacific.

Our office, school and calendar product lines use name brands such as AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy®, Marbig, Mead®, NOBO, Quartet®, Rexel, Swingline®, Tilibra®, Wilson Jones® and many others. Our products and brands are not confined to one channel or product category and are sold based on end-user preference in each geographic location.


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The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards, are used by businesses. Most of these business end-users purchase their products from our customers, which include commercial contract stationers, mass merchandisers, retail superstores, wholesalers, resellers, mail order and internet catalogs, club stores and dealers. We also supply some of our products directly to large commercial and industrial end-users. Historically, we have targeted the premium end of the product categories in which we compete. However, we also supply private label products for our customers and provide business machine maintenance and certain repair services.

Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily through traditional and online retail mass market, grocery, drug and office superstore channels. We also supply private label products within the school products sector. Our calendar products are sold throughout all channels where we sell office or school products, and we also sell direct to consumers.

Computer Products Group

The Computer Products Group designs, distributes, markets and sells accessories for laptop and desktop computers and tablets and smartphones. These accessories primarily include security products, iPad® covers and keypads, smartphone accessories, power adapters, input devices such as mice, laptop computer carrying cases, hubs, docking stations and ergonomic devices. The Computer Products Group sells mostly under the Kensington®, Microsaver® and ClickSafe® brand names, with the majority of its revenue coming from the U.S. and Western Europe.

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

For further information on our business segments see Note 16, Information on Business Segments, to the consolidated financial statements contained in Item 8 of this report.

Customers/Competition

Our sales are generated principally in North America, Europe, Latin America and Australia. For the year ended December 31, 2012, these markets represented 64%, 15%, 11% and 8% of net sales, respectively. Our top ten customers accounted for 53% of net sales for the year ended December 31, 2012. Sales to Staples, our largest customer, amounted to approximately 13% of consolidated net sales for each of the years ended 2012, 2011 and 2010. Sales to our second largest customer amounted to approximately 10% of consolidated net sales for each of the years ended 2011 and 2010. Sales to no family relationships amongother customer exceeded 10% of consolidated sales for any of the directorslast three years.

The customer base to which we sell our products is primarily made up of large global and regional resellers of our products. Mass and retail channels mainly sell to individual consumers but also to small businesses. Office superstores primarily sell to commercial customers but also to individual consumers at their retail stores. As a result, there is no clear correlation between product, consumer or distribution channel. We also sell to commercial contract stationers, wholesalers, distributors, mail order and internet catalogs, and independent dealers. Over half of our product sales by our customers are to business end-users, who generally seek premium products that have added value or ease-of-use features and a reputation for reliability, performance and professional appearance. Some of our document finishing products are sold directly to high-volume end-users and commercial reprographic centers. We also sell calendar products direct to consumers.

Current trends among our customers include fostering high levels of competition among suppliers, demanding innovative new products and requiring suppliers to maintain or reduce product prices and deliver products with shorter lead times and in smaller quantities. Other trends are for retailers to import generic products directly from foreign sources and sell those products, which compete with our products, under the customers' own private-label brands. The combination of these market influences, along with a recent and continuing trend of consolidation among resellers, has created an intensely competitive environment in which our principal customers continuously evaluate which product suppliers they use. This results in pricing pressures, the need for stronger end-user brands, broader product penetration within categories, the ongoing introduction of innovative new products and continuing improvements in customer service.

Competitors of our ACCO Brands North America and ACCO Brands International segments include, 3M, Avery Dennison, Blue Sky, Carolina Pad, Dominion BlueLine, Esselte, Fellowes, Franklin Covey, Hamelin, House of Doolittle, Newell Rubbermaid, Smead, Spiral Binding, Tops Products and numerous private label suppliers and importers. Competitors of the Computer Products Group include Belkin, Fellowes, Logitech and Targus.


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Certain financial information for each of our business segments and geographic regions is incorporated by reference to Note 16, Information on Business Segments, to the consolidated financial statements contained in Item 8 of this report.

Product Development and Product Line Rationalization

Our strong commitment to understanding our consumers and defining products that fulfill their needs drives our product development strategy, which we believe is and will continue to be a key contributor to our success in the office products industry. Our new products are developed from our own consumer understanding, our own research and development or through partnership initiatives with inventors and vendors. Costs related to consumer research and product research when paid directly by ACCO Brands are included in marketing costs and research and development expenses, respectively. Research and development expenses amounted to $20.8 million, $20.5 million and $24.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Significant product developments include the Computer Products Group's development of tablet and smartphone accessory products that represented 33% of the group's 2012 segment revenue. In 2011 the Computer Products Group also launched a new proprietary computer security lock product under the brand "ClickSafe®" to supplement its well recognized MicroSaver® product line for which most patent protection expired in January, 2012. The ClickSafe solution has patent protection through 2029.

In 2012, ACCO Brands extended its award-winning, patented auto-feed shredding line to seven models with a shredding capacity from 60 sheets to 750 sheets at a time. These models are sold globally under the Swingline and Rexel brands. We also redeveloped our global assortment of laminators, consolidating from 14 machines to 9 machines and rebranding them as Swingline™ GBC® Fusion™ Laminators in the U.S. The new Fusion laminator line is significantly faster in productivity compared to competitive products.
In commercial channels, we have extended our presentation product range line to include a new line of environmentally friendly porcelain whiteboards and notice boards which were launched in 2013 commercial catalogs. In retail channels, we introduced a range of Quartet® brand SKUs into Europe. We have also extended our Swingline® brand fashion stapling platform to include a durable full-strip metal model, and launched a new lower-cost range of opening-price-point metal staplers and punches for the South African market.
Also in 2012, ACCO Brands introduced a new product in the ergonomic category, the Conform Wrist Rest. This is the first wrist rest that lessens pressure on the user's carpel tunnel. Conform utilizes the proprietary SmartFit system to optimize the user's wrist angle.
Our product line strategy emphasizes the divestiture of businesses and rationalization of product offerings that do not meet our long-term strategic goals and objectives. We consistently review our businesses and product offerings, assess their strategic fit and seek opportunities to divest nonstrategic businesses. The criteria we use in assessing the strategic fit include: the ability to increase sales for the business; the ability to create strong, differentiated brands; the importance of the business to key customers; the business relationship with existing product lines; the impact of the business to the market; and the business's actual and potential impact on our operating performance.

As a result of this review process, during 2011 we completed the sale of GBC Fordigraph, our former Australian direct sales business that sold mail room and binding and laminating equipment and supplies. This business represented approximately $46 million in annual net sales for the year ended December 31, 2010. In addition, during 2009 we completed the sale of our former commercial print finishing business. This business represented approximately $100 million in annual net sales for the year ended December 31, 2008.

Raw Materials

The primary materials used in the manufacturing of many of our products are plastics, resin, polyester and polypropylene substrates, paper, steel, wood, aluminum, melamine, zinc and cork. These materials are available from a number of suppliers, and we are not dependent upon any single supplier for any of these materials. In general, our gross profit may be affected from time to time by fluctuations in the prices of these materials because our customers require advance notice and negotiation to pass through raw material price increases, giving rise to a delay before cost increases can be passed on to our customers. The raw materials and labor costs we incur are subject to price increases that could adversely affect our profitability. Based on experience, we believe that adequate quantities of these materials will be available in the foreseeable future. In addition, a significant portion of the products we sell in our international markets are sourced from China and other far Eastern countries and are paid for in U.S. dollars. Thus, movements of their local currency to the U.S. dollar have the same impacts as raw material price changes and we adjust our pricing in these markets to reflect these currency changes. See also Item 1A, "Risk Factors".


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Supply

Our products are either manufactured or sourced to ensure that we supply our customers with appropriate customer service, quality products, innovative solutions and attractive pricing. We have built a customer-focused business model with a flexible supply chain to ensure that these factors are appropriately balanced. Using a combination of manufacturing and third-party sourcing also enables us to reduce our costs and effectively manage our production assets by lowering capital investment and working capital requirements. Our strategy is to manufacture those products that would incur a relatively high freight and /or duty expense or have high service needs and source those products that have a high proportion of direct labor cost. Low-cost sourcing mainly comes from China, but we also source from other Asian countries and Eastern Europe. Where freight costs or service issues are significant, we source from factories located in or near our domestic markets.

Seasonality

Our business, as it concerns both historical sales and profit, has experienced increased sales volume in the third and fourth quarters of the calendar year. Two principal factors have contributed to this seasonality: (1) the office products industry, its customers and ACCO Brands specifically are major suppliers of products related to the "back-to-school" season, which occurs principally during June, July, August and September for our North American business and during November, December and January for our Australian and Brazilian businesses; and (2) our offering includes several products which lend themselves to calendar year-end purchase timing, including AT-A-GLANCE® and Day-Timer® planners, paper organization and storage products (including bindery) and Kensington computer accessories, which has higher sales in the fourth-quarter driven by traditionally strong fourth-quarter sales of personal computers, tablets and smartphones.

Intellectual Property

We have many patents, trademarks, brand names and trade names that are, in the aggregate, important to our business. The loss of any individual patent or license, however, would not be material to us taken as a whole, even though there can be no assurance that the royalty income we currently receive pursuant to license agreements covering patents that will expire can be replaced, or that we will not experience a decline in gross profit margin on related products. Many of ACCO Brands' trademarks are only important in particular geographic markets or regions. Our principal registered trademarks are: ACCO®,AT-A-GLANCE®, ClickSafe®, Day-Timer®, Five Star®, GBC®, Hilroy®, Kensington®, Marbig, Mead®,MicroSaver® NOBO, Quartet®, Rexel, Swingline®, Tilibra®, and Wilson Jones®.

Environmental Matters

We are subject to federal, state and local laws and regulations concerning the discharge of materials into the environment and the handling, disposal and clean-up of waste materials and otherwise relating to the protection of the environment. It is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future. In the opinion of our management, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material adverse effect upon our capital expenditures, financial condition, results of operations or competitive position. See also Item 1A, "Risk Factors".

Employees

As of December 31, 2012, we had approximately 5,850 full-time and part-time employees. There have 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.

Discontinued Operations

As of May 31, 2011, we disposed of GBC Fordigraph Pty Ltd (“GBC Fordigraph”). The Australia-based business was formerly part of the ACCO Brands International segment and the results of operations are included in the financial statements as a discontinued operation for all periods presented. GBC Fordigraph represented $45.9 million in annual net sales for the year ended December 31, 2010. In 2011, we received net proceeds of $52.9 million and recorded a gain on the sale of $41.9 million ($36.8 million after-tax).

In June 2009, we completed the sale of our commercial print finishing business for final gross proceeds of $16.2 million. The results of operations and loss on sale of this business are reported in discontinued operations for all periods presented.


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For further information on discontinued operations see Note 19, Discontinued Operations, to the consolidated financial statements contained in Item 8 of this report.

For a description of certain factors that may have had, or may in the future have, a significant impact on our business, financial condition or results of operations, see Part I, Item 1A—Risk Factors.


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Executive Officers of the Company
The following sets forth certain information with regard to our executive officers as of ACCO Brands.February 22, 2013 (ages are as of December 31, 2012).


Mark C. Anderson, age 50
ROBERT J. KELLER, Chairman of2007 - present, Senior Vice President, Corporate Development
Joined the BoardCompany in 2007

Boris Elisman, age 50
2010 - present, President and Chief Operating Officer
2008 - 2010, President, ACCO Brands Americas
2008 - 2008, President, Global Office Products Group
2004 - 2008, President, Computer Products Group
Joined the Company in 2004
Will succeed Robert J. Keller as Chief Executive Officer; Director since 2005Officer effective March 31, 2013 and will join the Company's Board of Directors on that date

Mr.Robert J. Keller, age 58, has served as59
2008 - present, Chairman and Chief Executive Officer since October,
2004 - 2008, was Chairman in September and October of 2008, and served as Presiding Independent Director of the Board from May, 2008 until September, 2008.  Previously, Mr. Keller served as President and Chief Executive Officer, and as a director of APAC Customer Services, Inc. from
Joined the Company in 2008
On March 2004 until February, 2008.  Mr. Keller served in various capacities at Office Depot, Inc. from February, 1998 through September, 2003, most recently as its President, Business Services Group.  We believe Mr. Keller’s qualifications31, 2013, to serve on our Board of Directors include his experience in and knowledge of the office products industry, as a public company director and as a business leader at a number of companies in several industries, including one of our principal customers, Office Depot, Inc., as well as his current rolebe succeeded as Chief Executive Officer ofby Boris Elisman. Will remain on the Company.
ROBERT H. JENKINS, Presiding Independent Director; Director since 2007
Mr. Jenkins, age 69, has served as Presiding Independent Director since September, 2008.  Mr. Jenkins is retired.  He served as Chairman, President and Chief Executive Officer of Sundstrand Corporation from 1997 to 1999 and as its President and Chief Executive Officer from 1995 to 1997.  Sundstrand is an aerospace and industrial company which merged with United Technologies Corporation in June, 1999, forming Hamilton Sundstrand Corporation.  Mr. Jenkins is currently a director of AK Steel Holding Corporation and Clarcor, Inc.  He formerly served as a director of Solutia, Inc. from 1997 to 2008.  We believe Mr. Jenkins’ qualifications to serve on our Board of Directors include his prior experience as a chief executive officer of a publicly held major industrial firm, his service on other boards of directors of publicly held firms, his extensive corporate governance experience, much of which has been acquired in his role as lead director for AK Steel Holdings Corporation, and his business and
Executive Chairman

Neal V. Fenwick, age 51
1

operational experience at a number of companies in other industries.  His board leadership has been and continues to be invaluable to the Company and the other directors.
GEORGE V. BAYLY, Director since 2005
Mr. Bayly, age 69, is a private investor.  Since August, 2008 Mr. Bayly has served as Principal of Whitehall Investors LLC, a consulting and venture capital firm.  From September, 2006 to March, 2008 he served as Chairman and interim Chief Executive Officer of Altivity Packaging LLC.  He served as interim Chief Executive Officer of U.S. Can Corporation from April, 2004 to January, 2005 and Chairman, President and Chief Executive Officer of Ivex Packaging Corporation, a specialty packaging company, until June, 2002.  He was a director of General Binding Corporation (“GBC”) from 1998 until August, 2005.  He currently is a director of CCL Industries, Inc., TreeHouse Foods, Inc., and Graphic Packaging Holding Company.  He was formerly a director of Huhtämaki Oyj until resigning in 2011.  We believe Mr. Bayly’s qualifications to serve on our Board of Directors include his twelve years’ experience as a director of ACCO Brands and GBC and the resultant knowledge he has obtained of the office products industry, his prior experience as chief executive officer at publicly held companies, and his service on other boards of directors of publicly held firms.  He also brings an invaluable global business perspective to the Board.
KATHLEEN S. DVORAK, Director since 2010
Ms. Dvorak, age 55, is- present, Executive Vice President and Chief Financial Officer of Richardson Electronics, Ltd.
1999 - 2005, Vice President Finance and Administration, ACCO World
1994 - 1999 Vice President Finance, ACCO Europe
Joined the Company in 1984

Christopher M. Franey, a global provider of engineered solutionsage 56
2010 - present, Executive Vice President; President, ACCO Brands International and distributor of electronic components servingPresident, Kensington Computer Products Group
2008 - 2010, President, Computer Products Group
Joined the RF (radio frequency)Company in 2008

Neil A. McLachlan, age 56
2012 - present, Executive Vice President; President, ACCO Brands Emerging Markets
1999 - 2012, President, Consumer and wireless communications, electron device, industrial power conversion and display systems markets.  Previously, she had beenOffice Products Group, MeadWestvaco Corporation
Joined the Company in 2012






Thomas P. O'Neill, Jr, age 59
2008 - present, Senior Vice President, Finance and Accounting
2005 - 2008, Vice President, Finance and Accounting
Joined the Company in 2005

Pamela R. Schneider, age 53
2012 - present, Senior Vice President, General Counsel and Secretary
2010 - 2012, General Counsel, Accertify, Inc.
2008 - 2010, Executive Vice President, General Counsel and Secretary, Movie Gallery, Inc.
2005 - 2008, Senior Vice President, General Counsel and Secretary, APAC Customer Services, Inc.
Joined the Company in 2012

Thomas H. Shortt, age 44
2010 - present, Executive Vice President; President, Global Products
2009 - 2010, Chief FinancialStrategy and Supply Chain officer
2008 - 2009, Management Consultant focusing on supply chain improvement
2004 - 2008, President, Unisource Worldwide, Inc.
Joined the Company in 2009.

Thomas W. Tedford, age 42
2010 - present, Executive Vice President; President, ACCO Brands U.S. Office and Consumer Products
2010 - 2010, Chief Marketing and Product Development Officer
2007 - 2010, Group Vice President, APAC Customer Services, Inc.
Joined the Company in 2010






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ITEM 1A.RISK FACTORS
The factors that are discussed below, as well as the matters that are generally set forth in this report on Form 10-K and the documents incorporated by reference herein, could materially and adversely affect the Company’s business, results of operations and financial condition.

Our business depends on a limited number of large and sophisticated customers, and a substantial reduction in sales to one or more of these customers could significantly impact our operating results.

The office products wholesalerindustry is characterized by a small number of major customers, principally office products superstores (which combine contract stationers, retail and distributor,mail order), office products resellers and mass merchandisers. A relatively limited number of customers account for a large percentage of our total net sales. Our top ten customers accounted for 53% of our net sales for the fiscal year ended December 31, 2012. Sales to Staples, our largest customer, during the same period amounted to approximately 13% of our 2012 net sales. Giving effect to the recently announced merger agreement entered into between Office Depot and Office Max, as if the contemplated merger had occurred on January 1, 2012, our sales to the combined companies and their subsidiaries would have represented approximately 15% of our 2012 net sales. Our large customers have the ability to obtain favorable terms, to directly source their own private label products and to create and support new and competing suppliers. The loss of, or a significant reduction in, business from 2001 until 2007.  one or more of our major customers could have a material adverse effect on our business, financial condition and results of operations.

Our customers may further consolidate, which could adversely impact our margins and sales.

Our customers have steadily consolidated over the last two decades. Recently, two of our large customers, Office Depot and Office Max, announced that they had entered into a merger agreement. While management currently expects the effects on our business of the proposed merger, if consummated, would be realized primarily in the retail channel, which only represents approximately one-third of our business with these customers, there can be no assurance that the combination of these two large customers will not adversely affect our business and results of operations. Further, if this trend continues, it is likely to result in further pricing pressures on us that could result in reduced margin and sales. Further, there can be no assurance that following consolidation large customers will continue to buy from us across different product segments or geographic regions, or at the same levels as prior to consolidation, which could negatively impact our financial results.

Challenges related to the highly competitive business segments in which we operate could have a negative effect on our ongoing operations, revenues, results, cash flows or financial position.

We operate in highly competitive business segments that face a number of challenges, including competitors with strong brands or brand recognition, significant private label producers, imports from a range of countries, low entry barriers, sophisticated and large buyers of office products, and potential substitution from a range of products and services including electronic, digital or web-based products that can replicate or render obsolete or less desirable some of the products we sell. In particular, our business is likely to be affected by: (1) the decisions and actions of our major customers, including their decisions on whether to increase their purchases of private label products; (2) decisions of current and potential suppliers of competing products on whether to take advantage of low entry barriers to expand their production; and (3) the decisions of end-users of our products to expand their use of substitute products and, in particular, to shift their use of time management and planning products toward electronic and other substitutes. In addition, our competitive position depends on continued investment in innovation and product development, manufacturing and sourcing, quality standards, marketing and customer service and support. Our success will depend in part on our ability to anticipate and offer products that appeal to the changing needs and preferences of our customers in a market where many of our product categories are affected by continuing improvements in technology and shortened product lifecycles. We may not have sufficient resources to make the investments that may be necessary to anticipate or react to those changing needs, and we may not identify, develop and market products successfully or otherwise be successful in maintaining our competitive position.

Sales of our products may be adversely affected by issues that affect business, commercial and consumer spending decisions during periods of economic uncertainty or weakness.

Sales of our products can be very sensitive to uncertain U.S. and global economic conditions, particularly in categories where we compete against private label, other branded and/or generic products that are competitive on price, quality, service or other grounds. In periods of economic uncertainty or weakness, the demand for our products may decrease, as businesses and consumers may seek or be forced to purchase more lower cost, private label or other economy brands, may more readily switch to electronic, digital or web-based products serving similar functions, or may forgo certain purchases altogether. As a result, adverse changes in U.S. or global economic conditions or sustained periods of economic uncertainty or weakness could negatively affect our

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earnings and could have a material adverse effect on our business, results of operations, cash flows and financial position.

If the operating results for Mead C&OP following the Merger are poor, or if we fail to realize anticipated cost synergies and growth opportunities, we may not achieve the financial results that we expect as a result of the Merger.

We believe Ms. Dvorak’s qualificationsthat we will derive a significant portion of our future revenues and earnings per share from the operations of Mead C&OP. Therefore, any negative impact on those business operations could harm our operating results. Some of the significant factors that could harm the operations of Mead C&OP, and therefore harm our operating results, include increases in the prices of raw materials, competitive pressure from existing or new companies, increased use of direct shipment sourcing by our customers, a decline in the markets served by Mead C&OP and general economic conditions.

Among the factors considered in connection with our acquisition of Mead C&OP were the opportunities for cost synergies, growth opportunities and other financial and operating benefits. Our ability to servefully realize these cost synergies, growth opportunities and other financial and operating benefits, and the timing of this realization, depends on the successful integration of Mead C&OP. We cannot predict with certainty if or when these cost synergies, growth opportunities and benefits may occur, or the extent to which they actually will be achieved. For example, the benefits from the Merger may be offset by significant costs that may be incurred in integrating Mead C&OP. Realization of any benefits and cost synergies could be adversely affected by difficulties in integrating the businesses, as described below, and a number of factors beyond our control, including, without limitation, deteriorating or anemic economic conditions, increased operating costs, increased competition and regulatory developments.

Our continued integration of Mead C&OP may present significant challenges, and we may be unable to quickly and effectively integrate Mead C&OP with our historical operations.

We continue to integrate and coordinate key elements of Mead C&OP with our historical operations; however, given the size and significance of the acquisition, we may encounter significant difficulties during the process of fully integrating Mead C&OP. These difficulties include:
the integration of Mead C&OP while carrying on our Boardongoing operations;
the need to coordinate geographically separate organizations;
challenges involving combining different corporate cultures;
challenges and costs associated with integrating the information technology systems of DirectorsMead C&OP with ours, which presently are run under different operating software systems; and
potential difficulties in retaining key officers and personnel.

The process of continuing to integrate operations 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 this integration process, which will decrease the time they will have to manage our business, service existing customers, attract new customers and develop new products or strategies. If our senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.

Difficulties in the integration and transition associated with Mead C&OP, including those relating to changes to or implementation of critical information technology systems, together with our increased size and global presence, could also adversely affect our internal control over financial reporting, our disclosure controls and our ability to effectively and timely report our financial results. Our acquisition of Mead C&OP may require significant modifications to our internal control systems, processes and information systems, both on a transition basis and over the longer-term as we fully integrate Mead C&OP. Since the acquisition of Mead C&OP occurred in the second quarter of 2012, the scope of our assessment of the effectiveness of internal control over financial reporting contained in this report does not include her extensive experienceMead C&OP. If we were to be unable to accurately report our financial results in a timely manner or unable to assert that our internal controls over financial reporting or our disclosure controls are effective, our business, results of operations and financial condition and the market perception thereof could be materially adversely affected.

If we fail to integrate our operations quickly and effectively, there could be uncertainty in the marketplace or concerns among our customers regarding the impact of the acquisition of Mead C&OP, which could materially adversely affect our businesses, financial condition and results of operations.


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Our growth strategy includes increased concentration in our emerging market geographies, which could create greater exposure to unstable political conditions, civil unrest or economic volatility.

With the acquisition of Mead C&OP more of the Company's sales are derived from emerging markets such as Brazil, Mexico and Chile. The profitable growth of our business in developing and emerging markets is key to our long term growth strategy. If we are unable to successfully expand our businesses in developing and emerging markets, or achieve the return on capital we expect as a result of our investments, our financial performance could be adversely affected.

Factors that could adversely affect our business results in these developing and emerging markets include: regulations on the transfer of funds to and from foreign countries, which, from time to time, result in significant cash balances in foreign countries, and limitations on the repatriation of funds; currency hyperinflation or devaluation; the lack of well-established or reliable legal systems; and increased costs of business due to compliance with complex foreign and United States laws and regulations that apply to our international operations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, and adverse consequences, such as the assessment of fines or penalties, for failing to comply with these laws and regulations. In addition, disruption in these markets due to political instability or civil unrest could result in a decline in consumer purchasing power, thereby reducing demand for our products.

Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.

In connection with our May 1, 2012 acquisition of Mead C&OP, we assumed all of the tax liabilities for the acquired foreign operations. In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the goodwill recorded in connection with the 2004 acquisition of Tilibra. This assessment denied the deductibility of that goodwill from Tilibra's taxable income for the year 2007. The assessment seeks payment of approximately R$26.9 million ($13.2 million based on current exchange rates) of tax, penalties and interest.

In January of 2013, Tilibra filed a protest disputing the tax assessment at the first administrative level of appeal within the FRD. We believe that we have meritorious defenses and intend to vigorously contest this matter, however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge the FRD's tax assessment, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take many years. In addition, Tilibra's 2008-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill deducted for the Tilibra acquisition for one or more of these years, which could increase the Company’s exposure to a total of approximately $44.5 million (based on current exchange rates), including interest and penalties which have accumulated to date. If the FRD's initial position is ultimately sustained, the amount assessed would adversely affect our reported cash flow in the year of settlement.

Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers the outcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in the amount of $44.5 million in consideration of this matter. In addition, the Company will continue to accrue interest related to this matter until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail.

There are various other claims, lawsuits and pending actions against us incidental to our operations. It is the opinion of management that the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, we can make no assurances that we will ultimately be successful in our defense of any of these matters.

For further information see Note 3, Acquisitions, to the consolidated financial statements contained in Item 8 of this report.

Risks associated with outsourcing the production of certain of our products could materially and adversely affect our business, financial condition and results of operations.

We outsource certain manufacturing functions to suppliers in China and other Asia-Pacific countries. All of our suppliers must comply with our design and product content specifications, applicable laws, including product safety, security, labor and environmental laws, and otherwise be certified as meeting our and our customers' supplier codes of conduct. Outsourcing generates a number of risks, including decreased control over the manufacturing process potentially leading to production delays or interruptions, inferior product quality control and misappropriation of trade secrets. In addition, performance problems by these suppliers could result in cost overruns, delayed deliveries, shortages, quality and compliance issues or other problems, which could materially and adversely affect our business, financial condition and results of operations.

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If one or more of these suppliers becomes insolvent or unable or unwilling to continue to provide products of acceptable quality, at acceptable costs or in a timely manner, our ability to deliver our products to our customers could be severely impaired. In addition, as we expect our suppliers to comply with and be responsive to our security audits and conform to our and our customers' expectations with respect to product quality and social responsibility, any failure to do so may result in our having to cease contracting with such supplier or cease production at a particular facility. Any need to identify and qualify substitute suppliers or facilities or increase our internal capacity could result in unforeseen operational problems and additional costs. Substitute suppliers might not be available or, if available, might be unwilling or unable to offer products on acceptable terms. Moreover, if customer demand for our products increases, we may be unable to secure sufficient additional capacity from our current suppliers, or others, on commercially reasonable terms, if at all.

Some of our suppliers are dependent upon other industries for raw materials and other products and services necessary to produce and provide the products they supply to us. Any adverse impacts to those industries could have a ripple effect on these suppliers, which could adversely impact their ability to supply us at levels we consider necessary or appropriate for our business, or at all. Any such disruptions could negatively impact our ability to deliver products and services to our customers, which in turn could have an adverse impact on our business, operating results, financial condition or cash flow.

Decline in the use of paper-based dated time management and productivity tools could adversely affect our business.

A number of our products and brands consist of paper-based time management and productivity tools, that historically have tended to be higher-margin products. However, consumer preference for technology-based solutions for time management and planning continues to grow worldwide. Many consumers use or have access to electronic tools that may serve as substitutes for traditional paper-based time management and productivity tools. Accordingly, the continued introduction of new digital software applications and web-based services by companies offering time management and productivity solutions could adversely impact the revenue and profitability of our largely paper-based portfolio of time management products.

Material disruptions at one of our or our suppliers' major manufacturing or distribution facilities could negatively impact our financial results.

A material operational disruption in one of our or any our supplier's major facilities could negatively impact production, customer deliveries and our financial results. Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, labor stoppages, transportation failures affecting the supply and shipment of materials and finished goods, severe weather conditions, natural disasters, civil unrest, war or terrorism and disruptions in utility services.

We rely extensively on information technology systems to operate, transact and otherwise manage our business. Any material failure, inadequacy, interruption or security failure of that technology or its infrastructure could harm our ability to effectively operate our business.

We rely extensively on our information technology systems, most of which are managed by third-party service providers, across our operations. Our ability to effectively manage our business and execute the production, distribution and sale of our products as well as our ability to manage and report our financial results and run other support functions depends significantly on the reliability and capacity of these systems and our third-party service providers. The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or a breach in the security of these systems could disrupt service to our customers and adversely affect our business, financial results of operations and financial condition.

We have a significant amount of indebtedness, which could adversely affect our business, results of operations and financial condition.

As of December 31, 2012, we had $1.07 billion of outstanding debt. This indebtedness could adversely affect us in a number of ways, including requiring us to dedicate a substantial portion of our cash flow from operating activities to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts, potential strategic acquisitions and other general corporate purposes. In addition, approximately $569 million of our outstanding debt is subject to floating interest rates which increases our exposure to fluctuations in market interest rates. Our significant indebtedness also may increase our vulnerability to economic downturns and changing market conditions and place us at a competitive disadvantage relative to competitors that have less debt, all of which could adversely affect our business, results of operations and financial condition.


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The agreements governing our indebtedness contain financial and other restrictive covenants that limit our ability to engage in certain activities that may be in our long-term best interests.

The agreements governing our indebtedness contain financial and other covenants that limit our ability to engage in certain activities and restrict our operational flexibility. These restrictive covenants also may limit our ability to obtain additional financing to fund growth, working capital or capital expenditures, or to fulfill other cash requirements. Among other things, these covenants restrict or limit our ability to incur additional indebtedness, incur certain liens on our assets, issue preferred stock or certain disqualified stock, pay cash dividends, make restricted payments, including investments, sell our assets or merge with other companies, and enter into transactions with affiliates. We are also required to maintain specified financial ratios under certain conditions and satisfy financial condition tests under our credit facility. These covenants, ratios and tests may limit or prohibit us from engaging in certain activities and transactions that may be in our long-term best interests, and could place us at a competitive disadvantage relative to our competitors, which could adversely affect our business and results of operations.

Our failure to comply with our debt covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our debts.

Our ability to comply with the covenants and financial ratios and tests under the agreements governing our indebtedness may be affected by events beyond our control, and we may not be able to continue to meet those covenants, ratios and tests. Our ability to generate sufficient cash from operations to meet our debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors. Our breach of any of these covenants, ratios or tests, or any inability to pay interest on, or principal of, our outstanding debt as it becomes due, could result in an event of default, in which case our lenders could declare all amounts outstanding to be immediately due and payable. If our lenders accelerate our indebtedness, our assets may not be sufficient to repay in full such indebtedness and any other indebtedness that would become due as a result of such acceleration and, if we were unable to obtain replacement financing or any such replacement financing was on terms that were less favorable than the indebtedness being replaced, our liquidity and results of operations would be materially and adversely affected. See “Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.”

Our business is subject to risks associated with seasonality, which could adversely affect our cash flow, financial condition or results of operations.

Historically, our business, as it concerns both historical sales and profit, experiences higher sales volume in the third and fourth quarters of the calendar year, and with our acquisition of Mead C&OP, this seasonality is expected to continue. Two principal factors have contributed to this seasonality: the office products industry, including as a former officer of one of our principalindustry's customers and her financial and accounting background and experience as a chief financial officer at two publicly held companies.  The Board believes this experience is highly valuable in her service on the Board’s Audit Committee.
G. THOMAS HARGROVE, Director since 2005
Mr. Hargrove, age 72, is a private investor.  Mr. Hargrove served as the non-executive Chairmanour product line. We are major suppliers of AGA Creative, a catalog creative agency, from 1999 until 2001, and as a director of General Binding Corporation from 2001 until August, 2005.  Early in his career he held various financial management positions and has also served on the Investment Committee of the Washington State University Foundation.  We believe Mr. Hargrove’s qualifications to serve on our Board of Directors include his eleven years’ experience as a director and Chairman of the Audit Committee of ACCO Brands and GBC and the resultant knowledge he has obtained of the office products industry.  Further enhancing his qualifications are his more than 30 years of operational and financial experience, primarily in the manufacturing and distribution of consumer products, which included serving as president of the At-A-Glance Group, a prominent office products company.  The exposure to risk assessment obtained in both his service to GBC’s Audit Committee and in his charitable service has been of great value in chairing the Board’s Audit Committee.
THOMAS KROEGER, Director since 2009
Mr. Kroeger, age 63, is President of Spencer Alexander Associates, which provides management consulting and executive recruiting services.  Spencer Alexander Associates is affiliated with Howard & O’Brien Associates, a retained executive search firm.  He is also a member of the Operating Council of

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Kirtland Capital Partners, a private equity firm.  Previously, Mr. Kroeger has served as chief human resources officer for each of Invacare Corporation, Office Depot, Inc., and The Sherwin-Williams Company.  In each of these positions he also was a member of the executive committee.  We believe Mr. Kroeger’s qualifications to serve on our Board of Directors include his extensive background in talent management, which brings an important perspective to board discussions on human resource matters, as well as his prior experience in the office products industry.
MICHAEL NORKUS, Director since 2009
Mr. Norkus, age 65, is President of Alliance Consulting Group, a business strategy consulting firm.  Prior to founding Alliance in 1986, Mr. Norkus was Vice President and Director of The Boston Consulting Group, where he served for 11 years.  Mr. Norkus also currently serves as a director of Genesee & Wyoming, Inc. and until February, 2011 served as a director of Overland Storage, Inc. since 2004.  We believe Mr. Norkus’ qualifications to serve on our Board of Directors include his service as a director of other publicly held companies, his international business experience and his more than three decades of global business consulting experience in the disciplines of corporate strategy, marketing, and new product development.
SHEILA G. TALTON, Director since 2010
Sheila G. Talton, age 59, is President of SGT, Ltd., a firm that provides strategy and technology consulting services in global markets in the financial services, healthcare and technology business sectors. Until July, 2011 she had been the Vice President, Office of Globalization, for Cisco Systems, Inc., a leading global manufacturer, supplier and servicer of Internet Protocol (IP)-based networking and other products related to the communication“back-to-school” season, which occurs principally from June through September for our North American business, from November through January for our Australian business, and information technology (“IT”) industry,predominantly from October through December for our Brazilian business. Our product line also includes a number of products that lend themselves to calendar year-end purchase timing. As a result, we historically have generated, and had held that position since 2008. From 2004expect to 2008 she also held vice president positions in Cisco’s Advisory Services and China groups following a long careercontinue to generate, most of our earnings in the IT industry. Priorsecond half of the year and much of our cash flow in the first quarter as receivables are collected. If these typical seasonal increases in sales of certain portions of our product line do not materialize, it may have an outsized impact on our business, which could result in a material adverse effect on our financial condition and results of operations.

Risks associated with currency volatility could harm our sales, profitability and cash flows.

Approximately 45% of our net sales for the fiscal year ended December 31, 2012 were from foreign sales. The acquisition of Mead C&OP significantly increased our sales in Brazil and Canada. While the recent relative volatility of the U.S. dollar to joining Cisco Ms. Talton servedother currencies has impacted our businesses' sales, profitability and cash flows as the results of non-U.S. operations are reported in multiple rolesU.S. dollars, we cannot predict the rate at EDSwhich the U.S. dollar will trade against other currencies in the future. If the U.S. dollar were to substantially strengthen, making the dollar significantly more valuable relative to other currencies in the global market, such an increase could harm our ability to compete or competitively price in those markets, and therefore, materially and adversely affect our financial condition and our results of operations. Approximately half of the products we sell are sourced from China and other Asia-Pacific countries and are paid for in U.S. dollars. Thus, movements in the value of local currency relative to the U.S. dollar in countries where we source our products have the same impacts as raw material price changes in addition to the currency translation impact noted above.

The raw materials and labor costs we incur are subject to price increases that could adversely affect our profitability.

The primary materials used in the manufacturing of many of our products are resin, plastics, polyester and polypropylene substrates, paper, steel, wood, aluminum, melamine, zinc and cork. In general, our gross profit may be affected from time to time

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by fluctuations in the prices of these materials because our customers require advance notice and negotiation to pass through raw material price increases, giving rise to a delay before cost increases can be passed to our customers. We attempt to reduce our exposure to increases in these costs through a variety of measures, including periodic purchases, future delivery contracts and longer-term price contracts together with holding our own inventory; however, these measures may not always be effective. Inflationary and other increases in costs of materials and labor have occurred in the past and may recur, and raw materials may not continue to be available in adequate supply in the future. Shortages in the supply of any of the raw materials we use in our products and other factors, such as Presidentinflation, could result in price increases that could have a material adverse effect on our financial condition or results of operations.

Our pension costs could substantially increase as a result of volatility in the equity markets or interest rates.

The difference between plan obligations and assets, or the funded status of our defined benefit pension plans, is a significant factor in determining the net periodic benefit costs of our pension plans and the ongoing funding requirements of those plans. Changes in interest rates and the market value of plan assets impact the funded status of these plans and cause volatility in the net periodic benefit cost and future funding requirements of these plans. The Company's cash contributions to pension and defined benefit plans totaled $19.2 million in 2012; however the exact amount of cash contributions made to pension plans in any year is dependent upon a number of factors, including the investment returns on pension plan assets. A significant increase in our pension funding requirements could have a negative impact on our cash flow and financial condition. In addition the acquisition of Mead C&OP increased our pension and post-retirement obligations in the U.S. and Canada, which may cause further increases in our pension retirement funding.

Impairment charges could have a material adverse effect on our financial results.

We have recorded significant amounts of goodwill and other intangible assets, which increased substantially as a results of our acquisition of Mead C&OP. In prior years, we have recorded significant goodwill and other asset impairment charges that adversely affected our financial results. Future events may occur that may also adversely affect the reported value of our assets and require impairment charges, which could further adversely affect our financial results. Such events may include, but are not limited to, a sustained decline in our stock price, strategic decisions made in response to changes in economic and competitive conditions, the impact of the economic environment on our customer base or a material adverse change in our relationship with significant customers.

We are subject to supplier credit and order fulfillment risk.

We purchase products for resale under credit arrangements with our suppliers. In weak global markets, suppliers may seek credit insurance to protect against non-payment of amounts due to them. During any period of declining operating performance, or should we experience severe liquidity challenges, suppliers may demand that we accelerate our payment for their Business Process Innovation Global Consulting Practice. ACCO believes Ms. Talton’s qualificationsproducts. Also, credit insurers may curtail or eliminate coverage to servethe suppliers. If suppliers begin to demand accelerated payment of amounts due to them or if they begin to require advance payments or letters of credit before goods are shipped to us, these demands could have a significant adverse impact on our operating cash flow and result in a severe drain on our liquidity.

A bankruptcy of one or more of our major customers could have a material adverse effect on our financial condition and results of operations.

Our concentrated customer base increases our customer credit risk. Were any of our major customers to make a bankruptcy filing, we could be adversely impacted due to not only a reduction in future sales but also losses associated with the potential inability to collect any outstanding accounts receivable from such customer. Such a result could negatively impact our financial results and cash flows.

We are subject to global environmental regulation and environmental risks as well as product content and product safety laws and regulations.

We and our operations, both in the U.S. and abroad, are subject to national, state, provincial and/or local environmental laws and regulations that impose limitations and prohibitions on the ACCO Boarddischarge and emission of, Directors include her extensive global operations experience and her further experienceestablish standards for the use, disposal and management of, certain materials and waste. We are also subject to laws regulating the content of toxic chemicals and materials in the products we sell as well as laws, directives and self-regulatory requirements related to the safety of our products. Environmental and product content and product safety laws and regulations can be complex and may change often. Capital and operating expenses required to comply with environmental and product content laws and regulations can be significant, and violations may result in substantial fines, penalties and civil damages. The costs of complying with environmental and product content and product safety laws and regulations and any claims concerning noncompliance, or liability with respect to contamination

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in the future could have a material adverse effect on our financial condition or results of operations.

Any inability to secure, protect and maintain rights to intellectual property could have material adverse impact on our business.

We own and license many patents, trademarks, brand names and trade names that are, in the aggregate, important to our business. The loss of any individual patent or license may not be material to us taken as a successfulwhole, but the loss of a number of patents or licenses that represent principal portions of our business leadercould have a material adverse effect on our business.

We could also incur substantial costs to pursue legal actions relating to the unauthorized use by third parties of our intellectual property, which could have a material adverse effect on our business, results of operation or financial condition. If our brands become diluted, if our patents are infringed or if our competitors introduce brands and entrepreneurproducts that cause confusion with our brands in the IT industry. Ms. Taltonmarketplace, the value that our consumers associate with our brands may become diminished, which could negatively impact our sales. If third parties assert claims against our intellectual property rights and we cannot successfully resolve those claims, or our intellectual property becomes invalidated, we could lose our ability to use the technology, brand names or other intellectual property that were the subject of those claims, which, if such intellectual property is material to the operation of our business or our financial results, could have a material adverse effect on our business, financial condition and results from operations.

We may also has extensive experience workingbecome involved in defending intellectual property claims being asserted against us that could cause us to incur substantial costs, divert the efforts of our management, and require us to pay substantial damages or require us to obtain a license, which might not be available on reasonable terms, if at all.

Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the boardsvalue of charitable organizationsour end-user brands.

Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our business. In addition to the risk of substantial monetary judgments and is affiliatedpenalties which could have a material effect on our financial condition and results of operations, product liability claims or regulatory actions could result in negative publicity that could harm our reputation in the marketplace or the value of our end-user brands. We also could be required to recall and possibly discontinue the sale of possible defective or unsafe products, which could result in adverse publicity and significant expenses. Although we maintain product liability insurance coverage, potential product liability claims are subject to a self-insured deductible or could be excluded under the terms of the policy.

Weare unable to take certain significant actions following the Mergerbecause such actions could adversely affect the tax-free status of the Distribution or the Merger. In certain circumstances, we may be obligated to indemnify MeadWestvaco Corporation (“MWV”) for any payment of United States federal income taxes by MWV that result from our taking or failing to take certain actions in connection with several organizations that serve the needsDistribution and the Merger.

In connection with (i) the transfer by MWV of Mead C&OP (the “Separation”) to a diverse population. ACCO believes these experiences will prove highly valuable givensubsidiary we acquired pursuant to the globalMerger (“Monaco SpinCo”); (ii) the distribution by MWV of Monaco Spinco shares to MWV stockholders (the “Distribution”); and (iii) the Merger (the Separation, the Distribution, the Merger and certain related financing transactions being collectively referred to as the “Transactions”), MWV received a private letter ruling from the Internal Revenue Service (the “IRS”) as to the tax-free nature of ACCO’s businessthe Transactions, MWV and Monaco SpinCo received an opinion from MWV's counsel as to the importance of information technology in ACCO’s operations.
NORMAN H. WESLEY, Director since 2005
Mr. Wesley, age 62, is retired.  He served as Chairmantax-free nature of the Board of Fortune Brands, Inc.,Distribution, and we, MWV and Monaco SpinCo received certain legal opinions from December, 1999 until September, 2008, and Chief Executive Officer of Fortune Brands from December, 1999 until January, 2008.  Mr. Wesley currently servesour respective counsel as a director of Fortune Brands Home & Security, Inc. and Acuity Brands, Inc.  He has formerly served as a director of R.R. Donnelley & Sons Company from 2001 to 2008 and Pactiv Corporation from 2001 to 2010 until its acquisition by Reynolds Group Holdings.  We believe Mr. Wesley’s qualifications to serve on our Board of Directors include his extensive experience in the office products industry, including his experience as Presidenttax-free nature of the Company’s predecessor while itMerger. The opinions of counsel were based on, among other things, the IRS ruling as to the matters addressed by the ruling, current law and certain assumptions and representations as to factual matters made by us, MWV and our respective subsidiaries.

In connection with the Transactions, we entered into a tax matters agreement with MWV (the “Tax Matters Agreement”). The Tax Matters Agreement prohibits us from taking certain actions that could cause the Distribution or the Merger to be taxable. In particular, for two years after the Distribution, the Company and Mead Products (as successor by merger to Monaco SpinCo) may not, among other things: (i) engage in any transaction or series of transactions that would result in one or more persons acquiring (directly or indirectly) stock comprising 50% or more of the vote or value of Mead Products; (ii) redeem or repurchase any stock or stock rights; (iii) amend its certificate of incorporation or take any other action affecting the relative voting rights of its capital stock; (iv) merge, consolidate or amalgamate with any other person (other than pursuant to a merger, consolidation or amalgamation with [the Company or with any of its wholly-owned subsidiaries]); or (v) sell, transfer or otherwise dispose of assets (including stock of subsidiaries) that constitute more than 30% of the consolidated gross assets of the Company, Mead Products and/or their subsidiaries (subject to exceptions for, among other things, ordinary course dispositions). Similar restrictions apply to Monaco Foreign Spinco Invest Ltd., a wholly owned subsidiary of the Company that was a wholly owned subsidiary of Fortune Brands, Inc., his prior experience as chief executive officerMonaco

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SpinCo at a publicly held company, and his service on other boards of directors of publicly held firms.
During 2011, there were eleven meetingsthe time of the BoardDistribution, because the stock of Directors.  Each director attended at least 75%Monaco Foreign Spinco Invest Ltd. was distributed in a tax-free distribution within MWV's consolidated tax group prior to the Distribution.

Because of these restrictions, we may be limited in the amount of stock that we can issue to make acquisitions or raise additional capital in the two years after the completion of the total meetingsMerger, which could have a material adverse effect on our liquidity and financial condition. If we wish to take any such restricted action, we are required to cooperate with MWV in obtaining a supplemental IRS ruling or an unqualified tax opinion.

Under the Tax Matters Agreement, in certain circumstances and subject to certain limitations, we are required to indemnify MWV against any taxes on the Distribution that arise if we or our subsidiaries take certain actions or fail to take certain actions, or as a result of certain changes in the ownership of our stock following the Merger, that adversely affect the tax-free status of the BoardDistribution or the Merger. Moreover, if we do not carefully monitor our compliance with the Tax Matters Agreement and relevant IRS rules, we might inadvertently trigger our obligation to indemnify MWV. If we are required to indemnify MWV in the event the Distribution is taxable, this indemnification obligation would be substantial and could have a material adverse effect on our financial condition and results of Directorsoperations.

Our success depends on our ability to attract and committeesretain qualified personnel.

Our success will depend on our ability to attract and retain qualified personnel, including executive officers and other key management personnel. We may not be able to attract and retain qualified management and other personnel necessary for the development, manufacture and sale of our products, and key employees may not remain with us in the future. If we fail to retain our key employees, we may experience substantial disruption in our businesses. Employee retention may be particularly challenging in light of the BoardMerger, as employees may feel uncertain about their future roles with us after the combination. The loss of Directorskey management personnel or other key employees or our potential inability to attract such personnel may adversely affect our ability to manage our overall operations, successfully implement our business strategy, and realize the anticipated benefits of which the director wasMerger.

Additionally, we rely to a member.  In additionsignificant degree on compensating our officers and key employees with incentive awards that pay out only if specified performance goals have been met. To the extent these performance goals are not met and the incentive awards do not pay out, or pay out less than the targeted amount, as has occurred in recent years, it may motivate certain officers and key employees to participation at Boardseek other opportunities.


ITEM 1B.UNRESOLVED STAFF COMMENTS
None.

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ITEM 2.PROPERTIES

We have manufacturing facilities in North America, Europe, Brazil, Mexico and committee meetings,Australia, and maintain distribution centers in relation to the regional markets we service. We lease our directors discharge their responsibilities throughoutprincipal U.S. headquarters in Lincolnshire, Illinois and plan to relocate our headquarters to Lake Zurich, Illinois during the year through personal meetingssecond quarter of 2013. The following table lists our principal manufacturing and other
distribution facilities as of December 31, 2012: 

3
LocationFunctional UseOwned/Leased
U.S. Properties:
Ontario, CaliforniaDistribution/ManufacturingLeased
Booneville, MississippiDistribution/ManufacturingOwned/Leased
Ogdensburg, New YorkDistribution/ManufacturingOwned/Leased
Sidney, New YorkDistribution/ManufacturingOwned
Alexandria, PennsylvaniaDistribution/ManufacturingOwned
East Texas, Pennsylvania(1)
Distribution/Manufacturing/OfficeOwned
Pleasant Prairie, WisconsinDistribution/ManufacturingLeased
Non-U.S. Properties:
Sydney, AustraliaDistribution/ManufacturingOwned
Bauru, BrazilDistribution/Manufacturing/OfficeOwned
Brampton, CanadaDistribution/Manufacturing/OfficeLeased
Missisauga, CanadaDistribution/Manufacturing/OfficeLeased
Tabor, Czech RepublicManufacturingOwned
Halesowen, EnglandDistributionOwned
Lillyhall, EnglandManufacturingLeased
Tornaco, ItalyDistributionLeased
Lerma, MexicoManufacturing/OfficeOwned
Born, NetherlandsDistributionLeased
Wellington, New ZealandDistribution/OfficeOwned
Arcos de Valdevez, PortugalManufacturingOwned

(1)Scheduled to be closed during the second quarter of 2013. Manufacturing and distribution activities will be substantially relocated to Sidney, New York.

We believe that the properties are suitable to the respective businesses and have production capacities adequate to meet the needs of our businesses.

ITEM 3.LEGAL PROCEEDINGS

communications, including considerable telephone contactIn connection with our May 1, 2012 acquisition of Mead C&OP, we assumed all of the tax liabilities for the acquired foreign operations. In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the goodwill recorded in connection with the Chairman2004 acquisition of Tilibra. This assessment denied the deductibility of that goodwill from Tilibra's taxable income for the year 2007. The assessment seeks a payment of approximately R$26.9 million ($13.2 million based on current exchange rates) of tax, penalties and othersinterest.
In January of 2013, Tilibra filed a protest disputing the tax assessment at the first administrative level of appeal within the FRD. We believe that we have meritorious defenses and intend to vigorously contest this matter, however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge the FRD's tax assessment, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take many years. In addition, Tilibra's 2008-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years, which could increase the Company's exposure to a total of approximately $44.5 million (based on current exchange rates), including interest

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and penalties which have accumulated to date. If the FRD's initial position is ultimately sustained, the amount assessed would adversely affect our reported cash flow in the year of settlement.
Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers the outcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in the amount of $44.5 million in consideration of this matter. In addition, the Company will continue to accrue interest related to this matter until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail.

For further information see Note 3, Acquisitions, to the consolidated financial statements contained in Item 8 of this report.

There are various other claims, lawsuits and pending actions against us incidental to our operations. It is the opinion of management that the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of interest and concern to ACCO Brands.operations or cash flows. However, we can make no assurances that we will ultimately be successful in our defense of any of these matters.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.


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PART II
 
Information With Respect to Executive Officers
Name and age
Title
Robert J. Keller, 58
Chairman and Chief Executive Officer
Boris Elisman, 49ITEM 5.President and Chief Operating Officer
Neal V. Fenwick, 50Executive Vice President and Chief Financial Officer
Christopher M. Franey, 56Executive Vice President; President, ACCO Brands International and President, Computer Products Group
Thomas H. Shortt, 44Executive Vice President; President, Product Strategy and Development
Thomas W. Tedford, 41Executive Vice President; President, ACCO Brands Americas
Mark C. Anderson, 50Senior Vice President, Corporate Development
David L. Kaput, 52Senior Vice President and Chief Human Resources Officer
Thomas P. O’Neill, Jr., 58Senior Vice President, Finance and Accounting
Steven Rubin, 64Senior Vice President, Secretary and General CounselMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “ACCO.” The following table sets forth, for the periods indicated, the high and low sales prices for our common stock as reported on the NYSE for 2011 and 2012:
 High Low
2011   
First Quarter$9.66
 $7.77
Second Quarter$10.39
 $6.91
Third Quarter$8.89
 $4.62
Fourth Quarter$10.20
 $4.33
2012   
First Quarter$13.25
 $9.24
Second Quarter$13.30
 $8.50
Third Quarter$10.94
 $6.01
Fourth Quarter$7.95
 $5.80

As of February 1, 2013, we had approximately 18,263 registered holders of our common stock.

Dividend Policy

We have not paid any dividends on our common stock since becoming a public company. We intend to retain any future earnings to reduce our indebtedness and fund the development and growth of our business. Currently our debt agreements restrict our ability to make dividend payments and we do not anticipate paying any cash dividends in the foreseeable future. Any determination as to the declaration of dividends is at our Board of Directors’ sole discretion based on factors it deems relevant.

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STOCK PERFORMANCE GRAPH

The 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, 2007 through December 31, 2012.

 Cumulative Total Return
 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12
ACCO Brands Corporation.$100.00
 $21.51
 $45.39
 $53.12
 $60.16
 $45.76
Russell 2000100.00
 66.21
 84.20
 106.82
 102.36
 119.09
S&P Office Services and Supplies
(SuperCap1500)
100.00
 61.97
 72.79
 86.16
 70.12
 72.79



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ITEM 6.SELECTED FINANCIAL DATA

SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth our selected consolidated financial data. The selected consolidated financial data as of and for the five fiscal years ended December 31, 2012 are derived from our consolidated financial statements. The data should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report.
 Year Ended December 31,
  
2012(1)
 2011 2010 2009 2008
(in millions of dollars, except per share data)         
Income Statement Data:         
Net sales$1,758.5
 $1,318.4
 $1,284.6
 $1,233.3
 $1,539.2
Operating income (loss)(2)
139.3
 115.2
 109.7
 75.4
 (199.9)
Interest expense, net89.3
 77.2
 78.3
 67.0
 63.7
Other expense (income), net(2)
61.3
 3.6
 1.2
 5.4
 (17.8)
Income (loss) from continuing operations(3)
117.0
 18.6
 7.8
 (118.6) (255.1)
Per common share:         
Income (loss) from continuing operations(3)
         
Basic$1.24
 $0.34
 $0.14
 $(2.18) $(4.71)
Diluted$1.22
 $0.32
 $0.14
 $(2.18) $(4.71)
Balance Sheet Data (at year end):         
Total assets$2,507.7
 $1,116.7
 $1,149.6
 $1,106.8
 $1,282.2
External debt1,072.1
 669.0
 727.6
 725.8
 708.7
Total stockholders’ equity (deficit)639.2
 (61.9) (79.8) (117.2) (3.4)
Other Data:         
Cash (used) provided by operating activities$(7.5) $61.8
 $54.9
 $71.5
 $37.2
Cash (used) provided by investing activities(423.2) 40.0
 (14.9) (3.9) (18.7)
Cash provided (used) by financing activities360.1
 (63.1) (0.1) (44.5) (37.7)
(1)
On May 1, 2012, the Company completed the Merger of the Mead C&OP with a wholly-owned subsidiary of the Company. Accordingly, the results of Mead C&OP are included in the Company's consolidated financial statements from the date of the Merger. For further information on the Merger, see Note 3, Acquisitions, to the consolidated financial statements, contained in Item 8 of this report.

(2)Income (loss) from continuing operations in the years 2009 and 2008 was impacted by non-cash goodwill and asset impairment charges of $1.7 million and $263.8 million, respectively.

Income (loss) from continuing operations in the year 2012 was impacted by $61.4 million in charges related to the refinancing completed in 2012 and recorded within Other expense (income), net. For further information on our refinancing, see Note 4, Long-term Debt and Short-term Borrowings, to the consolidated financial statements, contained in Item 8 of this report. The year 2008 was impacted by a $19.0 million gain due to early extinguishment of debt relating to the purchase of $49.6 million of our debt.

(3)
Income (loss) from continuing operations for the years 2012, 2011, 2010, 2009 and 2008 was impacted by restructuring charges (income) of $24.3 million, $(0.7) million, $(0.5) million, $17.4 million and $28.8 million, respectively.

Income (loss) from continuing operations for the years 2009 and 2008 was impacted by certain other charges that have been recorded within cost of products sold, and advertising, selling, general and administrative expenses. These charges are incremental to the cost of our underlying restructuring actions and do not qualify as restructuring. These charges include redundant warehousing or storage costs during the transition to new distribution centers, equipment and other asset move costs, ongoing facility overhead and maintenance costs after exit, gains on the sale of exited facilities, certain costs associated with our debt refinancing and employee retention incentives. Within cost of products sold on the Consolidated Statements of Operations for the years ended December 31, 2009 and 2008, these charges totaled $3.4

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million and $7.5 million, respectively. Within advertising, selling, general and administrative expenses on the Consolidated Statements of Operations for the years ended December 31, 2009, and 2008, these charges totaled $1.2 million and $3.1 million, respectively. Included within the 2008 result, is a charge for $4.2 million related to the exit of the Company’s former CEO, a $3.5 million gain on the sale of a manufacturing facility and net gains of $2.4 million on the sale of three additional properties. We did not incur these other charges in 2012, 2011 and 2010.

During 2009, we recorded a non-cash charge of $108.1 million to establish a valuation allowance against our U.S. deferred taxes. Following the Merger in the second quarter of 2012, we released into income $126.1 million of the valuation allowance that had been previously recorded against the U.S. deferred income tax assets. For a further discussion of the valuation allowance, see Note 11, Income Taxes, to the consolidated financial statements, contained in Item 8 of this report.




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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION

ACCO Brands is one of the world's largest suppliers of branded school and office products (excluding furniture, computers, printers and bulk paper). We sell our products through many channels that include the office products resale industry as well as through mass retail distribution and e-tailers. We design, develop, manufacture and market a wide variety of traditional and computer-related office products, school supplies and paper-based time management products. Through a focus on research, marketing and innovation, we seek to develop new products that meet the needs of our consumers and commercial end-users, and support our brands. We compete through a balance of innovation, a low-cost operating model and an efficient supply chain. We sell our products primarily to markets located in the United States, Northern Europe, Canada, Brazil, Australia and Mexico.

Our office, school and calendar product lines use name brands such as AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy®, Marbig, Mead®, NOBO, Quartet®, Rexel, Swingline®, Tilibra®, Wilson Jones® and many others. Our products and brands are not confined to one channel or product category and are designed based on end-user preference. We currently manufacture approximately half of our products, and specify and source approximately the other half of our products, mainly from Asia.

The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards, are used by businesses. Most of these business end-users purchase their products from our customers, which include commercial contract stationers, retail superstores, mass merchandisers, wholesalers, resellers, mail order and internet catalogs, club stores and dealers. We also supply some of our products directly to large commercial and industrial end-users. Historically, we have targeted the premium end of the product categories in which we compete. However, we also supply private label products for our customers and provide business machine maintenance and certain repair services.
Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily through traditional and online retail mass market, grocery, drug and office superstore channels. We also supply private label products within the school products sector. Our calendar products are sold throughout all channels where we sell office or school products, and we also sell direct to consumers.

Our Computer Products Group designs, distributes, markets and sells accessories for laptop and desktop computers, tablets and smartphones. These accessories primarily include security products, iPad® covers and keypads, smartphone accessories, power adapters, input devices such as mice, laptop computer carrying cases, hubs, docking stations and ergonomic devices. We sell these products mostly under the Kensington®, Microsaver® and ClickSafe® brand names. All of our computer products are manufactured by third-party suppliers, principally in Asia, and are stored in and distributed from our regional facilities. These computer products are sold primarily to consumer electronics online retailers, information technology value-added resellers, original equipment manufacturers and office products retailers.

We believe our leading product positions provide the above-named officersscale to enable us to invest in product innovation and drive growth across our product categories. In addition, the expertise we use to satisfy the exacting technical specifications of our more demanding commercial customers is in many instances the basis for expanding our products and innovations to consumer products. We plan to grow via a strategy of organic growth supplemented by acquisitions that can leverage our existing business.

Mead C&OP Merger and Debt Refinancing

On November 17, 2011, we announced the signing of a definitive agreement to acquire the Mead Consumer and Office Products Business (“Mead C&OP”). On May 1, 2012, we completed the merger ("Merger") of Mead C&OP with a wholly-owned subsidiary of the Company. Mead C&OP is a leading manufacturer and marketer of school supplies, office products, and planning and organizing tools - including the Mead®, Five Star®, Trapper Keeper®, AT-A-GLANCE®, Cambridge®, Day Runner®, Hilroy, Tilibra and Grafons brands in the U.S., Canada and Brazil.

In the Merger, MeadWestvaco Corporation (“MWV”) shareholders received 57.1 million shares of the Company's common stock, or 50.5% of the combined company, valued at $602.3 million on the date of the Merger. After the transaction was completed we had 113.1 million common shares outstanding.

Under the terms of the Merger agreement, MWV established a new subsidiary (“Monaco SpinCo Inc.”) to which it conveyed Mead C&OP in return for a $460.0 million payment. The shares of Monaco SpinCo Inc. were then distributed to MWV's shareholders

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as a dividend. Immediately after the spin-off and distribution, a newly formed subsidiary of the Company merged with and into Monaco SpinCo Inc. and MWV shareholders effectively received in the stock dividend and subsequent conversion approximately one share of ACCO Brands common stock for every three shares of MWV they held. Fractional shares were paid in cash. The subsidiary company subsequently merged with Mead Products LLC (“Mead Products”), the surviving corporate entity, which is a wholly-owned subsidiary of ACCO Brands Corporation.
As of December 31, 2012, $30.5 million has been received back from MWV through working capital adjustments to the purchase price.

For accounting purposes, the Company was the acquiring enterprise. The Merger was accounted for as a purchase business combination. Accordingly, the results of Mead C&OP are included in the Company's consolidated financial statements from the date of the Merger. In connection with this transaction, in the years ended December 31, 2012 and 2011, we incurred expenses of $22.9 million and $5.6 million, respectively, related to the transaction, including integration costs.

On May 1, 2012, we entered into a refinancing in conjunction with the Merger. The refinancing transactions reduced our effective interest rate while increasing our borrowing capacity and extending the maturities of our credit facilities.

The new credit facilities and notes are as follows:

$250 million of U.S. Dollar Senior Secured Revolving Credit Facilities due May 2017
$285 million of U.S. Dollar Senior Secured Term Loan A due May 2017
C$34.5 million of Canadian Dollar Senior Secured Term Loan A due May 2017
$450 million of U.S. Dollar Senior Secured Term Loan B due May 2019
$500 million of U.S. Dollar Senior Unsecured Notes due May 2020

Interest rates under the senior secured term loans are based on the London Interbank Offered Rate (LIBOR). The range of borrowing costs under the pricing grid is LIBOR plus 3.00% for the Term A loans and LIBOR plus 3.25% with a LIBOR rate floor of 1.00% for the Term B loans. The senior secured credit facilities had a weighted average interest rate of 3.89% as of December 31, 2012 and the senior unsecured notes have an interest rate of 6.75%.

In addition, on May 1, 2012, we repurchased or discharged all of our outstanding senior secured notes of $425.1 million, due March 2015, for $464.7 million including a premium and related fees of $39.6 million. On May 4, 2012, we redeemed all of our outstanding senior subordinated notes of $246.3 million, due August 2015, for $252.6 million including a premium of $6.3 million. We also terminated our senior secured asset-based revolving credit facility of $175.0 million, which was undrawn as of May 1, 2012. Associated with these transactions were $15.5 million in write-offs for original issue discount and debt origination costs.

In conjunction with our refinancing, we paid $38.5 million in additional bank, legal and advisory fees associated with our new credit facilities. These fees were capitalized and will be amortized over the life of the credit facilities and senior unsecured notes.

During 2012, we voluntarily repaid $200.3 million of our debt comprising $64.2 million of our U.S. Dollar Senior Secured Term Loan A, $12.9 million of our Canadian Dollar Senior Secured Term Loan A and $123.2 million of our U.S. Dollar Senior Secured Term Loan B.

As part of the inclusion of Mead C&OP 's financial results with those of the Company, certain information technology costs associated with the manufacturing and distribution operations have been actively engagedreclassified from advertising, selling, general and administrative expenses (SG&A) to cost of products sold. This reclassification was done to enable the financial results of the two businesses to be consistent and to better reflect those costs associated with the cost of products sold. All prior periods have been reclassified to make the results comparable. For the years ended December 31, 2011 and 2010 reclassified costs totaled $15.5 million and $14.6 million, respectively. These historical reclassifications have had no effect on net income.

Discontinued Operations

As of May 31, 2011, we disposed of the GBC Fordigraph Pty Ltd (“GBC Fordigraph”) business. The Australia-based business was formerly part of the ACCO Brands International segment and the results of operations are included in the financial statements as a discontinued operation for all periods presented. GBC Fordigraph represented $45.9 million in annual net sales for the year ended December 31, 2010. In 2011, we received net proceeds of $52.9 million and recorded a gain on the sale of $41.9 million ($36.8 million after-tax).

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For further information on the Company’s discontinued operations see Note 19, Discontinued Operations, to the consolidated financial statements contained in Item 8 of this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements of ACCO Brands Corporation and the accompanying notes contained therein. Unless otherwise noted, the following discussion pertains only to our continuing operations.

Adjustments Subsequent to the Earnings Release Filed on Form 8-K on February 13, 2013

On February 21, 2013, in connection with completing our 2012 audited financial statements for filing in this report, we determined that the Company should record a reserve in the amount of $44.5 million in consideration of a contingent liability related to a tax assessment issued in December 2012 by the Federal Revenue Department of the Ministry of Finance of Brazil against the Company's newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"). Of the total reserve recorded, $43.3 million was an adjustment to the allocation of the purchase price for the fair value of non-current liabilities assumed as of the acquisition date and was recorded as an increase to goodwill and the remaining $1.2 million was charged to current income tax expense and represents additional interest that has accumulated since the date of the acquisition. One additional revision resulted in a reduction of both deferred tax liabilities and goodwill of $9.9 million. These adjustments were recorded as the Company continues its process of finalizing the purchase price allocation for the Merger. For further information see Note 3, Acquisitions, to the consolidated financial statements contained in Item 8 of this report.

The Company also recorded an additional tax expense of $2.9 million reflecting an adjustment to the deferred tax expense to reflect a change in certain tax rates for which deferred taxes have previously been provided in other comprehensive income (loss).

The net effect of these changes was to reduce the Company's previously reported net income for the twelve months ended December 31, 2012 as included on the Form 8-K filed on February 13, 2013 by $4.1 million to $115.4 million, reduce earnings per diluted share by $0.04 to $1.20 per diluted share and increase our previously reported net loss for the three months ended December 31, 2012 by $4.1 million to $16.6 million or by $0.04 per diluted share to $0.15 loss per diluted share. There was no change to the amount of pretax income previously reported.

Overview of Company Performance

ACCO Brands’ results are dependent upon a number of factors affecting sales, including pricing and competition. Historically, key drivers of demand in the office and school products industries have included trends in white collar employment levels, enrollment levels in education, gross domestic product (GDP) and growth in the number of small businesses and home offices together with usage of personal computers. Pricing and demand levels for office products have also reflected a substantial consolidation within the global resellers of office products. This consolidation has led to multiple years of industry pricing pressure and a more efficient level of asset utilization by customers, resulting in lower sales pricing and volume for suppliers of office products. In February 2013, two of our largest customers, Office Depot and Office Max, announced that they have entered into a merger agreement.  While management currently expects that the effects on our business of the proposed merger, if consummated, would be realized primarily in our retail channel, which only represents approximately one-third of our business with these customers, there can be no assurance that the combination of these two large customers will not adversely affect our business and results of operations.  See “Risk Factors - Our customers may further consolidate, which could adversely impact our margins and sales."

With 45% of revenues for the year ended December 31, 2012 arising from foreign operations, exchange rate fluctuations can play a major role in our reported results. Foreign currency fluctuations impact the business in two ways: 1) the translation of our foreign operations results into U.S. dollars: a weak U.S. dollar benefits us and a strong U.S. dollar reduces the dollar-denominated contribution from foreign operations; and 2) the impact of foreign currency fluctuations on cost of goods sold. Approximately half of the products we sell worldwide are sourced from Asia, and are paid for in U.S. dollars. However, our international operations sell in their local currency and are exposed to their domestic currency movements against the U.S. dollar. A strong U.S. dollar, therefore, increases our cost of goods sold and a weak U.S. dollar decreases our cost of goods sold for our international operations.

We respond to these market changes by adjusting selling prices, but this response can be difficult during periods of rapid fluctuation. A significant portion of our foreign-currency cost of goods purchases is hedged with forward foreign currency contracts, which delays the economic effect of a fluctuating U.S. dollar helping us align our market pricing. The financial impact on our business from foreign exchange movements for our cost of goods is also further delayed until the inventory is sold. Foreign exchange exposures impact the business at different times: the translation of results is impacted immediately when the exchange

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rates move, whereas the impact on cost of goods is typically delayed due to a combination of currency hedging strategies and our inventory cycle.

The cost of certain commodities used to make products increased significantly, during 2011, negatively impacting cost of goods, mainly for products sold in the second half of the year. We implemented price increases in the first and third quarters of 2011 to offset these cost increases. As commodity costs continued to rise, in the first quarter of 2012, we implemented price increases in a limited number of markets in an effort to further offset increases in commodity costs. We continue to monitor commodity costs and work with suppliers and customers to negotiate balanced and fair pricing that best reflects the current economic environment.

During the first quarter of 2012, we committed to new cost savings plans intended to improve the efficiency and effectiveness of our businesses. The cost savings activities are principally in the U.S. and the U.K. We believe these actions will benefit our efforts to improve profitability and enhance shareholder value. These actions are expected to result in approximately $8 million in annualized cost savings when fully realized. In connection with these actions, we incurred pretax charges, principally employee termination and severance costs, of approximately $7 million in 2012, substantially all of which were recorded in the six months ending June 30, 2012. Cash costs related to these charges, net of asset sale proceeds, are expected to be approximately $5 million, which we substantially recovered in savings in the second half of 2012. During the year ended December 31, 2012, we received proceeds of $2.7 million related to the sale of a facility in the U.K.

The actions described in the preceding paragraph were independent of and not a part of any plan of integration related to our acquisition of Mead C&OP.

In the second quarter of 2012, we committed to cost savings plans largely related to the consolidation and integration of Mead C&OP. The largest plan, which is expected to result in employee severance charges of approximately $11 million, is related to our dated goods business and involves closing a facility in East Texas, Pennsylvania during March 2013 and relocating its activities. We expect to realize cash savings equal to the cash cost by the end of 2014. The East Texas facility is owned by us and will be marketed for sale. However, current real estate market conditions make a future sale date uncertain and therefore the foregoing estimates do not reflect potential cash sale proceeds from the sale of the facility. The remaining plans are primarily related to eliminating duplication in the management advertising, selling, general and administrative structures in the U.S. and Canada. Between now and the fourth quarter of 2013, we anticipate additional restructuring charges of approximately $25 million, of which approximately $4 million are non-cash charges. These charges relate to cost-reduction initiatives in the company's European and North American operations and are associated with the completion of the Mead integration and productivity initiatives. The cash component of the charge will approximate $15 million in 2013 and $6 million in 2014.

In the first quarter of 2011, we initiated plans to rationalize our European operations. The associated costs primarily related to employee terminations, which were accounted for as regular business expenses in selling, general and administrative expenses and were primarily incurred in the first half of 2011. These were largely offset by associated savings realized in the second half of 2011. These costs totaled $4.5 million during the year ended December 31, 2011.

We fund our liquidity needs for capital investment, working capital and other financial commitments through cash flow from continuing operations and our $250.0 million senior secured revolving credit facility. Based on our borrowing base, as of December 31, 2012, $238.5 million remained available for borrowing under this facility.

During 2009, we determined that it was no longer more likely than not that our U.S. deferred tax assets would be realized, and as a result, we recorded a non-cash charge of $108.1 million to establish a valuation allowance against our U.S. deferred tax assets. Due to the acquisition of Mead C&OP in the second quarter of 2012, we analyzed our need for maintaining valuation reserves against the expected U.S. future tax benefits. Based on our analysis we determined that there existed sufficient evidence in the form of future taxable income from the combined operations to release $126.1 million of the valuation allowance that had been previously recorded against the U.S. deferred income tax assets. The resulting deferred tax assets are comprised principally of net operating loss carry-forwards, that are expected to be fully realized within the expiration period and other temporary differences.



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Fiscal 2012 versus Fiscal 2011

The following table presents the Company’s results for the years ended December 31, 2012 and 2011.
 Year Ended December 31, Amount of Change 
(in millions of dollars)2012 2011 $       %       
Net sales$1,758.5
 $1,318.4
 $440.1
 33 % 
Cost of products sold1,225.1
 919.2
 305.9
 33 % 
Gross profit533.4
 399.2
 134.2
 34 % 
Gross profit margin30.3% 30.3%   0.0
pts 
Advertising, selling, general and administrative expenses349.9
 278.4
 71.5
 26 % 
Amortization of intangibles19.9
 6.3
 13.6
 NM
 
Restructuring charges (income)24.3
 (0.7) 25.0
 NM
  
Operating income139.3
 115.2
 24.1
 21 % 
Operating income margin7.9% 8.7%   (0.8)
pts 
Interest expense, net89.3
 77.2
 12.1
 16 % 
Equity in earnings of joint ventures(6.9) (8.5) (1.6) (19)% 
Other expense, net61.3
 3.6
 57.7
 NM
  
Income tax (benefit) expense(121.4) 24.3
 (145.7) NM
 
Effective tax rateNM
 56.6%   NM
 
Income from continuing operations117.0
 18.6
 98.4
 NM
 
Income (loss) from discontinued operations, net of income taxes(1.6) 38.1
 (39.7) (104)%  
Net income115.4
 56.7
 58.7
 NM
  

Net Sales

Net sales increased$440.1 million, or 33%, to $1.76 billion compared to $1.32 billion in the prior-year period. The acquisition of Mead C&OP contributed sales of $551.5 million. The underlying decline of $111.4 million includes an unfavorable currency translation of $17.1 million, or 1%. The remaining decline of $94.3 million, or 7%, occurred primarily in the International and North America business segments.

International segment sales declined $61 million (excluding the effect of Mead C&OP and currency translation) of which the decline in the European business accounted for $56 million. Approximately $32 million of the European decline was due to the Company's decision to re-focus on more profitable business; the remainder of the European decline was due to the weak economic environment. Australia also experienced weak consumer demand and lower price points.

North American segment sales declined $27 million (excluding the effect of Mead C&OP and currency translation). Approximately half of the sales decline was in the direct channel, which services large U.S. print finishing customers, with the remainder mainly from lower Canadian sales and declines in the calendar business.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in the manufacturing, procurement and distribution process, allocation of certain information technology costs supporting those processes, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes. Cost of products sold increased $305.9 million, or 33%, to $1.23 billion. The acquisition of Mead C&OP contributed $355.8 million, which includes $13.3 million in amortization of the acquisition step-up in inventory value. Excluding the impact of Mead C&OP acquisition, the principal drivers of the underlying decline of $49.9 million were lower sales volumes and a $12.1 million impact of favorable currency translation.

As part of the inclusion of Mead C&OP's financial results with those of the Company, certain information technology costs associated with the manufacturing and distribution operations have been reclassified from advertising, selling, general and administrative expenses to cost of products sold. This reclassification was done to enable the financial results of the two businesses to be consistent and to better reflect those costs associated with the cost of products sold. All prior periods have been reclassified

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to make the results comparable. For the year ended December 31, 2011, reclassified costs totaled $15.5 million. These historical reclassifications were not material and had no effect on net income.

Gross Profit

Management believes that gross profit and gross profit margin provide enhanced shareholder understanding of underlying profit drivers. Gross profit increased $134.2 million, or 34%, to $533.4 million. The acquisition of Mead C&OP contributed $195.7 million, which includes a $13.3 million charge for the acquisition step-up in inventory value. The principal drivers of the underlying decline of $61.5 million were lower sales volumes and a $5.0 million impact of unfavorable currency translation. Gross profit margin was unchanged at 30.3%. The inclusion of Mead C&OP, which has a mix of relatively higher margin products, was offset by an adverse sales mix in the legacy ACCO Brands businesses and the charge for the acquisition step-up in inventory value.

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

Advertising, selling, 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 expenses outside the manufacturing and distribution functions (e.g., finance, human resources, etc.). SG&A increased $71.5 million, or 26%, to $349.9 million, and as a percentage of sales, SG&A decreased to 19.9% from 21.1% in the prior-year period. The acquisition of Mead C&OP contributed $77.9 million of the increase. The underlying decrease of $6.4 million was driven by savings in the North America and International business segments and the absence of $4.5 million of business rationalization charges within our European operations incurred during 2011 as well as favorable currency translation of $2.6 million, partially offset by $22.9 million in transaction and integration costs associated with the acquisition of Mead C&OP.

Restructuring Charges

Employee termination and severance charges included in restructuring charges primarily relate to our plans for integration with Mead C&OP that were initiated in the second quarter of 2012. These charges were $24.3 million in the current year period compared to income of $0.7 million in the prior-year period due to the release of reserves related to prior projects no longer required. The current year period charges primarily relate to consolidation and integration of the recently acquired Mead C&OP business, but also include certain cost savings plans that are expected to improve the efficiency and effectiveness of our U.S. and European businesses.

Operating Income

Operating income increased$24.1 million, or 21%, to $139.3 million and as a percentage of sales operating income declined to 7.9% from 8.7%. The acquisition of Mead C&OP increased operating income by $101.2 million. The underlying decline of $77.1 million was driven by $24.3 million in restructuring costs, $22.9 million in transaction and integration costs associated with the acquisition of Mead C&OP, a $13.3 million charge for the acquisition step-up in inventory value, lower sales volume in the legacy ACCO Brands businesses and unfavorable currency translation of $2.2 million. Savings in the North America and International business segments and the absence of $4.5 million of business rationalization charges within our European operations incurred during 2011 partially offset the underlying decline.

Interest Expense, Net, Equity in Earnings of Joint Ventures and Other Expense, Net

Interest expense was $89.3 million compared to $77.2 million in the prior-year period. The increase was due to merger-related expenses for the committed financing required for the Merger of $16.4 million and accelerated amortization of debt origination costs of $3.6 million. The underlying decrease was due to our refinancing completed in May 2012 which substantially lowered our effective interest rate. Also, 2011 includes $1.2 million of accelerated amortization of debt origination costs resulting from debt repayments in the third quarter of 2011.

Equity in earnings of joint ventures was income of $6.9 million compared to $8.5 million in the prior-year period. During the fourth quarter of 2012 we took an impairment charge of $1.9 million related our Neschen GBC Graphics Films, LLC ("Neschen")joint venture. The Company has committed at the end of 2012 to pursue an exit strategy with regards to Neschen, due to significant excess capacity and other opportunities to reduce our costs of products sourced from Neschen.

Other expense, net, was $61.3 million compared to expense of $3.6 million in the prior year period. The significant increase was due to the refinancing of our debt in May 2012. The Company repurchased or discharged all of its outstanding Senior Secured Notes of $425.1 million, due March 2015, for $464.7 million including a premium and related fees of $39.6 million, and redeemed

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all of its outstanding Senior Subordinated Notes of $246.3 million, due August 2015, for $252.6 million including a premium of $6.3 million. The increase was also due to the write-off of debt origination costs of $15.5 million related to the refinanced debt. In the prior year we paid $3.0 million in premiums on the repurchase of $34.9 million of our Senior Secured Notes.
Income Taxes

Income tax benefit from continuing operations was $121.4 million on a loss before taxes of $4.4 million compared to an income tax expense from continuing operations of $24.3 million on income before taxes of $42.9 million in the prior-year period. The tax benefit for 2012 is primarily due to the release of certain valuation allowances for the U.S. of $126.1 million and certain foreign jurisdictions in the amount of $19.0 million. The high effective tax rate for 2011 of 56.6% is due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits. For a further discussion of income taxes and the release of the valuation allowances see Note 11 Income Taxes, to the consolidated financial statements contained in Item 8 of this report.

Income from Continuing Operations

Income from continuing operations was $117.0 million, or $1.22 per diluted share, compared to income of $18.6 million, or $0.32 per diluted share in the prior-year.

Income (loss) from Discontinued Operations

Loss from discontinued operations was $1.6 million, or $0.02 per diluted share, compared to income of $38.1 million, or $0.66 per diluted share in the prior-year.

Discontinued operations include the results of GBC Fordigraph, which was sold during the second quarter of 2011, and the commercial print finishing business, which was sold during 2009. For a further discussion of discontinued operations see Note 19, Discontinued Operations, to the consolidated financial statements contained in Item 8 of this report.

The components of discontinued operations for the years ended December 31, 2012 and 2011 are as follows:
(in millions of dollars)2012 2011
Income from operations before income taxes$—
 $2.5
Gain (loss) on sale before income taxes(2.1) 41.5
Provision (benefit) for income taxes(0.5) 5.9
Income (loss) from discontinued operations$(1.6) $38.1

Net Income

Net income was $115.4 million, or $1.20 per diluted share, compared to net income of $56.7 million, or $0.98 per diluted share, in the prior year.


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Segment Discussion
 Year Ended December 31, 2012 Amount of Change
 Net Sales Segment Operating Income (A) Operating Income Margin Adjusted Charges (B) Net Sales Net Sales Segment Operating Income Segment Operating Income Margin Points
         
(in millions of dollars)    $ % $ % 
ACCO Brands North America$1,028.2
 $86.2
 8.4% $37.2
 $405.1
 65% $48.8
 130 % 240
ACCO Brands International551.2
 62.0
 11.2% 5.2
 46.2
 9% 3.1
 5 % (50)
Computer Products Group179.1
 35.9
 20.0% 0.3
 (11.2) (6)% (11.2) (24)% (480)
Total segment sales$1,758.5
 $184.1
     $440.1
   $40.7
    
                  
 Year Ended December 31, 2011          
 Net Sales Segment Operating Income (A) Operating Income Margin Adjusted Charges (B)          
              
(in millions of dollars)             
ACCO Brands North America$623.1
 $37.4
 6.0% $—
          
ACCO Brands International505.0
 58.9
 11.7% —
          
Computer Products Group190.3
 47.1
 24.8% —
          
Total segment operating income$1,318.4
 $143.4
              

(A)     Segment operating income excludes corporate costs; Interest expense, net; Equity in earnings of joint ventures and Other expense, net. See Note 16, Information on Business Segments, to the consolidated financial statements contained in Item 8 of this report for a reconciliation of total segment operating income to income from continuing operations before income taxes.

(B)    Adjusted charges include restructuring charges for 2012 and non-recurring charges related to the Merger.

ACCO Brands North America

ACCO Brands North America net sales increased $405.1 million, or 65%, to $1.03 billion, compared to $623.1 million in the prior-year period. The acquisition of Mead C&OP contributed sales of $432.6 million. The remaining decline of $27.5 million includes an unfavorable currency translation of $0.9 million. The comparable decline (exclusive of currency translation) of $26.6 million, or 4%, occurred in the legacy ACCO Brands U.S. and Canadian businesses due to lower demand from large print finishing customers, weak demand including lower customer inventories and declines in the calendar business.
ACCO Brands North Americas operating income increased $48.8 million, or 130%, to $86.2 million, and operating income margin increased to 8.4% from 6.0% in the prior-year period. The acquisition of Mead C&OP contributed $81.4 million, net of other charges consisting of $11.5 millionin amortization of the acquisition step-up in inventory value and $2.2 million of restructuring charges. The underlying decrease of $32.6 million was driven by $23.5 million of other charges, consisting of $18.4 million of restructuring charges, $5.1 million of integration charges, as well as, lower sales and unfavorable product mix (higher sales of low-margin products). This was partially offset by savings within SG&A.
ACCO Brands International

ACCO Brands International net sales increased $46.2 million, or 9%, to $551.2 million compared to $505.0 million in the prior-year period. The acquisition of Mead C&OP contributed sales of $118.9 million. The remaining decline of $72.7 million includes an unfavorable currency translation of $11.9 million, or 2%. The comparable decline (exclusive of currency translation) was $60.8 million, or 12%. Of this decline, Europe accounted for $56 million - of which approximately $32 million was anticipated from our previously announced plans to restructure the business and focus on more profitable products, channels and/or geographic markets. The remaining $24 million in European sales decline together with an $11 million decline in our Australian sales was due to weak consumer demand, lower pricing, customer focus on lower-price-point items and share loss to our customers' directly sourced opening price point items. We achieved some modest growth in the legacy Latin American business that partially offset the declines noted above.

ACCO Brands International operating income increased $3.1 million, or 5%, to $62.0 million, and operating income margin decreased to 11.2% from 11.7% in the prior-year period. The acquisition of Mead C&OP contributed $19.8 million, net of other

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charges consisting of $1.8 million in amortization of the acquisition step-up in inventory value. Europe also incurred $3.4 million in restructuring charges, primarily during the first quarter of 2012. The remaining decrease of $13.3 million in operating income was primarily driven by lower sales volume and pricing in Australia. The European business largely offset its substantial top-line decline through cost reductions.

Computer Products Group

Computer Products net sales decreased $11.2 million, or 6%, to $179.1 million compared to $190.3 million in the prior-year period. Unfavorable foreign currency translation decreased sales by $4.3 million, or 2%. The remaining decrease primarily reflects lower net pricing due to promotions and the loss of $3.2 million in royalty income. Volume increased slightly as sales of new products for smartphones and tablets offset lower sales of PC accessories, including high-margin PC security products.

Operating income decreased $11.2 million, or 24%, to $35.9 million, and operating margin decreased to 20.0% from 24.8%. The decrease was primarily due to lower pricing, loss of royalty income and unfavorable product mix, impacted by the lower security product volume as noted above.


Fiscal 2011 versus Fiscal 2010

The following table presents the Company’s results for the years ended December 31, 2011, and 2010.
 Year Ended December 31, Amount of Change 
(in millions of dollars)2011 2010 $       %       
Net sales$1,318.4
 $1,284.6
 $33.8
 3 % 
Cost of products sold919.2
 902.0
 17.2
 2 % 
Gross profit399.2
 382.6
 16.6
 4 % 
Gross profit margin30.3% 29.8%   0.5
pts 
Advertising, selling, general and administrative expenses278.4
 266.7
 11.7
 4 % 
Amortization of intangibles6.3
 6.7
 (0.4) (6)% 
Restructuring income(0.7) (0.5) (0.2) (40)%  
Operating income115.2
 109.7
 5.5
 5 % 
Operating income margin8.7% 8.5%   0.2
pts 
Interest expense, net77.2
 78.3
 (1.1) (1)% 
Equity in earnings of joint ventures(8.5) (8.3) 0.2
 2 % 
Other expense, net3.6
 1.2
 2.4
 200 %  
Income tax expense24.3
 30.7
 (6.4) (21)% 
Effective tax rate56.6% 79.7%   NM
 
Income from continuing operations18.6
 7.8
 10.8
 NM
 
Income from discontinued operations, net of income taxes38.1
 4.6
 33.5
 728 %  
Net income56.7
 12.4
 44.3
 NM
  

Net Sales

Net sales increased $33.8 million, or 3%, to $1.32 billion, primarily due to translation gains from the U.S. dollar weakening relative to the prior-year period, which favorably impacted sales by $39.8 million, or 3%. Underlying sales declined modestly as lower volume in the International and Americas segments were partially offset by higher pricing and volumes gains in the Computer Products segment.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in the manufacturing, procurement and distribution process, allocation of certain information technology costs supporting those processes, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes. Cost of products sold increased $17.2 million, or 2% to $919.2 million. The

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increase reflects the impact of unfavorable currency translation of $25.8 million as well as higher commodity and fuel costs, which were partially offset by lower sales volume and improved manufacturing, freight and distribution efficiencies.

As part of the inclusion of Mead C&OP's financial results with those of the Company, certain information technology costs associated with the manufacturing and distribution operations have been reclassified from advertising, selling, general and administrative expenses to cost of products sold. This reclassification was done to enable the financial results of the two businesses to be consistent and to better reflect those costs associated with the cost of products sold. All prior periods have been reclassified to make the results comparable. For the years ended December 31, 2011 and 2010, reclassified costs totaled $15.5 million and $14.6 million, respectively. These historical reclassifications were not material and had no effect on net income.

Gross Profit

Management believes that gross profit and gross profit margin provide enhanced shareholder appreciation of underlying profit drivers. Gross profit increased $16.6 million, or 4%, to $399.2 million. The increase in gross profit was primarily due to the benefit from favorable currency translation of $14.0 million. Gross profit margin increased to 30.3% from 29.8%, primarily due to improved freight and distribution efficiencies, particularly in Europe.

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

SG&A expenses include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrative expenses outside the manufacturing and distribution functions (e.g., finance, human resources, etc.). SG&A increased $11.7 million, or 4%, to $278.4 million, of which currency translation contributed $6.8 million of the increase. SG&A as a percentage of sales increased to 21.1% from 20.8% . This increase was due to $5.6 million in costs associated with the pending acquisition of Mead C&OP. Business rationalization charges of $4.5 million, primarily incurred in the first quarter of 2011, were offset by savings during the rest of the 2011.

Operating Income

Operating income increased $5.5 million, or 5%, to $115.2 million, and as a percentage of sales, operating income increased modestly to 8.7% from 8.5%. The increase in operating income was driven by $7.0 million of favorable currency translation and improved gross margins, partially offset by the SG&A cost increases described above.

Interest Expense, Net and Other Expense, Net

Interest expense was $77.2 million compared to $78.3 million in the prior-year. The decrease in interest was due to repurchases of our Senior Secured Notes and Senior Subordinated Notes totaling $34.9 million and $25.0 million, respectively, as well as lower borrowings under our revolving credit facility during the year. This reduction was partially offset by the acceleration of debt origination amortization costs resulting from bond repurchases of $1.2 million.

Other expense was $3.6 million compared to $1.2 million in the prior-year period. The increase was due to $3.0 million of premium paid on the repurchase of $34.9 million of the Senior Secured Notes, partially offset by lower foreign exchange losses in the current year.

Income Taxes

Income tax expense from continuing operations was $24.3 million on income before taxes of $42.9 million compared to an income tax expense from continuing operations of $30.7 million on income before taxes of $38.5 million in the prior year. The high effective tax rates for 2011 and 2010 are due to no tax benefit being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation reserves are recorded against future tax benefits. Included in the 2011 amount is a $2.8 million benefit from the reversal of a valuation reserve in the U.K. Included in the 2010 amount is an $8.6 million expense recorded to reflect the tax impact of foreign currency fluctuations on an intercompany debt obligation, partially offset by the benefit of a $2.8 million out-of-period adjustment to increase deferred tax assets of a non-U.S. subsidiary.

Income from Continuing Operations

Income from continuing operations was $18.6 million, or $0.32 per diluted share, compared to income of $7.8 million, or $0.14 per diluted share in the prior-year period.


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Income from Discontinued Operations

Income from discontinued operations was $38.1 million, or $0.66 per diluted share, compared to income of $4.6 million, or $0.08 per diluted share in the prior-year period.

Discontinued operations include the results of GBC Fordigraph, which was sold during the second quarter of 2011, and the commercial print finishing business, which was sold during 2009. For a further discussion of discontinued operations see Note 19, Discontinued Operations, to the consolidated financial statements contained in Item 8 of this report.

The components of discontinued operations for the years ended December 31, 2011 and 2010 are as follows:
(in millions of dollars)2011 2010
Income from operations before income tax$2.5
 $6.6
Gain (loss) on sale before income tax41.5
 (0.1)
Income tax expense5.9
 1.9
Income from discontinued operations$38.1
 $4.6

Net Income

Net income was $56.7 million, or $0.98 per diluted share, compared to net income of $12.4 million, or $0.22 per diluted share, in the prior-year period.


Segment Discussion
 Year Ended December 31, 2011 Amount of Change
 Net Sales Segment Operating Income (A) Operating Income Margin Net Sales Net Sales Segment Operating Income Segment Operating Income Margin Points
        
(in millions of dollars)   $ % $ % 
ACCO Brands North America$623.1
 $37.4
 6.0% $(8.5) (1)% $(6.8) (15)% (100)
ACCO Brands International505.0
 58.9
 11.7% 29.0
 6% 15.3
 35 % 250
Computer Products Group190.3
 47.1
 24.8% 13.3
 8% 4.1
 10 % 50
Total segment sales$1,318.4
 $143.4
   $33.8
   $12.6
    
                
 Year Ended December 31, 2010          
 Net Sales Segment Operating Income (A) Operating Income Margin          
             
(in millions of dollars)            
ACCO Brands North America$631.6
 $44.2
 7.0%          
ACCO Brands International476.0
 43.6
 9.2%          
Computer Products Group177.0
 43.0
 24.3%          
Total segment operating income$1,284.6
 $130.8
            
(A)     Segment operating income excludes corporate costs; Interest expense, net; Equity in earnings of joint ventures and Other expense, net. See Note 16, Information on Business Segments, to the consolidated financial statements contained in Item 8 of this report for a reconciliation of total segment operating income to income from continuing operations before income taxes.


ACCO Brands North America

ACCO Brands North America net sales decreased $8.5 million, or 1% to $623.1 million, compared to $631.6 million in the prior-year period. Foreign currency translation favorably impacted sales by $3.9 million. Sales volume declined 4%, primarily in the U.S. due to inventory management initiatives by certain customers. The decline was partially offset by higher pricing and increased volumes in Canada.


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Operating income decreased $6.8 million, or 15%, to $37.4 million and included favorable foreign currency translation of $0.6 million. Operating income margin decreased to 6.0% from 7.0% in the prior-year period primarily due to the deleveraging of fixed costs due to lower sales volume.

ACCO Brands International

ACCO Brands International net sales increased $29.0 million, or 6%, to $505.0 million, compared to $476.0 million in the prior-year period. The increase was driven by foreign currency translation, which increased sales by $31.4 million, or 7%. Sales volume declined 3% due to weak European market demand, partially offset by European price increases and small volume gains in the Latin America and Asia-Pacific regions.

Operating income increased $15.3 million, or 35%, to $58.9 million, including a $4.9 million benefit from foreign currency translation. Operating income margin increased to 11.7% from 9.2%, mainly due to the substantial improvements in European operations, resulting from higher pricing, improved freight and distribution efficiencies, as well as SG&A savings. Included in the net SG&A savings were $4.5 million of business rationalization charges within Europe.

Computer Products Group

Computer Products net sales increased $13.3 million, or 8%, to $190.3 million. The favorable impact from foreign currency translation increased sales by $4.5 million, or 3%. The remainder of the increase primarily reflects volume gains from sales of new accessory products for smartphones and tablets.

Operating income increased $4.1 million, or 10%, to $47.1 million, resulting from a $1.5 million benefit from foreign currency translation, higher volume and lower SG&A expenses, partially offset by lower security product sales, which adversely impacted both margin and royalty income. Operating income margins increased to 24.8% from 24.3% primarily due to the favorable benefit from increased sales, partially offset by the adverse sales mix.

Liquidity and Capital Resources

Our primary liquidity needs are to service indebtedness, reduce our borrowing, fund capital expenditures and support working capital requirements. Our principal sources of liquidity are cash flows from operating activities, cash and cash equivalents held and seasonal borrowings under our senior secured revolving credit facility. We maintain adequate financing arrangements at market rates. Because of the seasonality of our business we typically carry greater cash balances in the first, second and third quarters of our fiscal year. Lower cash balances are typically carried during the fourth quarter due to the absorption of our Brazilian cash into working capital. Our Brazilian business is highly seasonal due to the combined impact of the back-to-school season coinciding with the calendar year-end in the fourth quarter. Due to various tax laws, it is costly to transfer short-term working capital in and out of Brazil. Our normal practice is therefore to hold seasonal cash requirements within Brazil, invested in Brazilian government securities. Our priority for all other cash flow use over the near term, after funding internal growth, is debt reduction, and investment in new products through both organic development and acquisitions.

Any available overseas cash, other than that held for working capital requirements in Brazil, is repatriated on a continuous basis. Undistributed earnings of foreign subsidiaries that are expected to be permanently reinvested and thus not available for repatriation, aggregate approximately $586 million and $517 million as of December 31, 2012 and 2011, respectively. If these amounts were distributed to the U.S., in the form of a dividend or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable.

Refinancing Transactions

On May 1, 2012 we entered into a refinancing in conjunction with the Merger.

For further information on our refinancing see Introduction - Mead C&OP Merger and Debt Refinancing contained elsewhere in Item 7 of this report and Note 4, Long-term Debt and Short-term Borrowings, to the consolidated financial statements contained in Item 8 of this report.

Loan Covenants

We must meet certain restrictive financial covenants as defined under the senior secured credit facilities. The covenants become more restrictive over time and require us to maintain certain ratios related to consolidated leverage and consolidated interest coverage. We are also subject to certain customary restrictive covenants under the senior unsecured notes.

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The table below sets forth the financial covenant ratio levels under the senior secured credit facilities: 
Maximum Consolidated Leverage Ratio(1)
Minimum - Interest Coverage Ratio(2)
May 1, 2012 to December 31, 20124.50:1.003.00:1.00
January 1, 2013 to December 31, 20134.25:1.003.00:1.00
January 1, 2014 to December 31, 20144.00:1.003.25:1.00
January 1, 2015 to December 31, 20153.75:1.003.25:1.00
January 1, 2016 and thereafter3.50:1.003.50:1.00

(1)The leverage ratio is computed by dividing our net funded indebtedness by the cumulative four-quarter-trailing EBITDA, which excludes restructuring, transaction costs, integration and other charges up to certain limits as well as other adjustments defined under the senior secured credit facilities.
(2)The interest coverage ratio for any period is the cumulative four-quarter-trailing EBITDA, for the Company, for such period, adjusted as provided in (1), divided by cash interest expense for the Company for such period and other adjustments, all as defined under the senior secured credit facilities.

The senior secured credit facilities contain customary events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults and cross-accelerations, certain bankruptcy or insolvency events, certain ERISA-related events, changes in control or ownership, and invalidity of any loan document.

The indenture governing the senior unsecured notes does not contain financial performance covenants. However, that indenture does contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to:

incur additional indebtedness;
pay dividends on our capital stock or repurchase our capital stock;
enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to the Company;
enter into certain transactions with affiliates;
make investments;
create liens; and
sell certain assets or merge with or into other companies.

Certain of these covenants will be subject to suspension when and if the notes are rated at least “BBB–” by Standard & Poor’s or at least “Baa3” by Moody’s. Each of the covenants is subject to a number of important exceptions and qualifications.

See also Note 4, Long-term Debt and Short-term Borrowings, to the consolidated financial statements contained in Item 8 of this report.

Compliance with Loan Covenants

As of December 31, 2012 our Leverage Ratio was approximately 3.7 to 1 and the Interest Coverage was approximately 4.5 to 1. The amount available for borrowings under our revolving credit facilities was $238.5 million (allowing for $11.5 million of letters of credit outstanding on that date).

As of and for the period ended December 31, 2012, we were in compliance with all applicable loan covenants.

Guarantees and Security

Obligations under the senior secured credit facilities are guaranteed by certain of our existing and future domestic subsidiaries. In the case of the obligations of ACCO Brands Canada its Senior Secured Term Loan A is guaranteed by its future subsidiaries and by our other existing and future Canadian subsidiaries.

The senior unsecured notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and future domestic subsidiaries other than certain excluded subsidiaries. The senior unsecured notes and the related guarantees will rank equally in right of payment with all of the existing and future senior debt of the Company, Mead Products and the guarantors, senior in right of payment to all of the existing and future subordinated debt of the Company, Mead Products and the guarantors, and effectively subordinated to all of the existing and future secured indebtedness of the Company,

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Mead Products and the guarantors to the extent of the value of the assets securing such indebtedness. The senior unsecured notes and the guarantees will be structurally subordinated to all existing and future liabilities, including trade payables, of each of the Company's and Mead Products’ subsidiaries that do not guarantee the notes.

Cash Flow

Fiscal 2012 versus Fiscal 2011

Cash Flow from Operating Activities

For the year ended December 31, 2012, cash used by operating activities was $7.5 million, compared to the cash provided in the prior-year period of $61.8 million. Net income for 2012 was $115.4 million, compared to $56.7 million in 2011. Non-cash and non-operating adjustments to net income on a pre-tax basis in 2012 totaled $106.6 million, compared to $10.0 million in 2011. The 2012 net adjustments were substantially higher than 2011, largely due to the inclusion of Mead C&OP in 2012 and the sale of GBC Fordigraph in 2011 which resulted in a pre-tax net gain of $41.9 million.

The operating cash outflow in 2012 of $7.5 million for the year ended December 31, 2012 was driven by the May 1, 2012 timing of the Merger with Mead C&OP, and only includes the cash flow from Mead C&OP since that date. The outflow includes cash payments of $16.1 million related to the transaction and $61.6 million related to the associated debt extinguishment and refinancing. This was largely offset by cash generated from operating profits. The use of cash for net working capital was $117.0 million in 2012, and reflects a large seasonal investment in working capital for the Mead C&OP business. The Mead business has a very seasonal cash flow pattern whereby strong sales during the fourth quarter result in substantial accounts receivable at the end of the year and strong cash collections during the early part of the following year. As a result, nearly all of the Mead annual net cash generation occurs during the first quarter. The use of cash for accounts payable reflects lower inventory purchases, primarily for Mead C&OP, due to the seasonally lower sales volume anticipated during the first quarter. Other significant cash payments in 2012 included interest payments of $79.3 million (excluding financing-related payments), income tax payments of $28.8 million and contributions to the Company's pension and defined benefit plans of $19.2 million.

The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2012 and 2011, respectively:
  2012 2011
Accounts receivable $(153.8) $0.6
Inventories 61.8
 5.4
Accounts payable (25.0) 16.8
Cash flow (used by)/provided by net working capital $(117.0) $22.8

Cash Flow from Investing Activities

Cash used by investing activities was $423.2 million for the year ended December 31, 2012 and reflects $397.5 million of net cash paid for Mead C&OP. For additional information, see Note 3, Acquisitions, to the consolidated financial statements contained in Item 8 of this report. Cash provided by investing activities in 2011 was $40.0 million and included proceeds from the sale of GBC Fordigraph of $53.6 million. Capital expenditures were $30.3 million and $13.5 million for the years ended December 31, 2012 and 2011, respectively. The increase in capital expenditures reflects the acquisition of Mead C&OP, as well as additional investments in information technology systems, including the cost of replacing the IT infrastructure previously supplied by Mead C&OP's former parent company. During 2012, the Company also received net proceeds of $3.1 million from the sale of assets, which included a manufacturing facility located in the United Kingdom. In addition, $1.5 million of net proceeds associated with the 2009 sale of the Company’s former commercial print finishing business were collected in 2012, while additional cash expenditures associated with the sale and exit of the business of approximately $2.4 million are anticipated during the Company2013 year.

Cash Flow from Financing Activities

Cash provided by financing activities for the year ended December 31, 2012 was $360.1 million, and its predecessor as employees (orincludes proceeds from new debt facilities of $1.27 billion, offset by repayments of the Company's extinguished and new debt facilities of $872.0 million and debt issuance payments of $38.5 million. Cash used by financing activities in 2011 was $63.1 million, primarily representing repayments of long-term debt.


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Fiscal 2011 versus Fiscal 2010

Cash Flow from Operating Activities

For the year ended December 31, 2011, cash provided by operating activities was $61.8 million, compared to $54.9 million in the caseprior year. Net income for 2011 was $56.7 million, compared to $12.4 million in 2010. Non-cash and non-operating adjustments to net income on a pre-tax basis in 2011 totaled $10.0 million, compared to $46.2 million in 2010. The 2011 net adjustments were substantially lower than 2010, largely due to the sale of Mr. Rubin, as an employeeGBC Fordigraph which resulted in a pre-tax net gain of General Binding Corporation (“GBC”)$41.9 million.

The table below shows our cash flow from accounts receivable, inventories and accounts payable for the years ended December 31, 2011 and 2010, respectively:
  2011 2010
Accounts receivable $0.6
 $(18.5)
Inventories 5.4
 (9.8)
Accounts payable 16.8
 14.8
Cash flow from net working capital $22.8
 $(13.5)

Operating cash flow in 2011 of $61.8 million was the result of the realization of income from operations and net working capital, partially offset by the use of cash to fund income tax and interest payments and contributions to our pension plans. Compared to the prior year, accounts receivable levels reflect improved customer collections and increased sales in the early part of the fourth quarter, which allowed us to its mergercollect more of our receivables before the end of the quarter. Inventory levels demonstrate improved supply chain management. Payments associated with the predecessor2010 annual incentive plan of approximately $9 million were made during the first quarter of 2011, compared to approximately $1 million in the prior year. Income tax payments were $27.7 million in 2011, compared to only $13.9 million in the 2010 period when we benefited from substantial refunds related to prior years and had lower operating profit. Interest payments of $71.9 million were slightly higher than the prior year, while contributions to our pension plans of $13.5 million were slightly less than payments made during the prior year. Payments associated with our wind-down of restructuring activities were $3.4 million, while European business rationalization activity resulted in payments of $4.2 million during 2011. In addition, the second half of 2011 included payments in pursuit of the CompanyMead C&OP acquisition of $4.8 million.

During the 2010 year, a recurring pattern of strong sales during the final month of each quarter lead to high quarter-end accounts receivable balances. In addition, inventory levels increased due to higher commodity costs and in August 2005)support of the sales growth anticipated during the first quarter of 2011.

Cash Flow from Investing Activities

Cash provided by investing activities was $40.0 million for the past fiveyear ended December 31, 2011 and cash used was $14.9 million for the year ended December 31, 2010. The sale of GBC Fordigraph during the second quarter of 2011 generated net proceeds of $52.9 million, and approximately $5.4 million of taxes associated with the sale were paid in 2012. We also received $0.6 million of net proceeds associated with the 2009 sale of our former commercial print finishing business. Capital expenditures were $13.5 million and $12.6 million for the periods ended December 31, 2011 and 2010, respectively. Additional cash payments of $1.4 million associated with the purchase of two minor product line acquisitions were also recognized during the first half of 2011.

Cash Flow from Financing Activities

Cash used by financing activities was $63.1 million and $0.1 million for the years ended December 31, 2011 and 2010, respectively. During 2011, principally during the third quarter, we repurchased $59.9 million of our Senior Subordinated Notes and Senior Secured Notes debt.


Capitalization

We had approximately 113.1 million common shares outstanding as of December 31, 2012.


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Adequacy of Liquidity Sources

We are subject to credit risk relative to the ability of counterparties to meet their contractual payment obligations or the potential non-performance of counterparties to deliver contracted commodities or services at the contracted price. The impact of any global economic downturn and the ability of our suppliers and customers to access credit markets is also unpredictable, outside of our control and may create additional risks for us, both directly and indirectly. The inability of suppliers to access financing or the insolvency of one or more of our suppliers could lead to disruptions in our supply chain, which could adversely impact our sales and/or increase our costs. Our suppliers may require us to pay cash in advance or obtain letters of credit for their benefit as a condition to selling us their products and services. If one or more of our principal customers were to file for bankruptcy, our sales could be adversely impacted and our ability to collect outstanding accounts receivable from any such customer could be limited. Any of these risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Based on our 2013 business plan and latest forecasts, we believe that cash flow from operations, our current cash balance and other sources of liquidity, including borrowings available under our senior secured revolving credit facility will be adequate to support requirements for working capital, capital expenditures, and to service indebtedness for the foreseeable future. Our future operating performance is dependent on many factors, some of which are beyond our control, including prevailing economic, financial and industry conditions.

Our operating performance is dependent on our continued ability to access funds under our credit and loan agreements, including under our senior secured revolving credit facility and from cash on hand, maintain sales volumes, drive profitable growth, realize cost savings and generate cash from operations. The financial institutions that fund our senior secured revolving credit facility could also be impacted by any volatility in the capacity indicated abovecredit markets, and if one or more of them could not fulfill our revolving credit requests, our operations may be adversely impacted. If our revolving credit is unavailable due to a lender not being able to fund requested amounts, or because we have not maintained compliance with our covenants, or we do not meet our sales or growth initiatives within the time frame we expect, our cash flow could be materially adversely impacted. A material decrease in our cash flow could cause us to fail to meet our obligations under our borrowing arrangements. A default under our credit or loan agreements could restrict or terminate our access to borrowings and materially impair our ability to meet our obligations as they come due. If we do not comply with any of our covenants and thereafter we do not obtain a substantially similar capacity except:
●Robert J. Keller, who has served in this position since October 22, 2008.  Mr. Keller had previously been named the Company’s Chairman on September 18, 2008.  He had been President and Chief Executive Officer of APAC Customer Services, Inc. from March, 2004 until February, 2008.  Prior to that time Mr. Keller served in various capacities at Office Depot, Inc. from February, 1998 through September, 2003, most recently as President, Business Services Group;
·Boris Elisman, who before being appointed to this position in December, 2010 was President, ACCO Brands Americas since December, 2008.  Prior to that time he served as President of the Company’s Global Office Products Group since April, 2008 and President of the Company’s Computer Products Group since joining the Company in 2005.  Prior to that time he held Vice President and General Manager positions in marketing and sales for the Hewlett-Packard Company from 2001 to 2004;
·Christopher M. Franey, who before adding the responsibility for the Company’s International operations in July, 2010 had been serving as President of the Company’s Computer Products Groups since joining the Company in December, 2008.  Prior to that time he had been a marketing and sales Vice President for Samsung Electronics Information Technology Division since 2006 and the President of ViewSonic Corporation, a global provider of visual display technology products since 2004;
·Thomas H. Shortt, who before being appointed to this position in December, 2010 had been the Company’s Chief Strategy and Supply Chain officer since joining the Company in April, 2009.  Prior to that time Mr. Shortt was a management consultant focusing on supply chain improvement since May, 2008.  From April, 2004 until May, 2008 he was a President of Unisource Worldwide, Inc., a North American distributor of commercial printing and business imaging papers, packaging systems, and facilities supplies and equipment;
waiver or amendment that otherwise addresses that non-compliance, our lenders may accelerate payment of all amounts outstanding under the affected borrowing arrangements, which amounts would immediately become due and payable, together with accrued interest. Such acceleration would cause a default under the agreements governing the senior secured term loans and other agreements that provide us with access to funding. Any one or more defaults, or our inability to generate sufficient cash flow from our operations in the future to service our indebtedness and meet our other needs, may require us to refinance all or a portion of our existing indebtedness or obtain additional financing or reduce expenditures that we deem necessary to our business. There can be no assurance that any refinancing of this kind would be possible or that any additional financing could be obtained. The inability to obtain additional financing could have a material adverse effect on our financial condition and on our ability to meet our obligations to noteholders.

4
Our cash flows from operating activities are dependent upon a number of factors that affect our sales, including demand, pricing and competition. Historically, key drivers of demand in the office products industry have included economic conditions generally, and specifically trends in gross domestic product (GDP), which affects business confidence and the propensity to purchase consumer durables, white collar employment levels, and growth in the number of small businesses and home offices together with increasing usage of personal computers. Pricing and demand levels for office products have also reflected a substantial consolidation within the global resellers of office products, which is likely to continue. Those resellers are our principal customers. This consolidation has led to increased pricing pressure on suppliers and a more efficient level of asset utilization by customers, resulting in lower sales volumes and higher costs from more frequent small orders for suppliers of office products. We sell products in highly competitive markets, and compete against large international and national companies, regional competitors and against our own customers’ direct and private-label sourcing initiatives.

·Thomas W. Tedford, who before being appointed to this position in December, 2010 had been the Company’s Chief Marketing and Product Development officer since joining the Company in May, 2010.  Prior to that time Mr. Tedford had been Group Vice President, Client Services since February, 2007 and Vice President, Healthcare and Media Sales since May, 2004, serving in those two positions for APAC Customer Services, Inc., a customer service outsourcing firm;
For more information on these risks see “Risk Factors” in Item 1A of this report.


·Mark C. Anderson, who before joining the Company in October, 2007 was the Director, Corporate Development for Pitney Bowes, Inc. since February, 2003 and a Vice President of Business Development for Pitney Bowes from August, 2001 to February, 2003; and
Off-Balance-Sheet Arrangements and Contractual Financial Obligations

·David L. Kaput, who before joining the Company in October, 2007 had been the Senior Vice President, Global HR Practices and Governance of SAP, AG since August, 2005 and Senior Vice President, Global Human Resources and Corporate Officer of SAP Global Marketing, Inc. from October, 2001 to August, 2005.
There is no family relationship betweenWe do not have any of the above named officers.  All officers are appointed for one-year terms by the Board of Directors or until such time each is re-appointed.
Risk Management As It Relates to Compensation Policies
Our Compensation Committee has reviewed and discussed with management the issues of risk as it relates to our compensation program and practices, and the Committee does not believe our compensation programs and practices encourage excessive or inappropriate risk-takingmaterial off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.


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Our contractual obligations and related payments by period at December 31, 2012 were as follows:
 2013 2014 - 2015 2016 -2017 Thereafter Total
(in millions of dollars)         
Contractual obligations         
Debt(1)
$1.3
 $52.3
 $191.8
 $826.7
 $1,072.1
Interest on debt(2)
56.5
 111.3
 101.6
 102.9
 372.3
Operating lease obligations21.0
 34.0
 25.5
 48.4
 128.9
Purchase obligations(3)
89.4
 16.2
 16.1
 —
 121.7
Other long-term liabilities(4)
14.3
 —
 —
 —
 14.3
Total$182.5
 $213.8
 $335.0
 $978.0
 $1,709.3
(1)The required 2013, 2014 and some 2015 principal cash payments on the U.S. Dollar and Canadian Dollar Senior Secured Term Loans were made in 2012.
(2)
Interest calculated at December 31, 2012 rates for variable rate debt.
(3)Purchase obligations primarily consist of contracts and non-cancelable purchase orders for raw materials and finished goods.
(4)Obligations related to the Company’s pension plans.

Due to the uncertainty with respect to the timing of future cash flows associated with our unrecognized tax benefits at December 31, 2012, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $56.3 million of unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 11, Income Taxes, to the consolidated financial statements contained in Item 8 of this report for a discussion on income taxes.

Critical Accounting Policies

Our financial statements are prepared in conformity with accounting principles generally accepted in the U.S. Preparation of our financial statements require us to make judgments, estimates and assumptions that affect the amounts of actual assets, liabilities, revenues and expenses presented for each reporting period. Actual results could differ significantly from those estimates. We regularly review our assumptions and estimates, which are based on historical experience and, where appropriate, current business trends. We believe that the following discussion addresses our critical accounting policies, which require more significant, subjective and complex judgments to be made by our management.

Revenue Recognition

We recognize revenue from product sales when earned, net of applicable provisions for discounts, returns and allowances. We consider revenue to be realized or realizable and earned when all of the following criteria are met: title and risk of loss have passed to the customer, persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. We also provide for our estimate of potential bad debt at the time of revenue recognition.

Allowances for Doubtful Accounts and Sales Returns

Trade receivables are recorded at the stated amount, less allowances for discounts, doubtful accounts and returns. The allowance for doubtful accounts represents estimated uncollectible receivables associated with potential customer defaults on contractual obligations, usually due to customers’ potential insolvency. The allowance includes amounts for certain customers where a risk of default has been specifically identified. In addition, the allowance includes a provision for customer defaults on a general formula basis when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers. The assessment of the likelihood of customer defaults is based on various factors, including the length of time the receivables are past due, historical experience and existing economic conditions.

The allowance for sales returns represents estimated uncollectible receivables associated with the potential return of products previously sold to customers, and is recorded at the time that the sales are recognized. The allowance includes a general provision for product returns based on historical trends. In addition, the allowance includes a reserve for currently authorized customer returns that are considered to be abnormal in comparison to the historical basis.


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Inventories

Inventories are priced at the lower of cost (principally first-in, first-out with minor amounts at average) or market. A reserve is established to adjust the cost of inventory to its 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 specific identification of items, such as product discontinuance or engineering/material changes. These estimates could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from expectations.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation is provided, principally on a straight-line basis, over the estimated useful lives of the assets. Gains or losses resulting from dispositions are included in operating income. Betterments and renewals, that improve and extend the life of an asset, are capitalized; maintenance and repair costs are expensed. Purchased computer software is capitalized and amortized over the software’s useful life. The following table shows estimated useful lives of property, plant and equipment:
Buildings40 to 50 years
Leasehold improvementsLesser of lease term or the life of the asset
Machinery, equipment and furniture3 to 10 years

Long-Lived Assets

We test long-lived assets for impairment whenever events or changes in circumstances indicate that the assets’ carrying amount is not recoverable from its undiscounted cash flows. When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventual disposition 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 of future cash flow, derived from the most recent business projections. If this comparison indicates that there is an impairment, the amount of the impairment is typically calculated using discounted expected future cash flows. The discount rate applied to these cash flows is based on our weighted average cost of capital, computed by selecting market rates at the valuation dates for debt and equity that are reflective of the risks associated with an investment in the Company’s industry as estimated by using comparable publicly traded companies.

Intangible Assets

Intangible assets are comprised primarily of indefinite-lived intangible assets acquired and purchased intangible assets arising from the application of purchase accounting. Indefinite-lived intangible assets are not amortized, but are evaluated annually to determine whether the indefinite useful life is appropriate. Indefinite-lived intangibles are tested for impairment on an annual basis and written down when impaired. An interim impairment test is performed if an event occurs or conditions change that would more likely than not reduce the fair value below the carrying value.

In addition, purchased intangible assets other than goodwill are amortized over their useful lives unless their lives are determined to be indefinite. Certain of our trade names have been assigned an indefinite life as we currently anticipate that these trade names will contribute cash flows to ACCO Brands indefinitely.

We review indefinite-lived intangibles for impairment annually, normally in the second quarter, and whenever market or business events indicate there may be a potential adverse impact on a particular intangible. We consider the implications of both external factors (e.g., market growth, pricing, competition, and technology) and internal factors (e.g., product costs, margins, support expenses, and capital investment) and their potential impact on cash flows for each business in both the near and long term, as well as their impact on any identifiable intangible asset associated with the business. Based on recent business results, consideration of significant external and internal factors, and the resulting business projections, indefinite-lived intangible assets are reviewed to determine whether they are likely to remain indefinite-lived, or whether a finite life is more appropriate. In addition, based on events in 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.

As part of our review in the second quarter of 2012, $21.4 million of the value previously assigned to one of our legacy indefinite-lived trade names was changed to an amortizable intangible asset. The legacy indefinite-lived trade name was not impaired. The change was made in respect of decisions regarding our future use of the trade name. We commenced amortizing the trade name in June of 2012 on a prospective basis over a life of 30 years.

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Goodwill

We test goodwill for impairment at least annually, normally in the second quarter, and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment has been incurred. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. During 2012, we adopted ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test included in U.S. GAAP. Entities are not required to calculate the fair value of a reporting unit unless they determine that it is more likely than not that the fair value is less than the carrying amount. We concluded it was not necessary to apply the traditional two-step fair value quantitative impairment test in ASC 350 to any of our reporting units in 2012. When applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from each reporting unit. The resulting fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors.

Given the current economic environment and the uncertainties regarding the impact on our business, there can be no assurance that our estimates and assumptions made for purposes of our qualitative impairment testing during 2012 will prove to be accurate predictions of the future. If our assumptions regarding forecasted revenue or margin growth rates of certain reporting units are not achieved, we may be required to record impairment charges in future periods, whether in connection with our next annual impairment testing in the second quarter of fiscal year 2013 or prior to that, if any such change constitutes a triggering event outside of the quarter from when the annual impairment test is performed. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

Employee Benefit Plans

We provide a range of benefits to our employees and retired employees, including pensions, post-retirement, post-employment and health care benefits. We record annual amounts relating to these plans based on calculations specified by accounting principles generally accepted in the U.S., which include various actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. Actuarial assumptions are reviewed on an annual basis and modifications to these assumptions are made based on current rates and trends when it is deemed appropriate. As required by accounting principles generally accepted in the U.S., the effect of our modifications are generally recorded and amortized over future periods. We believe that the assumptions utilized in recording our obligations under the plans are reasonable based on our experience. The actuarial assumptions used to record our plan obligations could differ materially from actual results due to changing economic and market conditions, higher or lower withdrawal rates or other factors which may impact the amount of retirement related benefit expense recorded by us in future periods.

The discount rate assumptions used to determine the post-retirement obligations of the benefit plans is based on a spot-rate yield curve that matches projected future benefit payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. The assumed discount rates reflect market rates for high-quality corporate bonds currently available. Our discount rates were determined by considering the average of pension yield curves constructed of a large population of high quality corporate bonds. The resulting discount rates reflect the matching of plan liability 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 on our investment profile to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns over the last 10 years, and asset allocation and investment strategy.

At the end of each calendar year an actuarial evaluation is performed to determine the funded status of our pension and post-retirement obligations and any actuarial gain or loss is recognized in other comprehensive income (loss) and then amortized into the income statement in future periods.

Pension expense was $8.9 million, $6.9 million and $8.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. The $2.0 million increase in pension expenses in 2012 compared to 2011 was due to the inclusion of the Mead C&OP plans and the settlement losses on the Supplemental Retirement Plan (the "SRP") as part of the Merger. Post-retirement (income) expense was $(0.8) million, $0.2 million and $0.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.


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The weighted average assumptions used to determine net cost for years ended December 31, 2012, 2011 and 2010 were:
 Pension Benefits Post-retirement
 U.S. International  
 2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate5.0% 5.5% 5.9% 4.7% 5.4% 5.8% 4.5% 5.0% 5.9%
Expected long-term rate of return8.2% 8.2% 8.2% 6.2% 6.4% 6.8% —
 —
 —
Rate of compensation increaseN/A
 N/A
 N/A
 3.6% 4.4% 4.5% —
 —
 —

In 2013, we expect pension expenses of approximately $7.2 million and post-retirement income of approximately $0.2 million. The estimated $1.7 million decrease in pension expense for 2013 compared to 2012 is primarily due to higher than expected returns on the plans assets because of higher level of assets at the end of 2012 versus 2011, primarily due to actual market returns and the lack of service costs in our U.K. plan which was frozen to future accruals in 2012. Partially offsetting is a full year of expense for the acquired Mead C&OP plans as opposed to only 8 months of expense in 2012.

A 25-basis point change (0.25%) in our discount rate assumption would lead to an increase or decrease in our pension expense of approximately $1.0 million for 2013. A 25-basis point change (0.25%) in our long-term rate of return assumption would lead to an increase or decrease in pension expense of approximately $1.1 million for 2013.

Pension and post-retirement liabilities of $119.8 million as of December 31, 2012, increased from $106.1 million at December 31, 2011, due to lower discount rates compared to prior year assumptions, partially offset by the actual over performance of the assets of the pension plans compared to the expected long-term rate of return of the assets of the pension plans.

Weighted average assumptions used to determine benefit obligations for years ended December 31, 2012, 2011, and 2010 were:
 Pension Benefits Post-retirement
 U.S. International  
 2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate4.2% 5.0% 5.5% 4.3% 4.7% 5.4% 4.0% 4.5% 5.0%
Rate of compensation increaseN/A
 N/A
 N/A
 4.0% 3.6% 4.4% —
 —
 —

Customer Program Costs

Customer programs and incentives are a common practice in our industry. We incur customer program costs to obtain favorable product placement, to promote sell-through of products and to maintain competitive pricing. Customer program costs and incentives, including rebates, promotional funds and volume allowances, are accounted for as a reduction to gross sales. These costs are recorded at the time of sale based on management’s best estimates. Estimates are based on individual customer contracts and projected sales to the customer in comparison to any thresholds indicated by contract. In the absence of a signed contract, estimates are based on historical or projected experience for each program type or customer. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in sales volume expectations or customer contracts).

Income Taxes

Deferred tax liabilities or assets are established for temporary differences between financial and tax reporting bases and are subsequently adjusted to reflect changes in tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is recorded to reduce deferred tax assets to an amount that is more likely than not to be realized. Facts and circumstances may change that cause us to revise the conclusions on our ability to realize certain net operating losses and other deferred tax attributes.

The amount of income taxes that we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax position is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. We believe that we have adequately provided for reasonably foreseeable outcomes related to

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these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are revised or resolved.

Deferred income taxes are not provided on certain undistributed earnings of foreign subsidiaries that are expected to be permanently reinvested in those companies, aggregating approximately $586 million and $517 million as of December 31, 2012 and 2011, respectively. If these amounts were distributed to the U.S., in the form of a dividend or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable.

Stock–Based Compensation

Stock-based compensation cost is estimated at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the vesting period. Determining the appropriate fair value model to use requires judgment. Determining the assumptions that enter into the model is highly subjective and also requires judgment, including long-term projections regarding stock price volatility, employee exercise, post-vesting termination, and pre-vesting forfeiture behaviors, interest rates and dividend yields. The grant date fair value of each award is estimated using the Black-Scholes option-pricing model.

We have utilized historical volatility for a pool of peer companies for a period of time that is comparable to the expected life of the option to determine volatility assumptions for stock-based compensation prior to 2012. Beginning with 2012 volatility is calculated using a combination of peer companies (50%) and ACCO Brands' historic volatility (50%). The weighted average expected option term reflects the application of the simplified method, which defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Forfeitures are estimated at the time of grant in order to calculate the amount of share-based payment awards ultimately expected to vest. The forfeiture rate is based on historical rates.

The use of different assumptions would result in different amounts of stock compensation expense. Holding all other variables constant, the indicated change in each of the assumptions below increases or decreases the fair value of an option (and hence, expense), as follows:
AssumptionChange to
Assumption		Impact on Fair Value
of Option
Expected volatilityHigherHigher
Expected lifeHigherHigher
Risk-free interest rateHigherHigher
Dividend yieldHigherLower

The pre-vesting forfeitures assumption is ultimately adjusted to the actual forfeiture rate. Therefore, changes in the forfeitures assumption would not impact the total amount of expense ultimately recognized over the vesting period. Different forfeitures assumptions would only impact the timing of expense recognition over the vesting period. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances.

Management is not able to estimate the probability of actual results differing from expected results, but believes our assumptions are appropriate, based upon our historical and expected future experience.

We recognized stock-based compensation expense of $9.2 million, $6.3 million and $4.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 was issued to simplify the testing of goodwill for impairment by allowing an optional qualitative factors test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test already included in ASC Topic 350. ASU No. 2011-08 is effective for annual and interim goodwill tests performed for fiscal years after December 15, 2011. We adopted the standard in 2012 and it did not have a significant impact on its consolidated financial statements or results of operations.

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In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. It is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. We will adopt the standard, and it is expected to have no effect on the Companyconsolidated financial statements or results of operations.

In October 2012, the FASB issued ASU No. 2012-04, Technical Corrections and Improvements. The amendments in this ASU affect a wide range of topics, but are generally considered nonsubstantive in nature. It is effective for fiscal periods beginning after December 15, 2012. We will adopt the standard, and it is expected to have no effect on the consolidated financial statements or results of operations.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The revised standard is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. It is effective for fiscal periods beginning after December 15, 2012. We will adopt the standard and its required disclosure.


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ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our industry is concentrated in a small number of major customers, principally office products superstores, large retailers, wholesalers and contract stationers. Customer consolidation and share growth of private-label products continue to increase pricing pressures, which may adversely affect margins for us and our competitors. We are addressing these challenges through design innovations, value-added features and services, as well as continued cost and asset reduction.

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. We enter into financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments are major financial institutions.

Foreign Exchange Risk Management

We enter into forward foreign currency and option contracts principally to hedge currency fluctuations in transactions (primarily anticipated inventory purchases and intercompany loans) denominated in foreign currencies, thereby limiting the risk that would otherwise result from changes in exchange rates. The majority of our exposure to local currency movements is in Europe, Australia, Canada, Brazil, Mexico and Japan. All of the existing foreign exchange contracts as of December 31, 2012 have maturity dates in 2013. Increases and decreases in the fair market values of the forward agreements are expected to be offset by gains/losses in recognized net underlying foreign currency transactions or loans. Notional amounts of outstanding foreign currency forward exchange contracts were $175.4 million and $147.5 millionat least,December 31, 2012 and 2011, respectively. The net fair value of these foreign currency contracts was $0.4 million and $2.4 million at December 31, 2012 and 2011, respectively. At December 31, 2012, a 10% unfavorable exchange rate movement in our portfolio of foreign currency forward contracts would have reduced our unrealized gains by $13.9 million. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, we believe these forward contracts and the offsetting underlying commitments do not create material market risk.

For more information related to outstanding foreign currency forward exchange contracts see Note 13, Fair Value of Financial Instruments and Note 14, Derivative Financial Instruments, to the consolidated financial statements contained in Item 8 of this report.

Interest Rate Risk Management

As discussed in Note 4, Long-term Debt and Short-term Borrowings, to the consolidated financial statements contained in Item 8 of this report, our previous debt has been refinanced in conjunction with the Merger with a combination of unsecured notes and senior secured term loans. The unsecured notes have fixed interest rates and, accordingly, are not exposed to market risk resulting from changes in interest rates. However, the fair market value of our long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. In addition, fair market values will also reflect the credit markets' view of credit risk spreads and our risk profile. These interest rate changes may affect the fair market value of the fixed interest rate debt and any repurchases of these notes, but do not impact our earnings or cash flows.

Interest rates under the senior secured term loans are based on the London Interbank Offered Rate (LIBOR). The range of borrowing costs under the pricing grid is LIBOR plus 3.00% for $242.6 million of the debt and LIBOR plus 3.25% with a LIBOR rate floor of 1.00% for $326.8 million of the debt. We are required to pay a quarterly commitment fee on the unused portion of the senior secured revolving credit facilities ranging from 0.375% to 0.5%, dependent on our consolidated leverage ratio. There were no borrowings outstanding under our senior secured revolving credit facilities as of December 31, 2012.

The following reasons:table summarizes information about our major debt components as of December 31, 2012, including the principal cash payments and interest rates.


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Debt Obligations
 Stated Maturity Date    
(in millions of dollars)
2013(1)
 
2014(1)
 
2015(1)
 2016 2017 Thereafter Total Fair Value
Long term debt:               
Fixed rate Unsecured Notes$—
  $—
  $—
  $—
 $—
 $500.0
  $500.0
 $523.8
Average fixed interest rate6.75% 6.75% 6.75% 6.75% 6.75% 6.75%     
Variable rate Senior Secured Term Loans (U.S. dollars)$—
 $—
 $49.9
 $99.8
 $71.2
 $326.7
  $547.6
 $549.2
Variable rate Senior Secured Term Loan (Canadian dollars)$—
 $—
 $1.0
 $12.1
 $8.7
 $—
  $21.8
 $21.8
Average variable interest rate(2)
3.89% 3.89% 3.94% 4.09% 4.25% 4.25%     
 
(1)The required 2013, 2014 and some 2015 principal cash payments on the U.S. Dollar and Canadian Dollar Senior Secured Term Loans were made in 2012.
(2)
Rates presented are as of December 31, 2012.


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ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
·
We structure our payPage
Report of Independent Registered Public Accounting Firm
47
Management’s Report on Internal Control Over Financial Reporting
48
Consolidated Balance Sheets
49
Consolidated Statements of Operations
50
Consolidated Statements of Comprehensive Income (Loss)
51
Consolidated Statements of Cash Flows
52
Consolidated Statements of Stockholders’ Equity (Deficit)
53
Notes to consist of both fixed and performance-based compensation.  The fixed (or salary) portion of compensation is designed to provide a steady income regardless of the Company’s stock price and financial performance so that executive compensation is not entirely performance based, which could encourage unnecessary or excessive risk taking.  The performance-based (cash bonus and equity) portions of compensation are designed to reward both short and long-term corporate performance.  For short-term performance, our cash bonus is awarded based on annual performance metrics and targets.  For long-term performance our equity awards generally vest over a three year minimum period and only create more value for award recipients if our stock price increases over time.  We feel that these variable elements of compensation are a sufficient percentage of overall compensation to motivate executives to produce superior short- and long-term corporate results while the fixed element is also sufficiently high that the executives are not encouraged to take unnecessary or excessive risks in doing so.Consolidated Financial Statements
54


·Our operating income and other performance related targets are applicable to our executives and employees alike, regardless of business unit.  We believe this encourages consistent behavior across the organization, rather than establishing different performance metrics depending on a person’s position in the Company or their business unit.  So, for example, a person in our most profitable business line is not encouraged to take more risk than someone in a less profitable business unit.
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·We cap our maximum cash bonus opportunity at two times target, which we believe also mitigates excessive risk taking.  Even if the Company dramatically exceeds its operating targets, bonus payouts are limited.  Conversely, we have a floor on the bonus target so that


5
Report of Independent Registered Public Accounting Firm

profitability below a certain level (as approved by the Compensation Committee) does not permit bonus payouts.
·Our internal control over financial reporting includes controls over the measurement and calculation of earnings that are designed to mitigate the risk of manipulation by any employee, including our executives.  In addition, our employees are encouraged to report up to the Company’s director of internal audit and general counsel through a confidential “whistle-blower” hot line in the event they become aware of any internal financial reporting irregularities.
·The members of the Board’s Compensation Committee have extensive experience in executive compensation matters and they are counseled by an independent professional executive compensation consulting firm.  Their approval is required before any new executive compensation plan can be amended or implemented.  This precludes management’s ability to implement any high risk or excessive compensation program.
·We have adopted a clawback and recoupment policy applicable to all executive officers that is intended to further deter excessive or inappropriate risk taking.
Audit Committee
The Board of Directors hasand Stockholders of ACCO Brands Corporation:

We have audited the accompanying consolidated balance sheets of ACCO Brands Corporation and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and stockholders' equity (deficit), for each of the years in the three-year period ended December 31, 2012. In connection with our audits of the consolidated financial statements, we also audited the related consolidated financial statement schedule, Schedule II - Valuation and Qualifying Accounts and Reserves. We also have audited ACCO Brands Corporation's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ACCO Brands Corporation's management is responsible for these consolidated financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management report on internal control over financial reporting. Our responsibility is to express an Audit Committee whose membersopinion on these consolidated financial statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are Messrs. Hargrove (Chairperson), Jenkins, Norkusfree of material misstatement and Mrs. Dvorak.  Each member meetswhether effective internal control over financial reporting was maintained in all material respects. Our audits of the independence standardsconsolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ACCO Brands Corporation and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also in our Corporate Governance Principlesopinion, ACCO Brands Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

ACCO Brands Corporation acquired the Mead Consumer and those set forthOffice Products Business (“Mead C&OP Business”) during 2012, and management excluded from its assessment of the effectiveness of ACCO Brands Corporation's internal control over financial reporting as of December 31, 2012, the Mead C&OP Business's internal control over financial reporting associated with total assets of $514.4 million and total revenues of $551.5 million included in the New York Stock Exchange Listed Company Manual.  In addition, each member meetsconsolidated financial statements of ACCO Brands Corporation and subsidiaries as of and for the independence standard under Rule 10A-3year ended December 31, 2012. Our audit of internal control over financial reporting of ACCO Brands Corporation also excluded an evaluation of the internal control over financial reporting of the Mead C&OP Business.

/s/ KPMG LLP

Chicago, Illinois
February 28, 2013


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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of ACCO Brands Corporation and its subsidiaries is responsible for establishing and maintaining adequate internal controls over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 (the “Exchange Act”)1934. The Company’s internal control over financial reporting is designed and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures 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 financial reporting as of December 31, 2012. Each memberIn making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on our assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2012.

The scope of managements' assessment of the effectiveness of internal control over financial reporting includes all of the Company's business units except for the Mead Consumer and Office Products Business (“Mead C&OP”), which was acquired by the Company on May 1, 2012. Consolidated net sales for the year-ended December 31, 2012 were $551.5 million and consolidated assets as of December 31, 2012 were $514.4 million.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report that appears herein.
/s/ ROBERT J. KELLER
/s/ NEAL V. FENWICK
Robert J. KellerNeal V. Fenwick
Chairman of the Board andExecutive Vice President and
Chief Executive OfficerChief Financial Officer
(principal executive officer)(principal financial officer)
February 28, 2013February 28, 2013


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ACCO Brands Corporation and Subsidiaries
Consolidated Balance Sheets
 December 31, 2012 December 31, 2011
(in millions of dollars, except share data)   
Assets   
Current assets:   
Cash and cash equivalents$50.0
 $121.2
Accounts receivable less allowances for discounts, doubtful accounts and returns of $19.3 and $13.9, respectively498.7
 269.5
Inventories265.5
 197.7
Deferred income taxes31.1
 7.6
Other current assets29.0
 26.9
Total current assets874.3
 622.9
Total property, plant and equipment591.4
 463.3
Less accumulated depreciation(317.8) (316.1)
Property, plant and equipment, net273.6
 147.2
Deferred income taxes36.4
 16.7
Goodwill589.4
 135.0
Identifiable intangibles, net of accumulated amortization of $123.3 and $102.3, respectively646.6
 130.4
Other assets87.4
 64.5
Total assets$2,507.7
 $1,116.7
Liabilities and Stockholders' Equity (Deficit)   
Current liabilities:   
Notes payable to banks$1.2
 $—
Current portion of long-term debt0.1
 0.2
Accounts payable152.4
 127.1
Accrued compensation38.0
 24.2
Accrued customer program liabilities119.0
 66.8
Accrued interest6.3
 20.2
Other current liabilities112.4
 67.6
Total current liabilities429.4
 306.1
Long-term debt1,070.8
 668.8
Deferred income taxes165.0
 85.6
Pension and post-retirement benefit obligations119.8
 106.1
Other non-current liabilities83.5
 12.0
Total liabilities1,868.5
 1,178.6
Stockholders’ deficit:   
Stockholders' equity (deficit):   
Preferred stock, $0.01 par value, 25,000,000 shares authorized; none issued and outstanding—
 —
Common stock, $0.01 par value, 200,000,000 shares authorized; 113,403,824 and 55,659,753 shares issued and 113,143,344 and 55,475,735 outstanding, respectively1.1
 0.6
Treasury stock, 260,480 and 184,018 shares, respectively(2.5) (1.7)
Paid-in capital2,018.5
 1,407.4
Accumulated other comprehensive loss(156.1) (131.0)
Accumulated deficit(1,221.8) (1,337.2)
Total stockholders' equity (deficit)639.2
 (61.9)
Total liabilities and stockholders' equity (deficit)$2,507.7
 $1,116.7

See notes to consolidated financial statements.
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ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Operations
 Year Ended December 31,
(in millions of dollars, except per share data)2012 2011 2010
Net sales$1,758.5
 $1,318.4
 $1,284.6
Cost of products sold1,225.1
 919.2
 902.0
Gross profit533.4
 399.2
 382.6
Operating costs and expenses:     
Advertising, selling, general and administrative expenses349.9
 278.4
 266.7
Amortization of intangibles19.9
 6.3
 6.7
Restructuring charges (income)24.3
 (0.7) (0.5)
Total operating costs and expenses394.1
 284.0
 272.9
Operating income139.3
 115.2
 109.7
Non-operating expense (income):     
Interest expense, net89.3
 77.2
 78.3
Equity in earnings of joint ventures(6.9) (8.5) (8.3)
Other expense, net61.3
 3.6
 1.2
Income (loss) from continuing operations before income tax(4.4) 42.9
 38.5
Income tax (benefit) expense(121.4) 24.3
 30.7
Income from continuing operations117.0
 18.6
 7.8
Income (loss) from discontinued operations, net of income taxes(1.6) 38.1
 4.6
Net income$115.4
 $56.7
 $12.4
Per share:     
Basic income per share:     
Income from continuing operations$1.24
 $0.34
 $0.14
Income (loss) from discontinued operations$(0.02) $0.69
 $0.08
Basic income per share$1.23
 $1.03
 $0.23
Diluted income per share:     
Income from continuing operations$1.22
 $0.32
 $0.14
Income (loss) from discontinued operations$(0.02) $0.66
 $0.08
Diluted income per share$1.20
 $0.98
 $0.22
Weighted average number of shares outstanding:     
Basic94.1
 55.2
 54.8
Diluted96.1
 57.6
 57.2



See notes to consolidated financial statements.
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Consolidated Statements of Comprehensive Income (Loss)
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Net income$115.4
 $56.7
 $12.4
Other comprehensive income (loss), before tax:     
Unrealized losses on derivative financial instruments:     
Losses arising during the period(0.2) (0.3) (3.1)
Reclassification adjustment for (income) losses included in net income(1.9) 4.9
 1.8
Foreign currency translation:     
Foreign currency translation adjustments(10.9) (8.9) 11.0
Less: reclassification adjustment for sale of GBC Fordigraph Pty Ltd included in net income—
 (6.1) —
Pension and other post-retirement plans:     
Actuarial (loss) gain arising during the period(21.1) (46.3) 4.4
Amortization of actuarial loss and prior service cost included in net income7.2
 7.8
 7.0
Other(4.5) 0.9
 3.0
Other comprehensive income (loss), before tax(31.4) (48.0) 24.1
Income tax expense related to items of other comprehensive income (loss)6.3
 3.1
 (3.2)
Comprehensive income$90.3
 $11.8
 $33.3

See notes to consolidated financial statements.
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Consolidated Statements of Cash Flows
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Operating activities     
Net income$115.4
 $56.7
 $12.4
Amortization of inventory step-up13.3
 —
 —
Loss (gain) on disposal of assets2.0
 (40.4) (1.5)
Deferred income tax provision(9.9) 3.9
 12.3
Release of tax valuation allowance(145.1) —
 —
Depreciation34.5
 26.5
 29.6
Other non-cash charges2.3
 0.1
 0.7
Amortization of debt issuance costs and bond discount9.9
 8.2
 6.3
Amortization of intangibles19.9
 6.4
 6.9
Stock-based compensation9.2
 6.3
 4.2
Loss on debt extinguishment15.5
 2.9
 —
Changes in balance sheet items:     
Accounts receivable(153.8) 0.6
 (18.5)
Inventories61.8
 5.4
 (9.8)
Other assets7.4
 0.2
 (5.1)
Accounts payable(25.0) 16.8
 14.8
Accrued expenses and other liabilities30.1
 (27.8) (2.2)
Accrued income taxes2.0
 (1.1) 7.7
Equity in earnings of joint ventures, net of dividends received3.0
 (2.9) (2.9)
Net cash (used) provided by operating activities(7.5) 61.8
 54.9
Investing activities     
Additions to property, plant and equipment(30.3) (13.5) (12.6)
Assets acquired—
 (1.4) (1.1)
Proceeds (payments) from the sale of discontinued operations1.5
 53.5
 (3.7)
Proceeds from the disposition of assets3.1
 1.4
 2.5
Cost of acquisition, net of cash acquired(397.5) —
 —
Net cash (used) provided by investing activities(423.2) 40.0
 (14.9)
Financing activities     
Proceeds from long-term debt1,270.0
 0.1
 1.5
Repayments of long-term debt(872.0) (63.0) (0.2)
Borrowings (repayments) of short-term debt, net1.2
 —
 (0.5)
Payments for debt issuance costs(38.5) —
 (0.8)
Net payments for exercise of stock options(0.6) (0.2) (0.1)
Net cash provided (used) by financing activities360.1
 (63.1) (0.1)
Effect of foreign exchange rate changes on cash(0.6) (0.7) (0.3)
Net (decrease) increase in cash and cash equivalents(71.2) 38.0
 39.6
Cash and cash equivalents     
Beginning of period121.2
 83.2
 43.6
End of period$50.0
 $121.2
 $83.2
Cash paid during the year for:     
Interest$94.9
 $71.9
 $70.6
Income taxes$28.8
 $27.7
 $13.9
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Non-cash transactions     
Common stock issued in conjunction with the Mead C&OP acquisition$602.3
 $—
 $—

See notes to consolidated financial statements.
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Consolidated Statements of Stockholders’ Equity (Deficit)
(in millions of dollars)Common
Stock		 Paid-in
Capital		 Accumulated
Other
Comprehensive
Income (Loss)		 Treasury
Stock		 Accumulated
Deficit		 Total
Balance at December 31, 2009$0.5
 $1,397.0
 $(107.0) $(1.4) $(1,406.3) $(117.2)
Net loss—
 —
 —
 —
 12.4
 12.4
Loss on derivative financial instruments, net of tax—
 —
 (0.5) —
 —
 (0.5)
Translation impact—
 —
 11.0
 —
 —
 11.0
Pension and post-retirement adjustment, net of tax—
 —
 10.4
 —
 —
 10.4
Stock-based compensation activity0.1
 4.2
 —
 (0.1) —
 4.2
Other—
 (0.1) —
 —
 —
 (0.1)
Balance at December 31, 20100.6
 1,401.1
 (86.1) (1.5) (1,393.9) (79.8)
Net income—
 —
 —
 —
 56.7
 56.7
Income on derivative financial instruments, net of tax—
 —
 3.7
 —
 —
 3.7
Translation impact—
 —
 (15.0) —
 —
 (15.0)
Pension and post-retirement adjustment, net of tax—
 —
 (33.6) —
 —
 (33.6)
Stock-based compensation activity—
 6.3
 —
 (0.2) —
 6.1
Balance at December 31, 20110.6
 1,407.4
 (131.0) (1.7) (1,337.2) (61.9)
Net income—
 —
 —
 —
 115.4
 115.4
Stock issuance - Mead C&OP acquisition0.5
 601.8
 —
 —
 —
 602.3
Loss on derivative financial instruments, net of tax—
 —
 (2.1) —
 —
 (2.1)
Translation impact—
 —
 (10.9) —
 —
 (10.9)
Pension and post-retirement adjustment, net of tax—
 —
 (12.1) —
 —
 (12.1)
Stock-based compensation activity—
 9.4
 —
 (0.8) —
 8.6
Other—
 (0.1) —
 —
 —
 (0.1)
Balance at December 31, 2012$1.1
 $2,018.5
 $(156.1) $(2.5) $(1,221.8) $639.2
Shares of Capital Stock
 Common
Stock		 Treasury
Stock		 Net
Shares
Shares at December 31, 200954,719,296
 (147,105) 54,572,191
Stock issuances - stock based compensation361,167
 (10,575) 350,592
Shares at December 31, 201055,080,463
 (157,680) 54,922,783
Stock issuances - stock based compensation579,290
 (26,338) 552,952
Shares at December 31, 201155,659,753
 (184,018) 55,475,735
Stock issuances - stock based compensation654,263
 (76,462) 577,801
Stock issuance - Mead C&OP acquisition57,089,808
 —
 57,089,808
Shares at December 31, 2012113,403,824
 (260,480) 113,143,344

See notes to consolidated financial statements.
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ACCO Brands Corporation and Subsidiaries
Notes to Consolidated Financial Statements

1. Basis of Presentation

The management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the consolidated financial statements and notes contained in this annual report.

The consolidated financial statements include the accounts of ACCO Brands Corporation and its domestic and international subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Our investments in companies that are between 20% and 50% owned are accounted for using the equity method of accounting. ACCO Brands has equity investments in the following joint ventures: Pelikan-Artline Pty Ltd (“Pelikan-Artline”) - 50% ownership; and Neschen GBC Graphic Films, LCC (“Neschen”) - 50% ownership. Our share of earnings from equity investments is included on the line entitled “Equity in earnings of joint ventures” in the consolidated statements of operations. Companies in which our investment exceeds 50% have been consolidated.

On May 1, 2012, we completed the merger of the Mead Consumer and Office Products Business (“Mead C&OP”) with a wholly-owned subsidiary of the Company (the "Merger"). Accordingly, the results of Mead C&OP are included in our consolidated financial statements from the date of the Merger, May 1, 2012. For further information on the Merger see Note 3, Acquisitions.

As part of the inclusion of Mead C&OP's financial results with those of the Company, certain information technology costs associated with the manufacturing, procurement and distribution operations have been reclassified from advertising, selling, general and administrative expenses (SG&A) to cost of products sold. This was done to enable the financial results of the two businesses to be consistent and to better reflect those costs associated with the cost of products sold. All prior periods have been adjusted to make the results comparable. For the years ended December 31, 2011 and 2010 reclassified costs totaled $15.5 million and $14.6 million, respectively. These historical reclassifications were not material and have had no effect on net income.

We sold our GBC Fordigraph Pty Ltd (“GBC Fordigraph”) business to The Neopost Group as of May 31, 2011. This business was part of the ACCO Brands International segment. GBC Fordigraph is reported as a discontinued operation on the condensed consolidated statement of operations for all periods presented in this annual report. The cash flows from discontinued operations have not been separately classified on the accompanying consolidated statements of cash flows. For further information on the Company’s discontinued operations see Note 18, Discontinued Operations.

2. Significant Accounting Policies

Nature of Business

ACCO Brands is primarily involved in the manufacturing, marketing and distribution of office products; such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards; school products; such as notebooks, folders, decorative calendars, and stationery products; calendar products; and accessories for laptop and desktop computers, smartphones and tablets - selling primarily to large resellers. Our subsidiaries operate principally in the United States, Northern Europe, Canada, Brazil, Australia and Mexico.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Cash and Cash Equivalents

Highly liquid investments with an original maturity of three months or less are included in cash and cash equivalents.

Allowances for Doubtful Accounts, Discounts and Returns

Trade receivables are recorded at the stated amount, less allowances for discounts, doubtful accounts and returns. The allowance for doubtful accounts represents estimated uncollectible receivables associated with potential customer defaults on

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Notes to Consolidated Financial Statements (Continued)


contractual obligations, usually due to customers’ potential insolvency. The allowances include amounts for certain customers where a risk of default has been specifically identified. In addition, the allowances includes a provision for customer defaults on a general formula basis when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers. The assessment of the likelihood of customer defaults is based on various factors, including the length of time the receivables are past due, historical experience and existing economic conditions.

The allowance for sales returns represents estimated uncollectible receivables associated with the potential return of products previously sold to customers, and is recorded at the time that the sales are recognized. The allowance includes a general provision for product returns based on historical trends. In addition, the allowance includes a reserve for currently authorized customer returns that are considered to be abnormal in comparison to the historical basis.

Inventories

Inventories are priced at the lower of cost (principally first-in, first-out with minor amounts at average) or market. A reserve is established to adjust the cost of inventory to its 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 specific identification of items, such as product discontinuance or engineering/material changes. These estimates could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from expectations.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. Depreciation is provided, principally on a straight-line basis, over the estimated useful lives of the assets. Gains or losses resulting from dispositions are included in operating income. Betterments and renewals, that improve and extend the life of an asset are capitalized; maintenance and repair costs are expensed. Purchased computer software is capitalized and amortized over the software’s useful life.

The following table shows estimated useful lives of property, plant and equipment:
Buildings40 to 50 years
Leasehold improvementsLesser of lease term or the life of the asset
Machinery, equipment and furniture3 to 10 years

Long-Lived Assets

We test long-lived assets for impairment whenever events or changes in circumstances indicate that the assets’ carrying amount is not recoverable from its undiscounted cash flows. When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventual disposition 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 of future cash flow, derived from the most recent business projections. If this comparison indicates that there is impairment, the amount of the impairment is typically calculated using discounted expected future cash flows. The discount rate applied to these cash flows is based on our weighted average cost of capital, computed by selecting market rates at the valuation dates for debt and equity that are reflective of the risks associated with an investment in our industry as estimated by using comparable publicly traded companies.

Intangible Assets

Intangible assets are comprised primarily of indefinite-lived intangible assets acquired and purchased intangible assets arising from the application of purchase accounting. Indefinite-lived intangible assets are not amortized, but are evaluated annually to determine whether the indefinite useful life is appropriate. Indefinite-lived intangibles are tested for impairment on an annual basis and written down when impaired. An interim impairment test is performed if an event occurs or conditions change that would more likely than not reduce the fair value below the carrying value.

In addition, purchased intangible assets other than goodwill are amortized over their useful lives unless their lives are determined to be indefinite. Certain of our trade names have been assigned an indefinite life as we currently anticipate that these trade names will contribute cash flows to ACCO Brands indefinitely.

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Notes to Consolidated Financial Statements (Continued)



We review indefinite-lived intangibles for impairment annually, normally in the second quarter, and whenever market or business events indicate there may be a potential adverse impact on a particular intangible. We consider the implications of both external factors (e.g., market growth, pricing, competition, and technology) and internal factors (e.g., product costs, margins, support expenses, and capital investment) and their potential impact on cash flows for each business in both the near and long term, as well as their impact on any identifiable intangible asset associated with the business. Based on recent business results, consideration of significant external and internal factors, and the resulting business projections, indefinite-lived intangible assets are reviewed to determine whether they are likely to remain indefinite-lived, or whether a finite life is more appropriate. In addition, based on events in 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.

As part of our review in the second quarter of 2012, $21.4 million of the value previously assigned to one of our legacy indefinite-lived trade names was changed to an amortizable intangible asset. The legacy indefinite-lived trade name was not impaired. The change was made in respect of decisions regarding our future use of the trade name. We commenced amortizing the trade name in June of 2012 on a prospective basis over a life of 30 years.

Goodwill

Goodwill has been recorded on our balance sheet and represents the excess of the cost of the acquisitions when compared to the fair value of the net assets acquired. We test goodwill for impairment at least annually, normally in the second quarter, and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment has been incurred. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. During 2012, we adopted ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits entities to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test included in U.S. GAAP. Entities are not required to calculate the fair value of a reporting unit unless they determine that it is more likely than not that the fair value is less than the carrying amount. We concluded it was not necessary to apply the traditional two-step fair value quantitative impairment test in ASC 350 to any of our reporting units in 2012. When applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from each reporting unit. The resulting fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors.

Given the current economic environment and the uncertainties regarding the impact on our business, there can be no assurance that our estimates and assumptions made for purposes of our qualitative impairment testing during 2012 will prove to be accurate predictions of the future. If our assumptions regarding forecasted revenue or margin growth rates of certain reporting units are not achieved, we may be required to record impairment charges in future periods, whether in connection with our next annual impairment testing in the second quarter of fiscal year 2013 or prior to that, if any such change constitutes a triggering event outside of the quarter from when the annual impairment test is performed. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

Employee Benefit Plans

We provide a range of benefits to our employees and retired employees, including pension, post-retirement, post-employment and health care benefits. We record annual amounts relating to these plans based on calculations, which include various actuarial assumptions, including discount rates, assumed rates of return on plan assets, compensation increases, turnover rates and health care cost trend rates. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. The effect of the modifications are generally recorded and amortized over future periods.

Income Taxes

Deferred tax liabilities or assets are established for temporary differences between financial and tax reporting bases and are subsequently adjusted to reflect changes in tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is recorded to reduce deferred tax assets to an 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 realize certain net operating losses and other deferred tax attributes.


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Notes to Consolidated Financial Statements (Continued)


The amount of income taxes that we pay is subject to ongoing audits by federal, state and foreign tax authorities. Our estimate of the potential outcome of any uncertain tax position is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. We believe that we have adequately provided for reasonably foreseeable outcomes related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are revised or resolved.

Revenue Recognition

We recognize revenue from product sales when earned, net of applicable provisions for discounts, returns and allowances. We consider revenue to be realized or realizable and earned when all of the following criteria are met: title and risk of loss have passed to the customer, persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. We also provide for our estimate of potential bad debt at the time of revenue recognition.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in the manufacturing, procurement and distribution process, allocation of certain information technology costs supporting those processes, inbound and outbound freight, shipping and handling costs, purchasing costs associated with materials and packaging used in the production processes.

Advertising, Selling, General and Administrative Expenses

Advertising, selling, general and administrative expenses include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related to assets outside the manufacturing and distribution processes and all other general and administrative expenses outside the manufacturing and distribution functions (e.g., finance, human resources, information technology, etc.).

Customer Program Costs

Customer program costs include, but are not limited to, sales rebates which are generally tied to achievement of certain sales volume levels, in-store promotional allowances, shared media and customer catalog allowances and other cooperative advertising arrangements, and freight allowance programs. We generally recognizes customer program costs as a deduction to gross sales at the time that the associated revenue is recognized. Certain customer incentives that do not directly relate to future revenues are expensed when initiated.

In addition, accrued customer program liabilities principally include, but are not limited to, sales volume rebates, promotional allowances, shared media and customer catalog allowances and other cooperative advertising arrangements, and freight allowances as discussed above.

Shipping and Handling

We reflect all amounts billed to customers for shipping and handling in net sales and the costs incurred from shipping and handling product (including costs to ship and move product from the seller’s place of business to the buyer’s place of business, as well as costs to store, move and prepare products for shipment) in cost of products sold.

Warranty Reserves

We offer our customers various warranty terms based on the type of product that is sold. Estimated future obligations related to products sold under these warranty terms are provided by charges to operations in the period in which the related revenue is recognized.

Advertising Costs

Advertising costs amounted to $125.7 million, $98.1 million and $92.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. These costs include, but are not limited to, cooperative advertising and promotional allowances as described in “Customer Program Costs” above, and are principally expensed as incurred.

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Notes to Consolidated Financial Statements (Continued)



Research and Development

Research and development expenses, which amounted to $20.8 million, $20.5 million and $24.0 million for the years ended December 31, 2012, 2011 and 2010, respectively, are classified as general and administrative expenses and are charged to expense as incurred.

Stock-Based Compensation

Our primary types of share-based compensation consist of stock options, stock-settled appreciation rights, restricted stock unit awards, and performance stock unit awards. Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. Where awards are made with non-substantive vesting periods (for example, where a portion of the award vests upon retirement eligibility), we estimate and recognize expense based on the period from the grant date to the date on which the employee is retirement eligible.

Foreign Currency Translation

Foreign currency balance sheet accounts are translated into U.S. dollars at the rates of exchange at the balance sheet date. Income and expenses are translated at the average rates of exchange in effect during the period. The related translation adjustments are made directly to a separate component of accumulated other comprehensive income (loss) in stockholders’ equity. Some transactions are made in currencies different from an entity’s functional currency. Gains and losses on these foreign currency transactions are included in income as they occur.

Derivative Financial Instruments

We recognize all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. If the derivative is designated as a fair value hedge and is effective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings in the same period. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income (loss) and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

Certain forecasted transactions, assets and liabilities are exposed to foreign currency risk. We continually monitor our foreign currency exposures in order to maximize the overall effectiveness of our foreign currency hedge positions. Principal currencies hedged include the U.S. dollar, Euro, Australian dollar, Canadian dollar and Pound sterling.

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (ASU) No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 was issued to simplify the testing of goodwill for impairment by allowing an optional qualitative factors test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test already included in ASC Topic 350. ASU No. 2011-08 is effective for annual and interim goodwill tests performed for fiscal years after December 15, 2011. We adopted the standard in 2012 and it did not have a significant impact on our consolidated financial statements or results of operations.

In July 2012, the FASB issued ASU No. 2012-02, Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a qualitative assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. It is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. We will adopt the standard, and it is expected to have no effect on the consolidated financial statements or results of operations.

In October 2012, the FASB issued ASU No. 2012-04, Technical Corrections and Improvements. The amendments in this ASU affect a wide range of topics, but are generally considered nonsubstantive in nature. It is effective for fiscal periods beginning

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Notes to Consolidated Financial Statements (Continued)


after December 15, 2012. We will adopt the standard, and it is expected to have no effect on the consolidated financial statements or results of operations.

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The revised standard is intended to improve the reporting of reclassifications out of accumulated other comprehensive income. It is effective for fiscal periods beginning after December 15, 2012. We will adopt the standard and its required disclosure.

3.Acquisitions
On May 1, 2012, the Company completed the Merger of Mead C&OP with a wholly-owned subsidiary of the Company. Mead C&OP is a leading manufacturer and marketer of school supplies, office products, and planning and organizing tools - including the Mead®, Five Star®, Trapper Keeper®, AT-A-GLANCE®, Cambridge®, Day Runner®, Hilroy, Tilibra and Grafons brands in the U.S., Canada and Brazil.
In the Merger, MeadWestvaco Corporation (“MWV”) shareholders received 57.1 million shares of the Company's common stock, or 50.5% of the combined company, valued at $602.3 million on the date of the Merger. After the transaction was completed we had 113.1 million common shares outstanding.
Under the terms of the Merger agreement, MWV established a new subsidiary (“Monaco SpinCo Inc.”) to which it conveyed Mead C&OP in return for a $460.0 million payment. The shares of Monaco SpinCo Inc. were then distributed to MWV's shareholders as a dividend. Immediately after the spin-off and distribution, a newly formed subsidiary of the Company merged with and into Monaco SpinCo Inc. and MWV shareholders effectively received in the stock dividend and subsequent conversion approximately one share of ACCO Brands common stock for every three shares of MWV they held. Fractional shares were paid in cash. The subsidiary company subsequently merged with Mead Products LLC (“Mead Products”), the surviving corporate entity, which is a wholly-owned subsidiary of ACCO Brands Corporation.
For accounting purposes, the Company is the acquiring enterprise. Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations” requires the use of the purchase method of accounting for business combinations. In applying the purchase method, it is necessary to identify both the accounting acquiree and the accounting acquiror. In a business combination effected through an exchange of equity interests, such as the Merger, the entity that issues the shares (ACCO in this case) is generally the acquiring entity. In identifying the acquiring entity in a combination effected through an exchange of equity interests, however, all pertinent facts and circumstances must be considered, including the following:

The relative voting interests in the combined entity after the combination. In this case stockholders of MWV, the sole stockholder of Monaco SpinCo Inc., received 50.5% of the equity ownership and associated voting rights in ACCO.
The composition of the governing body of the combined entity . In this case the composition of the Board of Directors of ACCO is composed of the members of the Board of Directors of ACCO and two members, who were selected by MWV and approved by the ACCO Board of Directors.
The composition of the senior management of the combined entity. In this case, the senior management of ACCO is composed of the members of senior management of ACCO immediately prior to consummation of the Merger, along with an executive of MEAD C&OP.

ACCO’s management determined that ACCO is the accounting acquiror in this combination based on the facts and circumstances outlined above. Accordingly, the results of Mead C&OP are included in the Company's consolidated financial statements from the date of the Merger, May 1, 2012.
The purchase price, net of working capital adjustments and cash acquired, was $999.8 million. The consideration given included 57.1 million shares of ACCO Brands common stock, which were issued to MWV shareholders with a fair value of $602.3 million and a $460.0 million dividend paid to MWV. The calculation of consideration given for Mead C&OP was finalized during the fourth quarter of 2012 and is described in the following table.


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Notes to Consolidated Financial Statements (Continued)


(in millions, except per share price)At May 1, 2012
Calculated consideration for Mead C&OP: 
Outstanding shares of ACCO Brands common stock(1)
56.0
Multiplier needed to calculate shares to be issued(2)
1.0202020202
Number of shares issued to MWV shareholders57.1
Closing price per share of ACCO Brands common stock(3)
$10.55
Value of common shares issued$602.3
Plus: 
Dividend paid to MWV460.0
Less: 
Working capital adjustment(4)
(30.5)
Consideration for Mead C&OP$1,031.8

(1) Represents the number of shares of the Company's common stock as of May 1, 2012.
(2) Represents MWV shareholders' negotiated ownership percentage in ACCO Brands of 50.5% divided by the 49.5% that was owned by ACCO Brands shareholders upon completion of the Merger.
(3) Represents the closing price per share of the Company's stock as of April 30, 2012.
(4) Represents the difference between the target net working capital and the closing net working capital as of April 30, 2012.
The following table presents the preliminary allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of acquisition.

(in millions of dollars)At May 1, 2012
Calculation of Goodwill: 
Consideration given for Mead C&OP$1,031.8
Cash acquired(32.0)
 Net purchase price$999.8
Plus fair value of liabilities assumed: 
Accounts payable and accrued liabilities103.8
Current and non-current deferred tax liabilities207.8
Other non-current liabilities72.8
  Fair value of liabilities assumed$384.4
  
Less fair value of assets acquired: 
Accounts receivable73.3
Inventory143.5
Property, plant and equipment136.6
Identifiable intangibles543.2
Other assets24.2
  Fair value of assets acquired$920.8
  
Goodwill$463.4

We are continuing our review of our fair value estimate of assets acquired and liabilities assumed during the measurement period, which will conclude as 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 not available. This measurement period will not exceed one year from

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the acquisition date. The excess of the purchase price over the preliminary fair value of net assets acquired has been allocated to goodwill in the amount of $463.4 million.

The final determination of the fair values and resulting goodwill may differ significantly from what is reflected above. Our fair value estimate of assets acquired and liabilities assumed is pending review and completion of several elements. The primary areas that are not yet finalized relate to on-going legal disputes, income and non-income related taxes and the fair value of contingent assets or liabilities. Accordingly, there could be material adjustments to our consolidated financial statements.

In connection with our May 1, 2012 acquisition of Mead C&OP, we assumed all of the tax liabilities for the acquired foreign operations. In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the goodwill recorded in connection with the 2004 acquisition of Tilibra. This assessment denied the deductibility of that goodwill from Tilibra's taxable income for the year 2007. The assessment seeks a payment of approximately R$26.9 million ($13.2 million based on current exchange rates) of tax, penalties and interest.

In January of 2013, Tilibra filed a protest disputing the tax assessment at the first administrative level of appeal within the FRD. We believe that we have meritorious defenses and intend to vigorously contest this matter, however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge the FRD's tax assessment, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take many years. In addition, Tilibra's 2008-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years, which could increase the Company's exposure to a total of approximately $44.5 million (based on current exchange rates), including interest and penalties which have accumulated to date. If the FRD's initial position is ultimately sustained, the amount assessed would adversely affect our reported cash flow in the year of settlement.

Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers the outcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in the amount of $44.5 million in consideration of this matter, of which $43.3 million was recorded as an adjustment to the allocation of the purchase price for the fair value of non-current liabilities assumed as of the acquisition date and was recorded as an increase to goodwill. In addition, the Company will continue to accrue interest related to this matter until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During 2012, the Company accrued $1.2 million of additional interest that has accumulated since the date of the acquisition as a charge to current income tax expense.

Acquisition-related costs of $14.5 million that were incurred during the twelve months ended December 31, 2012, and $5.6 million that were expensed during 2011, were classified as Selling, General and Administrative expenses.
Had the acquisition occurred on January 1, 2011, unaudited pro forma consolidated results for the twelve month periods ending December 31, 2012 and 2011 would have been as follows:
 Twelve Months Ended December 31,
(in millions of dollar, except per share data)2012 2011
Net sales$1,895.0
 $2,064.0
Income from continuing operations60.4
 116.7
Income from continuing operations per common share (diluted)$0.53
 $1.03
The pro forma amounts above are not necessarily indicative of the results that would have occurred if the acquisition had been completed on January 1, 2011. The pro forma amounts are based on the historical results of operations, and are adjusted for depreciation and amortization of finite-lived intangibles and property, plant and equipment, and other charges related to acquisition accounting. The pro forma results of operations for the twelve months ended December 31, 2011 have also been adjusted to include certain transaction and financing related costs in the first year of combined reporting. These 2011 adjustments include: amortization of the purchase accounting step-up in inventory cost of $13.3 million, transaction costs related to the Merger of $20.1 million and expenses of $88.0 million related to the Company's refinancing completed on May 1, 2012. Also included is $101.9 million for the release of the U.S. tax valuation allowance as if the Company began providing a tax benefit on U.S. losses beginning January 1, 2011.

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Notes to Consolidated Financial Statements (Continued)



4. Long-term Debt and Short-term Borrowings
Notes payable and long-term debt consisted of the following as of December 31, 2012 and 2011:
(in millions of dollars)2012 2011 
U.S. Dollar Senior Secured Term Loan B, due May 2019 (floating interest rate of 4.25% at December 31, 2012)$326.8
 $—
 
U.S. Dollar Senior Secured Term Loan A, due May 2017 (floating interest rate of 3.32% at December 31, 2012)220.8
 —
 
Canadian Dollar Senior Secured Term Loan A, due May 2017 (floating interest rate of 4.26% at December 31, 2012)21.8
 —
 
Senior Unsecured Notes, due May 2020 (fixed interest rate of 6.75%)500.0
 —
 
Senior Secured Notes, due March 2015, net of discount (fixed interest rate of 10.625%)—
 420.9
(1) 
U.S. Dollar Senior Subordinated Notes, due August 2015 (fixed interest rate of 7.625%)—
 246.3
 
Other borrowings2.7
 1.8
 
Total debt1,072.1
 669.0
 
Less: current portion(1.3) (0.2) 
Total long-term debt$1,070.8
 $668.8
 
(1)
Net of unamortized original issue discount of $4.2 million as of December 31, 2011.
As of December 31, 2012, there were no borrowings under the $250 million senior secured revolving credit facility. The amount available for borrowings was $238.5 million (allowing for $11.5 million of letters of credit outstanding on that date).
On May 1, 2012 we entered into a refinancing in conjunction with the Merger. The refinancing reduced our effective interest rate while increasing our borrowing capacity and extending the maturities of our credit facilities.
The new credit facilities and notes are as follows:
$250 million of U.S. Dollar Senior Secured Revolving Credit Facilities due May 2017
$285 million of U.S. Dollar Senior Secured Term Loan A due May 2017
C$34.5 million of Canadian Dollar Senior Secured Term Loan A due May 2017
$450 million of U.S. Dollar Senior Secured Term Loan B due May 2019
$500 million of U.S. Dollar Senior Unsecured Notes due May 2020
Interest rates under the senior secured term loans are based on the London Interbank Offered Rate ("LIBOR"). The range of borrowing costs under the pricing grid is LIBOR plus 3.00% for the Term A loans and LIBOR plus 3.25% with a LIBOR rate floor of 1.00% for the Term B loans. The senior secured credit facilities had a weighted average interest rate of 3.89% as of December 31, 2012 and the senior unsecured notes have an interest rate of 6.75%.
In addition on May 1, 2012 we repurchased or discharged all of our outstanding senior secured notes of $425.1 million, due March 2015, for $464.7 million including a premium and related fees of $39.6 million. On May 4, 2012 we redeemed all of our outstanding senior subordinated notes of $246.3 million, due August 2015, for $252.6 million including a premium of $6.3 million. We also terminated our senior secured asset-based revolving credit facility of $175.0 million, which was undrawn as of May 1, 2012. Associated with these transactions were $15.5 million in write-offs for original issue discount and debt origination costs.
In conjunction with our refinancing, we paid $38.5 million in additional bank, legal and advisory fees associated with our new credit facilities. These fees were capitalized and are being amortized over the life of the credit facilities and senior unsecured notes.
During 2012, we voluntarily repaid $64.2 million of our U.S. Dollar Senior Secured Term Loan A, $12.9 million of our Canadian Dollar Senior Secured Term Loan A and $123.2 million of our U.S. Dollar Senior Secured Term Loan B.
During 2011, we repurchased $34.9 million of our Senior Secured Notes and $25.0 million of our Senior Subordinated Notes. We paid a $3.0 million premium on the repurchase of our Senior Secured Notes, which was included in Other expense, net in the Consolidated Statements of Operations

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Notes to Consolidated Financial Statements (Continued)


Loan Covenants
We must meet certain restrictive financial covenants as defined under the senior secured credit facilities. The covenants become more restrictive over time and require us to maintain certain ratios related to consolidated leverage and consolidated interest coverage. We are also subject to certain customary restrictive covenants under the senior unsecured notes.
The table below sets forth the financial covenant ratio levels under the senior secured credit facilities:
Maximum Consolidated Leverage Ratio(1)
Minimum - Interest Coverage Ratio(2)
May 1, 2012 to December 31, 20124.50:1.003.00:1.00
January 1, 2013 to December 31, 20134.25:1.003.00:1.00
January 1, 2014 to December 31, 20144.00:1.003.25:1.00
January 1, 2015 to December 31, 20153.75:1.003.25:1.00
January 1, 2016 and thereafter3.50:1.003.50:1.00

(1)The leverage ratio is computed by dividing our net indebtedness by the cumulative four-quarter-trailing EBITDA, which excludes transaction, restructuring, integration and other charges up to certain limits as well as other adjustments as defined under the senior secured credit facilities.
(2)The interest coverage ratio for any period is the cumulative four-quarter-trailing EBITDA, for the Company, for such period, adjusted as provided in (1), divided by cash interest expense for the Company for such period and other adjustments, all as defined under the senior secured credit facilities.
The senior secured credit facilities contain customary events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults and cross-accelerations, certain bankruptcy or insolvency events, certain ERISA-related events, changes in control or ownership, and invalidity of any loan document.

The indenture governing the senior unsecured notes does not contain financial performance covenants. However, that indenture does contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to:

incur additional indebtedness;
pay dividends on our capital stock or repurchase our capital stock;
enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to the Company;
enter into certain transactions with affiliates;
make investments;
create liens; and
sell certain assets or merge with or into other companies.

Certain of these covenants will be subject to suspension when and if the notes are rated at least “BBB–” by Standard & Poor’s or at least “Baa3” by Moody’s. Each of the covenants is subject to a number of important exceptions and qualifications.
Guarantees and Security

Obligations under the senior secured credit facilities are irrevocably and unconditionally guaranteed, jointly and severally, by certain of our existing and future domestic subsidiaries. In the case of the obligations of ACCO Brands Canada its senior secured term loan A is guaranteed by its future subsidiaries and by the Company's other existing and future Canadian subsidiaries.

The senior unsecured notes are irrevocably and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and future domestic subsidiaries other than certain excluded subsidiaries. The senior unsecured notes and the related guarantees will rank equally in right of payment with all of the existing and future senior debt of the Company, Mead Products and the guarantors, senior in right of payment to all of the existing and future subordinated debt of the Company, Mead Products and the guarantors, and effectively subordinated to all of the existing and future secured indebtedness of the Company, Mead Products and the guarantors to the extent of the value of the assets securing such indebtedness. The senior unsecured notes and the guarantees are and structurally subordinated to all existing and future liabilities, including trade payables, of each of the Company's and Mead Products’ subsidiaries that do not guarantee the notes.

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Compliance with Loan Covenants
As of and for the year ended December 31, 2012, we were in compliance with all applicable loan covenants.

5. Pension and Other Retiree Benefits

We have a number of pension plans, principally in the U.K. and the U.S. The plans provide for payment of retirement benefits, mainly commencing between the ages of 60 and 65, and also for payment of certain disability and severance benefits. After meeting certain qualifications, an employee acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length of service and earnings. Cash contributions to the plans are made as necessary to ensure legal funding requirements are satisfied.

The Company provides post-retirement health care and life insurance benefits to certain employees and retirees in the U.S. and certain employee groups outside of the U.S. These benefit plans for ACCO Brands legacy employees have been frozen to new participants. Many employees and retirees outside of the U.S. are covered by government health care programs.

On January 20, 2009, the Company’s Board of Directors approved plan amendments to temporarily freeze our ACCO Brands legacy U.S. pension and non-qualified supplemental retirement plans effective March 7, 2009. No additional benefits will accrue under these plans after that date until further action by the Board of DirectorsDirectors. On September 30, 2012 our U.K. pension plan was frozen.
The Merger with Mead C&OP has added additional pension and post-retirement plans in the U.S. and Canada. In the U.S. we have added a pension plan for certain bargained hourly employees of Mead C&OP. In Canada we have assumed the Mead C&OP pension and post-retirement plans for its Canadian employees.


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Notes to Consolidated Financial Statements (Continued)


The following table sets forth our defined benefit pension plans and other post-retirement benefit plans funded status and the amounts recognized in our consolidated balance sheets:
 Pension Benefits Post-retirement
 U.S. International  
(in millions of dollars)2012 2011 2012 2011 2012 2011
Change in projected benefit obligation (PBO)         
Projected benefit obligation at beginning of year$171.9
 $162.5
 $284.6
 $268.3
 $13.4
 $13.3
Service cost1.2
 —
 2.1
 2.1
 0.2
 0.2
Interest cost8.4
 8.6
 14.3
 14.7
 0.6
 0.6
Actuarial loss19.9
 9.5
 30.7
 14.2
 0.1
 —
Participants’ contributions—
 —
 0.8
 0.9
 0.2
 0.2
Benefits paid(12.2) (8.7) (13.2) (13.0) (0.8) (0.9)
Curtailment gain—
 —
 —
 (0.6) —
 —
Foreign exchange rate changes—
 —
 13.6
 (2.0) 0.2
 —
Other items0.7
 —
 (0.4) —
 —
 —
Mead C&OP acquisition1.8
 —
 28.5
 —
 2.1
 —
Projected benefit obligation at end of year191.7
 171.9
 361.0
 284.6
 16.0
 13.4
Change in plan assets           
Fair value of plan assets at beginning of year119.1
 124.8
 242.7
 242.3
 —
 —
Actual return on plan assets19.8
 (3.2) 35.5
 7.0
 —
 —
Employer contributions8.7
 6.2
 9.9
 6.6
 0.6
 0.7
Participants’ contributions—
 —
 0.8
 0.9
 0.2
 0.2
Benefits paid(12.2) (8.7) (13.2) (13.0) (0.8) (0.9)
Foreign exchange rate changes—
 —
 11.8
 (1.1) —
 —
Mead C&OP acquisition—
 —
 24.4
 —
 —
 —
Fair value of plan assets at end of year135.4
 119.1
 311.9
 242.7
 —
 —
Funded status (Fair value of plan assets less PBO)$(56.3) $(52.8) $(49.1) $(41.9) $(16.0) $(13.4)
Amounts recognized in the consolidated balance sheet consist of:           
Other current liabilities$—
 $0.2
 $0.5
 $0.6
 $1.1
 $1.2
Accrued benefit liability(1)
56.3
 52.6
 48.6
 41.3
 14.9
 12.2
Components of accumulated other comprehensive income, net of tax:           
Unrecognized prior service cost0.4
 —
 (0.2) 0.4
 —
 —
Unrecognized actuarial loss (gain)57.8
 56.1
 74.2
 62.2
 (1.1) (2.6)
(1)
Pension and post-retirement liabilities of $119.8 million as of December 31, 2012, increased from $106.1 million as of December 31, 2011, due to lower discount rates compared to prior year assumptions, partially offset by the over performance of the assets of the pension plans compared to the expected long-term rate of return of the assets of the pension plans.



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Notes to Consolidated Financial Statements (Continued)


Of the amounts included within accumulated other comprehensive income (loss), we expect to recognize the following pre-tax amounts as components of net periodic benefit cost during 2013:
 Pension Benefits Post-retirement
(in millions of dollars)U.S. International 
Prior service cost$0.1
 $—
 $—
Actuarial loss (gain)9.6
 2.5
 (0.7)
 $9.7
 $2.5
 $(0.7)
All of our plans have projected benefit obligations in excess of plan assets.

The accumulated benefit obligation for all defined benefit pension plans was $536.2 million and $443.6 million at December 31, 2012 and 2011, respectively.

The following table sets out information for pension plans with an accumulated benefit obligation in excess of plan assets:
 U.S. International
(in millions of dollars)2012 2011 2012 2011
Projected benefit obligation$191.7
 $171.9
 $349.6
 $272.8
Accumulated benefit obligation189.8
 171.9
 335.3
 260.2
Fair value of plan assets135.4
 119.1
 300.6
 230.9

The components of net periodic benefit cost for pension and post-retirement plans for the years ended December 31, 2012, 2011, and 2010, respectively, were as follows:
 Pension Benefits   Post-retirement
 U.S. International      
(in millions of dollars)2012 2011 2010 2012 2011 2010 2012 2011 2010
Service cost$1.2
 $—
 $—
 $2.1
 $2.1
 $2.3
 $0.2
 $0.2
 $0.2
Interest cost8.4
 8.6
 8.9
 14.3
 14.7
 14.6
 0.6
 0.6
 0.7
Expected return on plan assets(10.4) (10.7) (10.4) (16.2) (16.0) (15.1) —
 —
 —
Amortization of prior service cost—
 —
 —
 0.4
 0.2
 0.1
 —
 —
 —
Amortization of net loss (gain)6.2
 4.3
 3.0
 2.2
 3.9
 4.8
 (1.6) (0.6) (0.9)
Curtailment—
 —
 —
 —
 (0.2) —
 —
 —
 —
Settlement loss0.7
 —
 —
 —
 —
 —
 —
 —
 —
Net periodic benefit cost$6.1
 $2.2
 $1.5
 $2.8
 $4.7
 $6.7
 $(0.8) $0.2
 $—

During the second quarter of 2012, due to of the Merger, we settled the Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (the "SRP"), which resulted in a settlement charge of $0.7 million. The SRP provided that the accrued vested benefit of each participant be paid in an actuarial equivalent lump sum upon the occurrence of a change of control (as defined in the SRP).

During the first quarter of 2012, we changed the amortization of our net loss included in accumulated other comprehensive income (loss) for our U.K. pension plan from the average remaining service period of active employees expected to receive benefits under the plan to the average remaining life expectancy of the inactive participants. This change was the result of decreases in plan participation resulting in substantially all of the participants now being inactive. This change reduced the net periodic benefit cost by approximately $3.3 million for the year ended December 31, 2012.

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Notes to Consolidated Financial Statements (Continued)


Other changes in plan assets and benefit obligations that were recognized in other comprehensive income (loss) during the years ended December 31, 2012, 2011, and 2010 were as follows:
 Pension Benefits Post-retirement
 U.S. International      
(in millions of dollars)2012 2011 2010 2012 2011 2010 2012 2011 2010
Current year actuarial loss (gain)$9.6
 $23.5
 $(0.2) $11.4
 $22.8
 $(4.2) $0.1
 $—
 $—
Amortization of actuarial (loss) gain(6.2) (4.3) (3.0) (2.2) (3.9) (4.8) 1.6
 0.6
 0.9
Current year prior service cost (income)0.8
 —
 —
 (0.3) —
 —
 —
 —
 —
Amortization of prior service cost—
 —
 —
 (0.4) (0.2) (0.1) —
 —
 —
Exchange rate adjustment—
 —
 —
 4.1
 (1.0) (3.2) (0.1) —
 0.1
Total recognized in other comprehensive income (loss)$4.2
 $19.2
 $(3.2) $12.6
 $17.7
 $(12.3) $1.6
 $0.6
 $1.0
Total recognized in net periodic benefit cost and other comprehensive income (loss)$10.3
 $21.4
 $(1.7) $15.4
 $22.4
 $(5.6) $0.8
 $0.8
 $1.0
Assumptions
Weighted average assumptions used to determine benefit obligations for the years ended December 31, 2012, 2011, and 2010 were as follows:
 Pension Benefits Post-retirement
 U.S. International  
 2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate4.2% 5.0% 5.5% 4.3% 4.7% 5.4% 4.0% 4.5% 5.0%
Rate of compensation increaseN/A
 N/A
 N/A
 4.0% 3.6% 4.4% —
 —
 —
Weighted average assumptions used to determine net cost for the years ended December 31, 2012, 2011, and 2010 were as follows:
 Pension Benefits Post-retirement
 U.S. International  
 2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate5.0% 5.5% 5.9% 4.7% 5.4% 5.8% 4.5% 5.0% 5.9%
Expected long-term rate of return8.2% 8.2% 8.2% 6.2% 6.4% 6.8% —
 —
 —
Rate of compensation increaseN/A
 N/A
 N/A
 3.6% 4.4% 4.5% —
 —
 —

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Notes to Consolidated Financial Statements (Continued)


Weighted average health care cost trend rates used to determine post-retirement benefit obligations and net cost as of December 31, 2012, 2011, and 2010 were as follows:
 Post-retirement Benefits
 2012 2011 2010
Health 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 rate2020
 2020
 2020
Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
 1-Percentage- 1-Percentage-
(in millions of dollars)Point Increase Point Decrease
Increase (decrease) on total of service and interest cost$0.1
 $(0.2)
Increase (decrease) on post-retirement benefit obligation1.6
 (1.4)
Plan Assets
The investment strategy for the Company is to optimize investment returns through a diversified portfolio of investments, taking into consideration underlying plan liabilities and asset volatility. Each plan has a different target asset allocation, which is reviewed periodically and is based on the underlying liability structure. The target asset allocation for our U.S. plan is 65% in equity securities, 20% in fixed income securities and 15% in alternative assets. The target 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, 2012 and 2011 were as follows:
  2012 2011
  U.S. International U.S. International
Asset category       
Equity securities64% 47% 63% 48%
Fixed income30
 39
 32
 42
Real estate—
 4
 —
 4
Other(1)
 6
 10
 5
 6
Total100% 100% 100% 100%
(1)Insurance contracts, multi-strategy hedge funds and cash and cash equivalents for certain of our plans.

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Notes to Consolidated Financial Statements (Continued)



U.S. Pension Plan Assets

Fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2012 were as follows:
(in millions of dollars)Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Fair Value
as of
December 31,
2012
Common stocks$8.1
 $—
 $—
 $8.1
Mutual funds79.1
 —
 —
 79.1
Common collective trust funds—
 8.0
 —
 8.0
Government debt securities—
 4.4
 —
 4.4
Corporate debt securities—
 11.2
 —
 11.2
Asset-backed securities—
 8.6
 —
 8.6
Multi-strategy hedge funds—
 6.2
 —
 6.2
Government mortgage-backed securities—
 4.2
 —
 4.2
Collateralized mortgage obligations, mortgage backed securities, and other—
 5.6
 —
 5.6
Total$87.2
 $48.2
 $—
 $135.4
Fair value measurements of our U.S. pension plan assets by asset category as of December 31, 2011 were as follows:
(in millions of dollars)Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Fair Value
as of
December 31,
2011
Common stocks$6.9
 $—
 $—
 $6.9
Mutual funds68.3
 —
 —
 68.3
Government debt securities—
 10.9
 —
 10.9
Corporate debt securities—
 8.0
 —
 8.0
Asset-backed securities—
 7.8
 —
 7.8
Multi-strategy hedge funds—
 5.4
 —
 5.4
Government mortgage-backed securities—
 4.0
 —
 4.0
Common collective trust funds, collateralized mortgage obligations, mortgage backed securities, and other fixed income securities—
 7.8
 —
 7.8
Total$75.2
 $43.9
 $—
 $119.1

Mutual funds and common stocks: The fair values of mutual fund and common stock fund investments are determined by obtaining quoted prices on nationally recognized securities exchanges (level 1 inputs).

Debt securities: Fixed income securities, such as corporate and government bonds, collateralized mortgage obligations, asset-backed securities, and other debt securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, including market interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable (level 2 inputs).

Multi-strategy hedge funds: The fair values of participation units held in multi-strategy hedge funds are based on their net asset values, as reported by the managers of the funds and are based on the daily closing prices of the underlying investments (level 2 inputs).


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Common collective trusts: The fair values of participation units held in common collective trusts are based on their net asset values, as reported by the managers 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 financial statement date (level 2 inputs).

International Pension Plans Assets

Fair value measurements of our international pension plans assets by asset category as of December 31, 2012 were as follows:
(in millions of dollars)Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Fair Value
as of
December 31,
2012
Cash and cash equivalents$4.3
 $—
 $—
 $4.3
Equity securities130.5
 15.8
 —
 146.3
Corporate debt securities—
 103.6
 —
 103.6
Multi-strategy hedge funds—
 15.0
 —
 15.0
Insurance contracts—
 12.2
 —
 12.2
Other debt securities—
 10.3
 —
 10.3
Real estate—
 9.9
 1.0
 10.9
Government debt securities—
 9.3
 —
 9.3
Total$134.8
 $176.1
 $1.0
 $311.9
Fair value measurements of our international pension plans assets by asset category as of December 31, 2011 were as follows:
(in millions of dollars)Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		 Significant
Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Fair Value
as of
December 31,
2011
Cash and cash equivalents$3.2
 $—
 $—
 $3.2
Equity securities116.6
 —
 —
 116.6
Corporate debt securities—
 82.6
 —
 82.6
Real estate—
 10.0
 —
 10.0
Insurance contracts—
 9.7
 —
 9.7
Other debt securities—
 9.7
 —
 9.7
Government debt securities—
 9.0
 —
 9.0
Multi-strategy hedge funds—
 1.9
 —
 1.9
Total$119.8
 $122.9
 $—
 $242.7

Equity securities: The fair values of equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (level 1 inputs).

Debt securities: Fixed income securities, such as corporate and government bonds and other debt securities consisting of index linked securities. These debt securities are valued using quotes from independent pricing vendors based on recent trading activity and other relevant information, including market interest rate curves, referenced credit spreads, and estimated prepayment rates, where applicable (level 2 inputs).

Real estate: Real estate, exclusive of the Canadian plan, consists of managed real estate investment trust securities (level 2 inputs). Real estate in the Canadian plan was acquired in the Merger of Mead C&OP and the properties are appraised by a third party on an annual basis (level 3 inputs). There have been no substantial purchases or gain/losses since the Merger.


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Insurance contracts: Valued at contributions made, plus earnings, less participant withdrawals and administrative expenses, which approximate fair value (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 by the managers of the funds and are based on the daily closing prices of the underlying investments (level 2 inputs).

Cash Contributions

We contributed $19.2 million to our defined benefit plans in 2012, including $3.3 million for the settlement of the SRP.

We expect to contribute $14.3 million to our defined benefit plans in 2013.
The following table presents estimated future benefit payments for the next ten fiscal years:
 Pension Post-retirement
(in millions of dollars)Benefits Benefits
2013$21.5
 $1.1
2014$22.3
 $1.2
2015$22.7
 $1.1
2016$23.3
 $1.1
2017$24.0
 $1.1
Years 2018 — 2022$125.8
 $4.9

We also sponsor a number of defined contribution plans. Contributions are determined under various formulas. Costs related to such plans amounted to $8.0 million, $6.6 million and $6.1 million for the years ended December 31, 2012, 2011, and 2010, respectively. The $1.4 million increase in defined contribution plan costs in 2012 compared to 2011 was due to the Merger with Mead C&OP.

6. Stock-Based Compensation

We have two share-based compensation plans under which a total of 15,665,000 shares may be issued under awards to key employees and non-employee directors.

The following table summarizes the impact of all stock-based compensation expense on our consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010.
(in millions of dollars)2012 2011 2010
Advertising, selling, general and administrative expense$9.2
 $6.3
 $4.2
Income from continuing operations before income tax9.2
 6.3
 4.2
Income tax expense3.3
 0.2
 0.2
Net income$5.9
 $6.1
 $4.0

There was no capitalization of stock based compensation expense.


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Stock-based compensation expense by award type (including stock options, stock-settled appreciation rights (“SSARs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”)) for the years ended December 31, 2012, 2011 and 2010 are as follows:
(in millions of dollars)2012 2011 2010
Stock option compensation expense$1.8
 $0.6
 $0.4
SSAR compensation expense0.1
 0.2
 0.2
RSU compensation expense3.9
 3.0
 2.8
PSU compensation expense3.4
 2.5
 0.8
Total stock-based compensation$9.2
 $6.3
 $4.2

Stock Option and SSAR Awards

The exercise price of each stock option and SSAR equals or exceeds the fair market price of our stock on the date of grant. Options/SSARs can generally be exercised over a maximum term of up to seven years. Stock options/SSARs outstanding as of December 31, 2012 generally vest ratably over three years. There were no SSAR or option awards issued during 2010. During 2011 and 2012, we granted only option awards. The fair value of each option/SSAR grant is estimated on the date of grant using the Black-Scholes option-pricing model using the weighted average assumptions as outlined in the following table:
 Year Ended December 31,
 2012 2011
Weighted average expected lives4.5
years 4.5
years
Weighted average risk-free interest rate0.75
% 1.65
%
Weighted average expected volatility55.7
% 50.7
%
Expected dividend yield0.0
% 0.0
%
Weighted average grant date fair value$5.41
  $3.85
 

We have utilized historical volatility for a pool of peer companies for a period of time that is comparable to the expected life of the option/SSAR to determine volatility assumptions for stock-based compensation prior to 2012. Beginning with 2012 volatility is calculated using a combination of peer companies (50%) and ACCO Brands' historic volatility (50%). The weighted average expected option/SSAR term reflects the application of the simplified method, which defines the life as the average of the contractual term of the option/SSAR and the weighted average vesting period for all option tranches. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Forfeitures are estimated at the time of grant in order to calculate the amount of share-based payment awards ultimately expected to vest. The forfeiture rate is based on historical rates.

A summary of the changes in stock options/SSARs outstanding under the Company’s stock compensation plans during the year ended December 31, 2012 is presented below:
 Number
Outstanding		 Weighted
Average
Exercise
Price		 Weighted  Average
Remaining
Contractual Term		 Aggregate
Intrinsic
Value
Outstanding at December 31, 20116,108,456
 $12.23
    
Granted698,526
 $11.83
    
Exercised(297,446) $1.58
    
Lapsed(1,630,983) $20.28
    
Outstanding at December 31, 20124,878,553
 $10.12
 3.2 years $9.7 million
Exercisable shares at December 31, 20123,796,756
 $9.95
 2.4 years $9.7 million
Options/SSARs vested or expected to vest4,814,335
 $10.12
 3.1 years $9.7 million

We received cash of $0.2 million and $0.1 million from the exercise of stock options for the years ended December 31, 2012 and 2011, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2012 and 2011,

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Notes to Consolidated Financial Statements (Continued)


were not significant. No stock options were exercised in 2010. The aggregate intrinsic value of SSARs exercised during the years ended December 31, 2012, 2011 and 2010 totaled $2.5 million, $3.0 million and $2.1 million, respectively. The fair value of options and SSARs vested during the years ended December 31, 2012, 2011 and 2010 was $1.0 million, $0.6 million and $1.1 million, respectively. As of December 31, 2012, we had unrecognized compensation expense related to stock options of $3.7 million, which will be recognized over a weighted-average period of 2.1 years.

Stock Unit Awards

The ACCO Brands Corporation 2011 Amended and Restated ACCO Brands Corporation Incentive Plan provides for stock based awards in the form of RSUs, PSUs, incentive and non-qualified stock options, and stock appreciation rights, any of which may be granted alone or with other types of awards and dividend equivalents. RSUs vest over a pre-determined period of time, generally three to four years from the date of grant. Stock-based compensation expense for the years ended December 31, 2012, 2011 and 2010 includes $0.9 million, $0.6 million and $0.7 million, respectively, of expense related to RSUs granted to non-employee directors, which became fully vested on the grant date. PSUs also vest over a pre-determined period of time, minimally three years, but are further subject to the achievement of certain business performance criteria in future periods. Based upon the level of achieved performance, the number of shares actually awarded can vary from 0% to 150% of the original grant.

There were 1,428,592 RSUs outstanding at December 31, 2012. All outstanding RSUs as of December 31, 2012 vest within four years of their date of grant. Also outstanding at December 31, 2012 were 1,571,005 PSUs. All outstanding PSUs as of December 31, 2012 vest at the end of their respective performance periods subject to achievement of the performance targets associated with such awards. Upon vesting, all of the remaining PSU awards will be converted into the right to receive one share of common stock of the Company for each unit that vests. The cost of these awards is determined using the fair value of the shares on the date of grant, and compensation expense is generally recognized over the period during which the employees provide the requisite service to the Company. We generally recognize compensation expense for our PSU awards ratably over the performance period based on management’s judgment of the likelihood that performance measures will be attained. We generally recognize compensation expense for our RSU awards ratably over the service period.

A summary of the changes in the stock unit awards outstanding under our equity compensation plans during 2012 is presented below:
 Stock
Units		 Weighted
Average
Grant
Date Fair
Value
Outstanding at December 31, 20112,391,360
 $8.80
Granted1,536,779
 $11.54
Vested(453,831) $11.11
Forfeited and cancelled(474,711) $9.25
Outstanding at December 31, 20122,999,597
 $9.78

The weighted-average grant date fair value of our stock unit awards was $11.54, $8.73, and $7.06 for the years ended December 31, 2012, 2011 and 2010, respectively. The fair value of stock unit awards that vested during the years ended December 31, 2012, 2011 and 2010 was $5.0 million, $2.5 million and $1.3 million, respectively. As of December 31, 2012, the Company had unrecognized compensation expense related to RSUs and PSUs of $7.2 million and $7.8 million, respectively. The unrecognized compensation expense related to RSUs and PSUs will be recognized over a weighted-average period of 2.3 years and 1.8 years, respectively.

We will satisfy the requirement for delivering the common shares for stock-based plans by issuing new shares.


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7. Inventories

Inventories are stated at the lower of cost or market value. The components of inventories were as follows:
 December 31,
(in millions of dollars)2012 2011
Raw materials$40.1
 $23.9
Work in process5.4
 3.6
Finished goods220.0
 170.2
Total inventories$265.5
 $197.7

8. Property, Plant and Equipment

Property, plant and equipment, net consisted of:
 December 31,
(in millions of dollars)2012 2011
Land and improvements$27.5
 $13.6
Buildings and improvements to leaseholds151.3
 115.5
Machinery and equipment379.2
 321.7
Construction in progress33.4
 12.5
 591.4
 463.3
Less: accumulated depreciation(317.8) (316.1)
Property, plant and equipment, net(1)
$273.6
 $147.2
(1)
Net property, plant and equipment as of December 31, 2012 and 2011 contained $26.9 million and $24.9 million of computer software assets, which are classified within machinery and equipment and construction in progress. Amortization of software costs was $8.4 million, $9.5 million and $10.1 million for the years ended December 31, 2012, 2011 and 2010, respectively.

9. Goodwill and Identifiable Intangible Assets
Goodwill
Changes in the net carrying amount of goodwill by segment were as follows:
 (in millions of dollars)
ACCO
Brands
North America
 
ACCO
Brands
International
 
Computer
Products
Group
 Total
 
 Balance at December 31, 2010$78.0
(1) 
$52.1
(1) 
$6.8
 $136.9
 Translation(0.2) (1.7) —
 (1.9)
 Balance at December 31, 201177.8
 50.4
 6.8
 135.0
 Mead C&OP acquisition318.7
 144.7
 —
 463.4
 Translation(0.2) (8.8) —
 (9.0)
 Balance at December 31, 2012$396.3
 $186.3
 $6.8
 $589.4
 Goodwill$527.2
 $270.5
 $6.8
 $804.5
 Accumulated impairment losses(130.9) (84.2) —
 (215.1)
 Balance at December 31, 2012$396.3
 $186.3
 $6.8
 $589.4

(1)
We implemented certain organizational changes in conjunction with the Merger. Effective as of the second quarter of 2012, our former ACCO Brands Americas segment became ACCO Brands North America as the pre-acquisition Latin America

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business was moved into the ACCO Brands International segment. Goodwill associated with our legacy ACCO Brands Latin America business is therefore now included in the ACCO Brands International segment.

The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. We have determined that our reporting units are ACCO Brands North America, ACCO Brands International and Computer Products Group segments. We test goodwill for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. During 2012, we adopted ASU No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment. ASU No. 2011-08 permits entities to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test included in U.S. GAAP. Entities are not required to calculate the fair value of a reporting unit unless they determine that it is more likely than not that the fair value is less than the carrying amount. We concluded that it was not necessary to apply the traditional two-step fair value quantitative impairment test in ASC 350 to any of our reporting units in 2012. When applying a fair-value-based test, if it is determined to be required, the fair value of a reporting unit is compared to its carrying value. If the fair value of a reporting unit exceeds 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 carrying value of the net assets assigned to a reporting unit exceeds the fair value of areporting unit, the second step of the impairment test is performed in order to determine the implied fair value of a reporting unit’s goodwill. Determining the implied fair value of goodwill requires valuation of a reporting unit’s tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, goodwill is deemed impaired and is written down to the extent of the difference. Based upon our most recent annual qualitative impairment test completed during 2012, it is not more likely than not that the fair value of the reporting units goodwill is less than their carrying amounts.

Goodwill has been recorded on our balance sheet related to the Merger and represents the excess of the cost of the acquisition when compared to the fair value estimate of the net assets acquired on May 1, 2012 (the date of the Merger). See Note 3, Acquisitions, for details on the preliminary calculation of the goodwill acquired in the Merger with Mead C&OP.
Given the current economic environment and the uncertainties regarding the impact on our business, there can be no assurance that our estimates and assumptions made for purposes of our impairment testing in 2012 will prove to be accurate predictions of the future. If our assumptions regarding forecasted revenue or margin growth rates are not achieved, we may be required to record additional impairment charges in future periods, whether in connection with our next annual impairment testing in the second quarter of 2013 or prior to that, if any such change constitutes a triggering event outside of the quarter from when the annual impairment test is performed. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.
Identifiable Intangibles
The identifiable intangible assets of $543.2 million acquired in the Merger with Mead C&OP include trade names and customer relationships and were recorded at their fair values. The values assigned were based on the estimated future discounted cash flows attributable to the asset. These future cash flows were estimated based on the historical cash flows and then adjusted for anticipated future changes, primarily expected changes in sales volume or price. We have assigned an “audit committeeindefinite life to certain trade names, which include the Five Star®, Mead®, Tilibra and Hilroy brands, based on the Company's intention to use these trade names for an indefinite period of time and the expected sustainability of brands and the product categories and cash flows with which they are associated. Each of the named brands has a long history of high brand recognition in the markets that it serves, has significant market share in the product categories in which it competes and has demonstrated strong historical financial expert”performance.

The customer relationships and certain trade names will be amortized on an accelerated basis. Definite-lived trade names and customer relationships are expected to be amortized over lives ranging from 10 to 15 years from the Merger date of May 1, 2012.


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Notes to Consolidated Financial Statements (Continued)


The allocations of the acquired identifiable intangibles acquired in the Merger are as follows:
(in millions of dollars)Estimated Fair Value Estimated Average Remaining Useful Life
Trade names - indefinite lived$415.3
 Indefinite
Trade names - finite lived50.3
 10-15 years
Customer relationships77.6
 10-15 years
 $543.2
  
As of June 1, 2012, $21.4 million of the value previously assigned to one of our legacy indefinite-lived trade names was changed to an amortizable intangible asset. The change was made in respect of decisions regarding our future use of the trade name. We commenced amortizing the trade name in June of 2012 on a prospective basis over a life of 30 years.
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2012 and 2011 are as follows:
 December 31, 2012 December 31, 2011
(in millions of dollars)Gross
Carrying
Amounts		 Accumulated
Amortization		 Net
Book
Value		 Gross
Carrying
Amounts		 Accumulated
Amortization		 Net
Book
Value
Indefinite-lived intangible assets:           
Trade names$524.9
 $(44.5)
(1) 
$480.4
 $138.2
(2) 
$(44.5)
(1) 
$93.7
Amortizable intangible assets:           
Trade names130.9
(2) 
(36.7) 94.2
 58.0
 (27.8) 30.2
Customer and contractual relationships103.7
 (32.7) 71.0
 26.1
 (21.5) 4.6
Patents/proprietary technology10.4
 (9.4) 1.0
 10.4
 (8.5) 1.9
Subtotal245.0
 (78.8) 166.2
 94.5
 (57.8) 36.7
Total identifiable intangibles$769.9
 $(123.3) $646.6
 $232.7
 $(102.3) $130.4
(1)Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time further amortization ceased.
(2)
A trade name with a gross carrying value of $21.4 million has been reclassified to amortizable intangible assets effective in the second quarter of 2012.
The Company’s intangible amortization was $19.9 million, $6.3 million and $6.7 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Estimated amortization expense for amortizable intangible assets for the next five years is as follows:
(in millions of dollars)2013 2014 2015 2016 2017
Estimated amortization expense$24.7
 $22.2
 $19.9
 $17.5
 $14.3
Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events.

10. Restructuring

During the year 2012, we initiated cost savings plans related to the consolidation and integration of the recently acquired Mead C&OP business. The most significant of these plans relates to our dated goods business and includes the 2013 closure of a manufacturing and distribution facility in East Texas, Pennsylvania and relocation of its activities to other facilities within the Company. We have also committed to certain cost savings plans that are expected to improve the efficiency and effectiveness of our U.S. and European businesses, which are independent of any plans related to our acquisition of the Mead C&OP business.


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During the year ended December 31, 2012, the Company recorded restructuring charges of $24.3 million. No new restructuring initiatives were expensed in the years ended December 31, 2011 or 2010.

A summary of the activity in the restructuring accounts and a reconciliation of the liability for the year ended December 31, 2012 is as follows:
(in millions of dollars)Balance at December 31, 2011 Provision/ (Income) Cash
Expenditures		 Non-cash
Items/
Currency Change		 Balance at December 31, 2012
Employee termination costs$0.3
 $24.0
 $(9.2) $0.1
 $15.2
Termination of lease agreements0.7
 (0.1) (0.4) —
 0.2
Other—
 0.1
 (0.1) —
 —
Sub-total1.0
 24.0
 (9.7) 0.1
 15.4
Asset impairments/net loss on disposal of assets resulting from restructuring activities0.2
 0.3
 (0.3) (0.2) —
Total restructuring liability$1.2
 $24.3
 $(10.0) $(0.1) $15.4

Management expects the $15.2 million employee termination costs balance to be substantially paid within the next 12 months. Cash payments associated with lease termination costs of $0.2 million are expected to be paid within the next six months.

Not included in the restructuring table above is a $0.1 million net gain on the sale of a manufacturing facility and certain assets in the U.K. The sale, which occurred during the second quarter of 2012, generated net cash proceeds of $2.7 million. The gain on sale has been recognized our Consolidated Statements of Operations in selling, general and administrative expenses.

A summary of the activity in the restructuring accounts and a reconciliation of the liability for the year ended December 31, 2011 is as follows:
(in millions of dollars)Balance at December 31, 2010 Provision/ (Income) Cash
Expenditures		 Non-cash
Items/
Currency Change		 Balance at December 31, 2011
Employee termination costs$2.2
 $(0.6) $(1.4) $0.1
 $0.3
Termination of lease agreements3.0
 (0.5) (1.9) 0.1
 0.7
Sub-total5.2
 (1.1) (3.3) 0.2
 1.0
Asset impairments/net loss on disposal of assets resulting from restructuring activities—
 0.4
 (0.1) (0.1) 0.2
Total restructuring liability$5.2
 $(0.7) $(3.4) $0.1
 $1.2
A summary of the activity in the restructuring accounts and a reconciliation of the liability for the year ended December 31, 2010 is as follows:
(in millions of dollars)Balance at December 31, 2009 Provision/ (Income) Cash
Expenditures		 Non-cash
Items/
Currency Change		 Balance at December 31, 2010
Employee termination costs$8.0
 $(1.5) $(3.9) $(0.4) $2.2
Termination of lease agreements4.4
 0.2
 (1.5) (0.1) 3.0
Sub-total12.4
 (1.3) (5.4) (0.5) 5.2
Asset impairments/net loss on disposal of assets resulting from restructuring activities—
 0.8
 —
 (0.8) —
Total restructuring liability$12.4
 $(0.5) $(5.4) $(1.3) $5.2

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In addition to the restructuring described above, in the first quarter of 2011 we initiated plans to rationalize our European operations. The associated costs primarily relate to employee terminations, which were accounted for as regular business expenses and were largely offset by associated savings realized during the remainder of the 2011 year. These costs totaled $4.5 million during the year ended December 31, 2011 and are included within advertising, selling, general and administrative expenses in the Consolidated Statements of Operations.

A summary of the activity in the rationalization charges and a reconciliation of the liability for the year ended December 31, 2011 is as follows:
(in millions of dollars)Balance at December 31, 2010 Provision Cash
Expenditures		 Non-cash
Items/
Currency Change		 Balance at December 31, 2011
Employee termination costs$—
 $4.5
 $(4.2) $0.1
 $0.4
The $0.4 million of employee termination costs remaining as of December 31, 2011 were paid in 2012.

11. Income Taxes
The components of income (loss) before income taxes from continuing operations are as follows:
(in millions of dollars)2012 2011 2010
Domestic operations$(94.9) $(48.6) $(38.5)
Foreign operations90.5
 91.5
 77.0
Total$(4.4) $42.9
 $38.5
The reconciliation of income taxes computed at the U.S. federal statutory income tax rate to our effective income tax rate for continuing operations is as follows:
(in millions of dollars)2012 2011 2010
Income tax at U.S. statutory rate$(1.5) $15.0
 $13.5
State, local and other tax, net of federal benefit(0.6) (1.3) (0.8)
U.S. effect of foreign dividends and earnings23.7
 11.6
 4.9
Unrealized foreign currency (loss) gain on intercompany debt(7.7) 0.9
 8.6
Foreign income taxed at a lower effective rate(7.2) (7.7) (6.7)
(Decrease) increase in valuation allowance(145.1) 5.4
 15.7
U.S. effect of capital gain11.0
 —
 —
Correction of deferred tax error on foreign subsidiary0.8
 —
 (2.8)
Change in prior year tax estimates(0.4) 1.0
 (1.3)
Miscellaneous5.6
 (0.6) (0.4)
Income taxes as reported$(121.4) $24.3
 $30.7
Effective tax rateNM
 56.6% 79.7%

For 2012, we recorded an income tax benefit from continuing operations of $121.4 million on a loss before taxes of $4.4 million. The tax benefit for 2012 is primarily due to the $145.1 million release of certain valuation allowances.

We continually review the need for establishing or releasing valuation allowances on our deferred tax attributes. Due to the acquisition of Mead C&OP in the second quarter of 2012, we analyzed our need for maintaining valuation reserves against the expected U.S. future tax benefits. Based on our analysis we determined that there existed sufficient evidence in the form of future taxable income from the combined operations to release $126.1 million of the valuation allowance that had been previously recorded against the U.S. deferred income tax assets. The resulting deferred tax assets are comprised principally of net operating loss carryforwards that are expected to be fully realized within the expiration period and other temporary differences. Also, as part

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of this ongoing review, valuation allowances were released in certain foreign jurisdictions in the amount of $19.0 million, primarily during the second quarter of 2012, due to the sustained profitability of these businesses.

For the year ended December 31, 2011, income tax expense from continuing operations was $24.3 million on income before taxes of $42.9 million. For 2010, we recorded income tax expense from continuing operations of $30.7 million on income before taxes of $38.5 million. The high effective rates for 2011 and 2010 of 56.6% and 79.7% are due to increases in the valuation allowance of $5.4 million, net of a $2.8 million reversal of a valuation reserve in the U.K., and $15.7 million, respectively. Therefore no tax benefit was being provided on losses incurred in the U.S. and certain foreign jurisdictions where valuation allowances were recorded against certain tax benefits. Also contributing to the high effective tax rate for 2010 was an $8.6 million expense recorded to reflect the income tax impact of foreign currency fluctuations on an intercompany debt obligation, partially offset by the benefit of the $2.8 million out-of-period adjustment.

The effective tax rates for discontinued operations were 25.6%, 13.4% and 29.6% in 2012, 2011 and 2010, respectively. The lower rate in 2011 reflects the benefit of the goodwill tax basis and prior year capital loss carryforwards that reduced the taxable gain on the sale of GBC Fordigraph in Australia.

The U.S. federal statute of limitations remains open for the years 2009 and forward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Australia (2008 forward), Brazil (2007 forward), Canada (2006 forward) and the U.K. (2010 forward). We are currently under examination in various foreign jurisdictions.

The components of the income tax expense from continuing operations are as follows:
(in millions of dollars)2012 2011 2010
Current expense     
Federal and other$6.0
 $0.3
 $0.6
Foreign27.1
 19.8
 18.1
Total current income tax expense33.1
 20.1
 18.7
Deferred (benefit) expense     
Federal and other(129.5) 4.9
 4.8
Foreign(25.0) (0.7) 7.2
Total deferred income tax (benefit) expense(154.5) 4.2
 12.0
Total income tax (benefit) expense$(121.4) $24.3
 $30.7

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The components of deferred tax assets (liabilities) are as follows:
(in millions of dollars)2012 2011
Deferred tax assets   
Compensation and benefits$15.6
 $14.7
Pension38.5
 34.2
Inventory5.8
 5.4
Other reserves18.0
 7.2
Accounts receivable6.0
 3.7
Capital loss carryforwards—
 10.3
Foreign tax credit carryforwards20.5
 20.5
Net operating loss carryforwards135.2
 129.3
Miscellaneous6.3
 3.3
    Gross deferred income tax assets245.9
 228.6
   Valuation allowance(55.4) (204.3)
   Net deferred tax assets190.5
 24.3
Deferred tax liabilities   
Depreciation(27.3) (2.0)
Identifiable intangibles(257.4) (73.0)
Unrealized foreign currency gain on intercompany debt(3.3) (10.6)
  Gross deferred tax liabilities(288.0) (85.6)
  Net deferred tax liabilities$(97.5) $(61.3)
Deferred income taxes are not provided on certain undistributed earnings of foreign subsidiaries that are expected to be permanently reinvested in those companies, which aggregate to approximately $586 million and $517 million as of December 31, 2012 and at 2011, respectively. If these amounts were distributed to the U.S., in the form of a dividend or otherwise, we would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable.
At December 31, 2012, $404.5 million of net operating loss carryforwards are available to reduce future taxable income of domestic and international companies. These loss carryforwards expire in the years 2013 through 2031 or have an unlimited carryover period.
We recognize interest and penalties related to unrecognized tax benefits as a component of income taxes in our results of operations. As of December 31, 2012, we have accrued $1.4 million for interest and penalties on unrecognized tax benefits.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions of dollars)2012 2011 2010
Balance at beginning of year$5.5
 $5.7
 $6.0
Additions for tax positions of prior years2.0
 0.1
 0.2
Reductions for tax positions of prior years(1.5) (0.2) (0.5)
Settlements—
 (0.1) —
Mead C&OP acquisition50.3
 —
 —
Balance at end of year$56.3
 $5.5
 $5.7
As of December 31, 2012 the amount of unrecognized tax benefits increased to $56.3 million, of which $51.6 million would affect our effective tax rate, if recognized. We expect the amount of unrecognized tax benefits to change within the next twelve months, but these changes are not expected to have a significant impact on our results of operations or financial position. None of the positions included in the unrecognized tax benefit relate to tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.


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Income Tax Assessment

In connection with our May 1, 2012 acquisition of Mead C&OP, we assumed all of the tax liabilities for the acquired foreign operations. In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the goodwill recorded in connection with the 2004 acquisition of Tilibra. This assessment denied the deductibility of that goodwill from Tilibra's taxable income for the year 2007. The assessment seeks payment of approximately R$26.9 million ($13.2 million based on current exchange rates) of tax, penalties and interest.

In January of 2013, Tilibra filed a protest disputing the tax assessment at the first administrative level of appeal within the FRD. We believe that we have meritorious defenses and intend to vigorously contest this matter, however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge the FRD's tax assessment, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take many years. In addition, Tilibra's 2008-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years, which could increase the Company's exposure to a total of approximately $44.5 million (based on current exchange rates), including interest and penalties which have accumulated to date. If the FRD's initial position is ultimately sustained, the amount assessed would adversely affect our reported cash flow in the year of settlement.

Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers the outcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in the amount of $44.5 million in consideration of this matter, of which $43.3 million was recorded as an adjustment to the allocation of the purchase price for the fair value of non-current liabilities assumed as of the acquisition date and was recorded as an increase to goodwill. In addition, the Company will continue to accrue interest related to this matter until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During 2012, the Company accrued $1.2 million of additional interest that has accumulated since the date of the acquisition as a charge to current income tax expense.

12. Earnings per Share

Total outstanding shares as of December 31, 2012 and 2011 were 113.1 million and 55.5 million, respectively. The calculation of basic earnings per common share is based on the weighted average number of common shares outstanding in the year, or period, over which they were outstanding. Our calculation of diluted earnings per common share assumes that any common shares outstanding were increased by shares that would be issued upon exercise of those stock units for which the average market price for the period exceeds the exercise price; less, the shares that could have been purchased by the Company with the related proceeds, including compensation expense measured but not yet recognized, net of tax.
(in millions)2012 2011 2010
Weighted-average number of common shares outstanding — basic94.1
 55.2
 54.8
Stock options0.1
 0.1
 0.1
Stock-settled stock appreciation rights0.9
 1.7
 2.1
Restricted stock units1.0
 0.6
 0.2
Adjusted weighted-average shares and assumed conversions — diluted96.1
 57.6
 57.2

Awards of shares representing approximately 5.4 million, 4.3 million and 4.1 million as of December 31, 2012, 2011 and 2010, respectively, of potentially dilutive shares of common stock were outstanding and are not included in the computation of dilutive earnings per share as their effect would have been anti-dilutive because their exercise prices were higher than the average market price during the period.

13. Derivative Financial Instruments
We are exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. We enter into financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments are major financial institutions. We continually monitor our foreign currency exposures in order to maximize the overall effectiveness of our foreign currency hedge positions. Principal currencies hedged include the

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U.S. dollar, Euro, Australian dollar, Canadian dollar and Pound sterling. 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, as appropriate, to further manage our counterparty credit risk. There are no credit contingency features in our derivative financial instruments.
On the date in which we enter into a derivative, the derivative is designated as a hedge of the identified exposure. We measure the effectiveness of our hedging relationships both at hedge inception and on an ongoing basis.
Forward Currency Contracts
We enter into forward foreign currency contracts to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventory purchases and intercompany loans. The majority of the Company’s exposure to local currency movements is in Europe, Australia, Canada, Brazil, Mexico and Japan.
Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada and Japan and are designated as cash flow hedges. Unrealized gains and losses on these contracts for inventory purchases are deferred in other comprehensive income (loss) until the contracts are settled and the underlying hedged transactions are recognized, at which time the deferred gains or losses will be reported in the “Cost of products sold” line in the Consolidated Statements of Operations. As of December 31, 2012 and December 31, 2011, the Company had cash flow designated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $85.0 million and $71.9 million, respectively.
Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within "Other expense, net" in the Consolidated Statements of Operations and are largely offset by the changes in the fair value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, and do not extend beyond 2013. As of December 31, 2012 and 2011, we have undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $90.4 million and $75.6 million, respectively.
The following table summarizes the fair value of our derivative financial instruments as of December 31, 2012 and 2011, respectively.
 Fair Value of Derivative Instruments
 Derivative Assets Derivative Liabilities
(in millions of dollars)Balance  Sheet
Location		 December 31, 2012 December 31, 2011 Balance Sheet
Location		 December 31, 2012 December 31, 2011
Derivatives designated as hedging instruments:           
Foreign exchange contractsOther current assets $0.7
 $3.0
 Other current liabilities $0.6
 $0.2
Derivatives not designated as hedging instruments:           
Foreign exchange contractsOther current assets 0.5
 0.8
 Other current liabilities 0.2
 1.2
Total derivatives  $1.2
 $3.8
   $0.8
 $1.4
The following tables summarizes the pre-tax effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 respectively.
  The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Statements of Operations for the Years Ended December 31,
  Amount of Gain (Loss) Recognized in OCI (Effective Portion) Location of (Gain) Loss Reclassified from OCI to Income Amount of (Gain) Loss
Reclassified from AOCI to Income (Effective Portion)
(in millions of dollars)2012 2011 2010   2012 2011 2010
Cash flow hedges:             
Foreign exchange contracts(0.2) $(0.3) $(3.1) Cost of products sold $(1.9) $4.4
 $0.8

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 The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations
 Location of (Gain) Loss Recognized in
Income on Derivatives		 Amount of (Gain) Loss
Recognized in Income year ended December 31,
(in millions of dollars) 2012 2011 2010
Foreign exchange contractsOther expense, net $2.3
 $0.9
 $(1.8)


14. Fair Value of Financial Instruments

In 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 the fair 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 liabilities
Level 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 liability
Level 3Unobservable inputs for the asset or liability

We utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
We have determined that our financial assets and liabilities are Level 2 in the fair value hierarchy. 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, 2012 and 2011, respectively:
(in millions of dollars)December 31, 2012 December 31, 2011
Assets:   
Forward currency contracts$1.2
 $3.8
Liabilities:   
Forward currency contracts$0.8
 $1.4

Our forward currency contracts are included in "Other current assets" or "Other current liabilities" and mature within 12 months. The forward foreign currency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. As such, these derivative instruments are classified within Level 2.

The fair values of cash and cash equivalents, notes payable to banks, accounts receivable and accounts payable approximate carrying amounts due principally to their short maturities. The carrying amount of total debt was $1,072.1 million and $669.0 million and the estimated fair value of total debt was $1,097.5 million and $727.2 million at December 31, 2012 and 2011, respectively. The fair values are determined from quoted market prices, where available, and from investment bankers using current interest rates considering credit ratings and the remaining terms of maturity.

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15. Accumulated Other Comprehensive Income (Loss)
Comprehensive income is defined as net income (loss) and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. The components of, and changes in, accumulated other comprehensive income (loss) were:
(in millions of dollars)Derivative
Financial
Instruments		  
Foreign
Currency
Adjustments		 Unrecognized
Pension and Other
Post-retirement
Benefit Costs		 Accumulated
Other
Comprehensive
Income (Loss)
Balance at December 31, 2010$(1.5) $(2.1) $(82.5) $(86.1)
Changes during the year (net of taxes of $3.1)3.7
 (15.0) (33.6) (44.9)
Balance at December 31, 20112.2
 (17.1) (116.1) (131.0)
Changes during the year (net of taxes of $6.3)(2.1) (10.9) (12.1) (25.1)
Balance at December 31, 2012$0.1
 $(28.0) $(128.2) $(156.1)

16. Information on Business Segments

In conjunction with the Merger during the second quarter of 2012, we realigned our Americas and International segments. The pre-acquisition Latin America business has been moved into the International segment along with Mead C&OP's Brazilian operations. Our Computer Products Group was unaffected by the realignment or the Merger.

Our three business segments are described below.

ACCO Brands North America and ACCO Brands International

On May 1, 2012, we implemented certain organizational changes in our business segments in conjunction with the Merger with Mead C&OP. Effective as of the second quarter of 2012, the Company's former ACCO Brands Americas segment became ACCO Brands North America as the Company's pre-acquisition Latin America business was moved into the ACCO Brands International segment. These two segments manufacture, source and sell traditional office products, school supplies, calendar products and document finishing solutions. ACCO Brands North America comprises the U.S. and Canada, and ACCO Brands International comprises the rest of the world, principally Europe, Australia, Latin America and Asia-Pacific. Prior periods have been restated for comparability.

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

Our office, school and calendar product lines use name brands such as: AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy®, Marbig, Mead®, NOBO, Quartet®, Rexel, Swingline®, Tilibra®, Wilson Jones® and many others. Products and brands are not confined to one channel or product category and are sold based on end-user preference in each geographic location. We manufacture approximately 50% of our products, and specify and source approximately 50% of our products, mainly from Asia. The majority of our office products, such as stapling, binding and laminating equipment and related consumable supplies, shredders and whiteboards, are used by businesses. Most of these end-users purchase their products from our customers, which include commercial contract stationers, mass merchandisers, retail superstores, wholesalers, resellers, mail order and internet catalogs, club stores and dealers. We also supply some of our products directly to large commercial and industrial end-users. For all of our products, historically, we have targeted the premium end of the product categories in which we compete. However, we also supply private label products for our customers and provide machine maintenance and certain repair services. Our school products include notebooks, folders, decorative calendars, and stationery products. We distribute our school products primarily through traditional and online retail mass market, grocery, drug and office superstore channels. Our calendar products are sold throughout all channels where we sell office or school products, and we also sell calendar products direct to consumers.

The customer base to which we sell our products is mainly made up of large global and regional resellers of our products. Mass and retail channels mainly sell to individual consumers but also to small businesses. Office superstores mainly sell to

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commercial customers but also to individual consumers at their retail stores. As a result, there is no clear correlation between product, consumer or distribution channel. We also sell to commercial contract stationers, wholesalers, distributors, mail order and internet catalogs, and independent dealers. Over half of our product sales by our customers are to business end-users, who generally seek premium products that have added value or ease-of-use features and a reputation for reliability, performance and professional appearance. Some of our document finishing products are sold directly to high-volume end-users and commercial reprographic centers.

Computer Products Group

The Computer Products Group designs, distributes, markets and sells accessories for laptop and desktop computers and tablets and smartphones. These accessories primarily include security products, iPad® covers and keypads, smartphone accessories, power adapters, input devices such as mice, laptop computer carrying cases, hubs, docking stations and ergonomic devices. The Computer Products Group sells mostly under the Kensington®, Microsaver® and ClickSafe® brand names, with the majority of its revenue coming from the U.S. and Western Europe.

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

Financial information by reportable segment is set forth below.

Net sales by business segment for the years ended December 31, 2012, 2011 and 2010 are as follows:
(in millions of dollars)2012 2011 2010
ACCO Brands North America$1,028.2
 $623.1
 $631.6
ACCO Brands International551.2
 505.0
 476.0
Computer Products Group179.1
 190.3
 177.0
Net sales$1,758.5
 $1,318.4
 $1,284.6
Operating income by business segment for the years ended December 31, 2012, 2011 and 2010 are as follows (a):
(in millions of dollars)2012 2011 2010
ACCO Brands North America$86.2
 $37.4
 $44.2
ACCO Brands International62.0
 58.9
 43.6
Computer Products Group35.9
 47.1
 43.0
Segment operating income184.1
 143.4
 130.8
Corporate(44.8) (28.2) (21.1)
Operating income139.3
 115.2
 109.7
Interest expense, net89.3
 77.2
 78.3
Equity in earnings of joint ventures(6.9) (8.5) (8.3)
Other expense, net61.3
 3.6
 1.2
Income (loss) from continuing operations before income tax$(4.4) $42.9
 $38.5
(a)Operating income as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less advertising, selling, general and administrative expenses; iv) less amortization of intangibles; and v) less restructuring.


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Segment assets:

The following table presents the measure of segment assets used by the Company’s chief operating decision maker.
 December 31,
 2012 2011
(in millions of dollars)   
ACCO Brands North America (b)$505.1
 $272.9
ACCO Brands International (b)486.4
 282.2
Computer Products Group (b)90.3
 85.5
  Total segment assets1,081.8
 640.6
Unallocated assets1,424.5
 468.9
Corporate (b)1.4
 7.2
Total assets$2,507.7
 $1,116.7
 (b)Represents total assets, excluding: goodwill and identifiable intangibles resulting from business acquisitions, intercompany balances, cash, deferred taxes, prepaid pension assets, prepaid debt issuance costs and joint ventures accounted for on an equity basis.

As a supplement to the presentation of segment assets presented above, the table below presents segment assets, including the allocation of identifiable intangible assets and goodwill resulting from business combinations.
 December 31,
(in millions of dollars)2012 2011
ACCO Brands North America (c)$1,398.6
 $433.4
ACCO Brands International (c)814.3
 372.2
Computer Products Group (c)104.8
 100.4
  Total segment assets2,317.7
 906.0
Unallocated assets188.6
 203.5
Corporate (c)1.4
 7.2
Total assets$2,507.7
 $1,116.7
(c)Represents total assets, excluding: intercompany balances, cash, deferred taxes, prepaid pension assets, prepaid debt issuance costs and joint ventures accounted for on an equity basis.

Property, plant and equipment, net by geographic region are as follows:
 December 31,
(in millions of dollars)2012 2011
U.S.$141.0
 $76.2
Brazil62.1
 —
U.K.22.7
 23.8
Australia17.1
 17.5
Other countries30.7
 29.7
Property, plant and equipment$273.6
 $147.2

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Net sales by geographic region for the years ended December 31, 2012, 2011 and 2010 are as follows (d):
(in millions of dollars)2012 2011 2010
U.S.$959.2
 $621.3
 $633.0
Canada160.8
 105.2
 97.8
Australia133.4
 143.0
 137.0
Brazil118.9
 —
 —
UK98.0
 115.6
 107.3
Other countries288.2
 333.3
 309.5
Net sales$1,758.5
 $1,318.4
 $1,284.6
(d)Net sales are attributed to geographic areas based on the location of the selling company.
Major Customers

Sales to the Company’s five largest customers totaled $716.2 million, $508.2 million and $496.4 million in the years ended December 31, 2012, 2011 and 2010, respectively. Sales to Staples, our largest customer, were $236.3 million (13%), $175.9 million (13%) and $166.8 million (13%) in the years ended December 31, 2012, 2011 and 2010, respectively. Sales to our second largest customer were $138.9 million (11%) and $141.0 million (11%) in the years ended December 31, 2011 and 2010, respectively. Sales to no other customer exceeded 10% of annual sales.

A significant percentage of our sales are to customers engaged in the office products resale industry. Concentration of credit risk with respect to trade accounts receivable is partially mitigated because a large number of geographically diverse customers make up each operating companies’ domestic and international customer base, thus spreading the credit risk. At December 31, 2012, and 2011, our top five trade account receivables totaled $184.3 million and $116.0 million, respectively.

17. Joint Venture Investments

Summarized below is aggregated financial information for the Company’s joint ventures, Pelikan-Artline Pty Ltd and Neschen GBC Graphics Films, LLC ("Neschen"), which are accounted for under the equity method. Accordingly, we record our proportionate share of earnings or losses on the line entitled “Equity in earnings of joint ventures” in the Consolidated Statements of Operations. Our share of the net assets of the joint ventures are included within “Other assets” in the Condensed Consolidated Balance Sheets.
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Net sales$161.9
 $165.6
 $151.8
Gross profit95.6
 94.6
 85.8
Operating income24.7
 24.3
 23.0
Net income17.4
 16.9
 16.3
 December 31,
(in millions of dollars)2012 2011
Current assets$80.7
 $94.3
Non-current assets36.9
 37.1
Current liabilities34.2
 40.0
Non-current liabilities12.8
 16.7

During the fourth quarter of 2012 we recorded an impairment charge of $1.9 million related to our investment in Neschen. We have committed to pursue an exit strategy in regards to Neschen, due to significant excess capacity and other opportunities to

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reduce the cost of products that we have historically sourced from Neschen. Neschen reported net sales of $8.3 million and net income of $0.1 million for the year ended December 31, 2012.

18. Commitments and Contingencies

Pending Litigation

In connection with our May 1, 2012 acquisition of Mead C&OP, we assumed all of the tax liabilities for the acquired foreign operations. In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against our newly acquired indirect subsidiary, Tilibra Produtos de Papelaria Ltda. ("Tilibra"), which challenged the goodwill recorded in connection with the 2004 acquisition of Tilibra. This assessment denied the deductibility of that goodwill from Tilibra's taxable income for the year 2007. The assessment seeks a payment of approximately R$26.9 million ($13.2 million based on current exchange rates) of tax, penalties and interest.

In January of 2013, Tilibra filed a protest disputing the tax assessment at the first administrative level of appeal within the FRD. We believe that we have meritorious defenses and intend to vigorously contest this matter, however, there can be no assurances that we will ultimately prevail. We are in the early stages of the process to challenge the FRD's tax assessment, and the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take many years. In addition, Tilibra's 2008-2012 tax years remain open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill deducted for the Tilibra acquisition for one or more of those years, which could increase the Company's exposure to a total of approximately $44.5 million (based on current exchange rates), including interest and penalties which have accumulated to date. If the FRD's initial position is ultimately sustained, the amount assessed would adversely affect our reported cash flow in the year of settlement.

Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, the Company considers the outcome of this dispute to be uncertain. Since it is not more likely than not that we will prevail, in the fourth quarter of 2012, we recorded a reserve in the amount of $44.5 million in consideration of this matter. In addition, the Company will continue to accrue interest related to this matter until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail.

There are various other claims, lawsuits and pending actions against us incidental to our operations. It is the opinion of management that the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, we can make no assurances that we will ultimately be successful in our defense of any of these matters.
Lease Commitments

Future minimum rental payments for all non-cancelable operating leases (reduced by minor amounts from subleases) at December 31, 2012 are as follows:
(in millions of dollars) 
2013$21.0
201418.3
201515.7
201613.7
201711.8
Remainder48.4
Total minimum rental payments$128.9
Total rental expense reported in our statement of operations for all non-cancelable operating leases (reduced by minor amounts for subleases) amounted to $22.3 million, $21.7 million and $23.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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ACCO Brands Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)


Unconditional Purchase Commitments
Future minimum payments under unconditional purchase commitments, primarily for inventory purchase commitments at December 31, 2012 are as follows:
(in millions of dollars) 
2013$89.4
20148.1
20158.1
20168.1
20178.0
Thereafter—
 $121.7
Environmental
We are subject to laws and regulations relating to the protection of the environment. While it is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that our subsidiaries may undertake in the future, in the opinion of management, compliance with the present environmental protection laws, before taking into account any estimated recoveries from third parties, will not have a material adverse effect upon the results of operations, cash flows or financial condition of the Company.

19. Discontinued Operations

During the second quarter of 2011, we sold GBC Fordigraph to The Neopost Group. The Australia-based business was formerly part of the ACCO Brands International segment and is included in the financial statements as discontinued operations. GBC Fordigraph represented $45.9 million in annual net sales for the year ended December 31, 2010. We received final proceeds of $52.9 million during 2011, inclusive of working capital adjustments and selling costs. In connection with this transaction, in 2011, the Company recorded a gain on sale of $41.9 million ($36.8 million after- tax).

Also included in discontinued operations are residual costs of our commercial print finishing business, which was sold during the second quarter of 2009. During the twelve months ended December 31, 2012, the Company recorded additional costs related to a legal settlement and to ongoing legal disputes of $2.0 million related to its former commercial print finishing business.

The operating results and financial position of discontinued operations are as follows:
(in millions, except per share data)2012 2011 2010
Operating Results:     
Net sales$—
 $19.9
 $45.9
Income from operations before income taxes(1)
—
 2.5
 6.6
Gain (loss) on sale before income taxes(2.1) 41.5
 (0.1)
Provision (benefit) for income taxes(0.5) 5.9
 1.9
Income (loss) from discontinued operations$(1.6) $38.1
 $4.6
Per share:     
Basic income (loss) from discontinued operations$(0.02) $0.69
 $0.08
Diluted income (loss) from discontinued operations$(0.02) $0.66
 $0.08
(1)
During the fourth quarter of 2010, we completed the sale of a property formerly occupied by our commercial print finishing business, resulting in a gain on sale of $1.7 million.

Litigation-related accruals of $2.4 million and $1.1 million related to discontinued operations are included in other current liabilities as of December 31, 2012 and 2011, respectively. Of the $2.4 million accrued at December 31, 2012, $1.1 million was paid in January of 2013.

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ACCO Brands Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)



20. Quarterly Financial Information (Unaudited)
The following is an analysis of certain items in the consolidated statements of operations by quarter for 2012 and 2011:
(in millions of dollars, except per share data)
1st  Quarter
 
2nd  Quarter
 
3rd  Quarter
 
4th  Quarter
2012       
Net sales$288.9
 $438.7
 $501.2
 $529.7
Gross profit79.8
 124.3
 151.2
 178.1
Operating income4.0
 11.6
 56.4
 67.3
Income (loss) from continuing operations(17.3) 94.2
 55.2
 (15.1)
Loss from discontinued operations, net of income taxes(0.1) —
 —
 (1.5)
Net income (loss)$(17.4) $94.2
 $55.2
 $(16.6)
Basic income (loss) per share:       
Income (loss) from continuing operations$(0.31) $1.00
 $0.49
 $(0.13)
Loss from discontinued operations$—
 $—
 $—
 $(0.01)
Net income (loss)$(0.31) $1.00
 $0.49
 $(0.15)
Diluted income (loss) per share:       
Income (loss) from continuing operations$(0.31) $0.98
 $0.48
 $(0.13)
Loss from discontinued operations$—
 $—
 $—
 $(0.01)
Net income (loss)$(0.31) $0.98
 $0.48
 $(0.15)
2011       
Net sales$298.4
 $330.2
 $339.1
 $350.7
Gross profit85.2
 101.4
 103.2
 109.4
Operating income13.3
 30.6
 35.4
 35.9
Income (loss) from continuing operations(9.0) 6.3
 11.9
 9.4
Income (loss) from discontinued operations, net of income taxes0.9
 37.4
 (0.2) —
Net income (loss)$(8.1) $43.7
 $11.7
 $9.4
Basic income (loss) per share:       
Income (loss) from continuing operations$(0.16) $0.11
 $0.22
 $0.17
Income (loss) from discontinued operations$0.02
 $0.68
 $—
 $—
Net income (loss)$(0.15) $0.79
 $0.21
 $0.17
Diluted income (loss) per share:       
Income (loss) from continuing operations$(0.16) $0.11
 $0.21
 $0.16
Income (loss) from discontinued operations$0.02
 $0.64
 $—
 $—
Net income (loss)$(0.15) $0.75
 $0.20
 $0.16

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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our Disclosure Committee and our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective.

In the second quarter of 2012, we completed the Merger of Mead C&OP which represented $551.5 million of our consolidated net sales for the year ended December 31, 2012. Consolidated assets as of December 31, 2012 were $514.4 million. As the acquisition occurred in the second quarter of 2012, the scope of our assessment of the effectiveness of internal control over financial reporting does not include Mead C&OP. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.

The report called for by Item 407(d)(5)(ii)308(a) of Regulation S-K is incorporated herein by reference to the Report of Management on Internal Control Over Financial Reporting included in Part II, Item 8 of this report.

The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the Report of Independent Registered Public Accounting Firm, included in Part II, Item 8 of this report.

There has been no change in our internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.OTHER INFORMATION
Not applicable.
PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required under the Exchange Act.
Section 16(a) Beneficial Ownership Reporting Compliance
Each director and executive officer of ACCO Brands whothis Item is subject to Section 16contained in Item 1, Business - Executive Officers of the Exchange ActCompany, of this report and in the Company’s 2013 Definitive Proxy Statement, which is required to filebe filed with the SEC reports regarding their ownershipSecurities and changes in beneficial ownership of our equity securities.  Reports receivedExchange Commission prior to April 30, 2013 and is incorporated herein by ACCO Brands indicate that all these directors and executive officers have filed all requisite reports with the SEC on a timely basis during or for 2011.reference.

Code of Business Conduct

The Company has adopted a code of business conduct as required by the listing standards of the New York Stock Exchange and rules of the Securities and Exchange Commission. This code applies to all of the Company’s directors, officers and employees. The code of business conduct is published and available at the Investor Relations Section of the Company’s internet website at www.accobrands.com. The Company will post on its website any amendments to, or waivers from, our code of business conduct applicable to any of its directors or executive officers. The foregoing information will be available in print to any shareholder who requests such information from ACCO Brands Corporation, 300 Tower Parkway, Lincolnshire, IL 60069, Attn: Office of the General Counsel. After April 16, 2013 please send all inquiries to ACCO Brands Corporation, Four Corporate Drive, Lake Zurich, IL 60047-2997, Attn: Office of the General Counsel.

As required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual, the Company’s Chief Executive Officer certified to the NYSE within 30 days after the Company’s 20112012 Annual Meeting of Stockholders that he was not aware of any violation by the Company of the NYSE Corporate Governance Listing Standards.

ITEM 11.EXECUTIVE COMPENSATION

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ITEM 11.  Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of our Board of Directors, referred to inInformation required under this section as the Committee, administers our executive compensation program.  The Committee endeavors to provide a compensation program for our named executive officers thatItem is competitive within our industry and provides a substantial emphasis on Company performance and stockholder returns.  Our total executive compensation is designed to have a balanced focus on both short and long-term goals.  Direct compensation principally consists of a base salary, annual cash incentive bonus, and long-term equity incentive awards.
At the 2011 Annual Meeting of Shareholders, holders of over 95% of the shares represented at the meeting voted to approve, in a non-binding vote, the compensation of our named executive officers.  The Committee believes this affirms shareholders’ support of the Company’s approach to executive compensation.  Accordingly, after considering the results of the advisory vote on executive compensation, the Committee determined not to implement any significant changes to our executive compensation program for 2011 in response to the vote and does not intend to make any significant changes to our executive compensation program in 2012.  The Committee will continue to consider the outcome of our shareholders’ advisory votes on executive compensation when making future compensation decisions for our named executive officers.
Also at the 2011 Annual Meeting of Shareholders, our shareholders expressed a preference that advisory votes on executive compensation occur once every year.  Consistent with this preference, the Board determined that the Company will hold an advisory vote on the compensation of the Company’s named executive officers annually until the next required vote on the frequency of shareholder votes on the compensation of executive officers, which is scheduled to occur at the 2017 Annual Meeting.
Executive Summary
For the 2011 fiscal year, we believe the compensation earned by our executive officers properly reflected the performance of the Company in an economic environment that continued to be challenging but in which we were able to achieve significant successes.  Successes in 2011 included:
·We entered into an agreement to merge the Consumer & Office Products Business of MeadWestvaco Corporation (“MCOP”) into the Company which we view as a transformational event for the Company.
·Our operating income increased 10% to $120.8 million, excluding $5.6 million of costs associated with the pending MCOP merger.
·We reduced our net debt (total debt minus cash) by $96 million to $548 million.
·Our total shareholder return of 13.26% significantly exceeded the average negative return of our Peer Group, which was -20.14%.
·We introduced many new products and gained significant market share in several product categories.
·We completed the sale of our GBC Fordigraph subsidiary, an Australian-based business that was not core to our long-term strategies, at a market premium price.

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·
We were recognized as one of “America’s Safest Companies” and received our 15th consecutive Gold Award for safety in Europe.
With respect to specific compensation activities during 2011:
·We entered into a special equity award agreement with our Chief Executive Officer (“CEO”), Robert J. Keller, aimed at retaining his services for at least a four-year period so that his leadership skills will be available to the Company as it continues in its current strategic direction.
·Base salaries for executive officers were increased on average by 3%.
·Despite our solid market performance, not all of our internal operating targets were achieved as our results benefited from favorable foreign exchange translation which we exclude when assessing our performance for incentive compensation purposes.  As a result, annual cash bonuses were paid to our executive officers at only 45.1% of the target award.
·Long-term incentive plan Performance Share Units (“PSUs”) were accrued at only 50% of targeted achievement as all performance targets were not achieved.  Shares accrued under these awards generally vest and are issued to executives at the end of the third year in the applicable three-year performance cycle.
·Excluding the effect of the special equity award granted to our CEO, which is discussed later in this Analysis, we were able to revert to our normal mix of long-term incentive compensation as discussed further below.
·We adopted a global clawback and recoupment policy for incentive-based compensation paid or payable to executive officers in the event of a financial restatement.
·We enhanced our executive stock ownership guidelines by increasing the retention multiple of pay for our CEO and certain other named executive officers.
·No changes were made to our Executive Severance Plan or retirement plans.
Overview of the Compensation Program; Objectives of the Committee
The Committee has the responsibility for establishing, implementing and monitoring the compensation and benefit programs of the Company and ensuring adherence with the Company’s compensation objectives.  The principal purpose of the Committee is to oversee an executive compensation program that aligns an executive’s interests with those of our stockholders by rewarding performance against established goals, with the ultimate objective of improving stockholder value.  Further, the Committee seeks to structure its executive compensation arrangements so that the Company can attract and retain quality management leadership.
Among other things, the Committee:
·approves the compensation levels for the Company’s executive officers including the officers named in the 2011 Summary Compensation Table (the “named executive officers”);
·approves performance metrics and goals for both the annual and long-term incentive awards to the Company’s executive officers under the Company’s 2011 Amended and Restated Incentive Plan (the “LTIP”);

8

·makes a final determination with respect to the achievement of annual performance goals, establishes individual incentive opportunities, and determines the actual awards, if any, under the cash award annual incentives portion of the LTIP (the “Annual Incentive Plan” or “AIP”);
·assesses the competitiveness and effectiveness of the Company’s other executive compensation and benefit plans; and
·on at least an annual basis, discusses with management the likelihood of any material adverse effect or risk to the Company arising from the Company’s compensation policies, plans and practices.
Further, the Committee annually reviews and approves the target compensation and goals for the CEO, evaluates, along with the other non-employee members of the Board of Directors, the CEO’s performance in light of these goals, and determines the CEO’s total cash and long-term incentive compensation program based on this evaluation.  The actions of the Committee with respect to the CEO are then reported on and discussed with the non-employee members of the Board of Directors for final approval.
At the direction of the Committee and to assist it in its review and approval process, management prepares a presentation of total compensation, “tally sheets,” and other supporting data for the Committee’s use when considering and determining executive compensation matters.  The tally sheets summarize each executive officer’s total compensation and provide information on the:
·value of each component of current compensation, including benefits and any perquisites;
·potential value of all equity-based long-term incentive awards held by the executive officer, both vested and unvested, at then-current market prices; and
·the projected value of all payments and benefits that would be payable should the executive officer’s employment terminate under various scenarios such as retirement, voluntary termination, involuntary termination or following a change-in-control.
The tally sheets provide a succinct summary of all elements of each executive officer’s compensation so that the Committee can analyze the individual elements of compensation, the aggregate amount of projected and actual compensation and the impact of Company performance on the value of both short and long-term incentive awards.
The Committee has retained Compensation Strategies, Inc. (“CSI”) as its consultant and advisor on executive officer and director compensation and benefit matters.  During 2011, CSI provided guidance to the Committee on the executive compensation environment, and provided feedback and advice on selected Committee meeting topics, including recommendations and advice on compensation for all of the Company’s executive officers.  During 2011, representatives of CSI attended four of the five Committee meetings.  For the 2011 fiscal year, CSI was paid $78,400 in fees for the services it performed for the Committee.  Management continues to use publicly available compensation and benefits survey data and information for making recommendations regarding executive officer compensation to the Committee.  Management may retain other consultants to provide related competitive data and information to assist management in formulating such recommendations.
Our executive management can and does make recommendations to the Committee.  These recommendations have historically focused on the Company’s broad-based compensation and benefit plans; award pools for long-term incentive grants; and compensation and benefits matters related to the Company’s executive officers.  However, the Committee has final approval on all compensation actions,

9

plans, and programs as they relate to executive officers.  Our CEO, other members of our management team and the Committee’s outside advisors may be invited to attend all, or a portion of the Committee meetings.  At these meetings, the Committee solicits the views of the CEO on compensation and benefits matters as they relate to the other executive officers.  However, decisions relating to compensation and benefits matters for the CEO are made by the Committee with final approval by all of the non-employee directors, in each case without the CEO being present.
Design of the Compensation Program
The executive compensation program seeks to align an executive officer’s interests with those of our stockholders by rewarding performance against established goals at the corporate and, where appropriate, business unit and regional levels, as well as to attract, retain and motivate high-caliber talent and management leadership.  In particular, our compensation program seeks to:
·link management and stockholder interests by creating incentive awards and other opportunities that balance both short and long-term goals;
·drive achievement of the Company’s business objectives and calibrate compensation to those achievements by delivering a mix of fixed and at-risk compensation; and
·provide flexibility that enables the development and deployment of talent to support the current and future needs of the Company’s businesses worldwide.
As part of its analytical process in setting executive compensation, the Committee reviews the compensation of its executive officers in relation to compensation of executives at comparable companies.  The peer group considered by the Committee consists of companies with business to business sales models, and retailers and distributors in similar markets as the Company, as well as companies with whom the Company competes for either market share or talent in specific geographic locations.  In reviewing and establishing base salaries and annual and long-term incentive programs during the first quarter of 2011, the peer group (the “Peer Group”) consisted of the following companies:
Avery Dennison CorporationNewell Rubbermaid Inc.
Alberto-Culver CompanyOfficeMax, Inc.
Brunswick CorporationOffice Depot, Inc.
Cenveo, Inc.Pitney Bowes, Inc.
Herman Miller, Inc.Polycom, Inc.
HNI CorporationSanDisk Corporation
Hospira, Inc.Steelcase, Inc.
Imation CorporationSybase, Inc.
Knoll, Inc.Synopsys, Inc.
Lexmark International Inc.United Stationers Inc.
MeadWestvaco Corp.Zebra Technologies Corp.

Later in 2011 the Alberto-Culver Company and Sybase, Inc. were acquired and, as a result, they are no longer in the Peer Group.
The Committee believes that linking pay and performance contributes to the creation of sustainable stockholder value.  The Committee believes that, for the pay-and-performance link to be effective, high-performing, experienced individuals that have proven to be strong contributors to the Company’s performance, or have shown the potential to be strong contributors, should be rewarded with total compensation that falls at approximately the 50th percentile of compensation paid to similarly situated executives of the companies comprising the Peer Group.  The Committee may exercise discretion

10

to vary these objectives in consideration of additional facts such as individual performance, experience level, future potential and specific job assignment of the executive, pay equity, market conditions and the Company’s recent performance.  In comparison to the Company’s Peer Group and based on competitive data provided by CSI, the 2011 target total compensation for the Company’s executive officers as a group was at or near the 50th percentile reflecting alignment with the Committee’s overall aggregate target levels.
Special Retention Award for Mr. Keller
At its February, 2011 meeting, the Committee recommended, and on the following day the Board of Directors approved, granting Mr. Keller 500,000 restricted stock units (“RSUs”).  This cliff-vesting retention award, which is designed to retain Mr. Keller’s services through at least the end of 2014, was granted to Mr. Keller in response to employment recruitment efforts initiated by another company with Mr. Keller and the Board’s determination that there was an increased risk that an executive of Mr. Keller’s caliber and experience would be actively recruited by other potential employers.  The Committee and Board of Directors strongly believes that this special retention award further aligned Mr. Keller’s interests directly with those of stockholders, created executive stability and will help secure consistencycontained in the Company’s strategic business direction and executive succession planning.  The Committee believes that Mr. Keller’s leadership during his tenure as Chairman and Chief Executive Officer has been critical2013 Definitive Proxy Statement, which is to the Company’s successful turnaround, and that the future success of the Company requires continuity of his vision and outstanding leadership.  Under his leadership our cumulative total shareholder return for the three full fiscal years for which he has been CEO is 279.71%, a return significantly greater than the average cumulative total shareholder return of 175.44% over the same period for our Peer Group.  Vesting of the award is conditioned upon Mr. Keller’s continued service with the Company through January 2, 2015, or earlier upon Mr. Keller’s death or disability or a change-in-control of the Company.  Further, by an amendment to the award agreement approved by the Board in December, 2011, if Mr. Keller’s employment was to be involuntarily terminated before January 2, 2015, he would fully vest in the award unless such termination was due to “Cause” as defined in the amendment.  This amendment will only become effective upon the consummation of the Company’s merger with MCOP and the amendment also acted to make clear that the merger with MCOP would not be considered a change-in-control of the Company which would trigger full vesting of the award.  Mr. Keller has agreed to a 24-month non-solicitation and an 18-month non-compete period following the termination of his employment, and the Company has the right to recoup the value of the award if he violates either of these covenants.
Because of the value of the special award, the increase in the total compensation for Mr. Keller for the year 2011 over his 2010 total compensation is not in alignment with the Company’s total shareholder return in 2011 of 13.26%.  The Board of Directors recognized the potential for this disparity in making the award but in its judgment believed the award was appropriate for the reasons described above.
Executive Compensation Mix
Our executive compensation components are weighted toward performance-based incentives, encouraging the creation of sustainable stockholder value through the achievement of the Company’s long-term profitability and growth goals.  Though the Committee has not pre-established any weightings for the various components of either cash or long-term compensation, the Committee targets the 50th percentile of the market for each compensation component.  A substantial portion of executive compensation is typically at risk and differentiated as follows:

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Annual Compensation
·Base salaries — fixed annual income that is typically reviewed and adjusted annually based on the Committee’s assessment of the individual’s performance, competitive market data and information as provided to the Committee
·Annual incentives — performance-based cash compensation that is earned only upon achieving annual objectives established by the Committee and based on operating (business) plans prepared by senior management and approved by the Board of Directors during the first quarter of each fiscal year
Long-term Compensation
·Long-term incentives — equity-based and/or cash-based incentives earned by achieving sustained long-term performance which would be expected to correlate into increasing stockholder value
Retirement Plans
·Tax-qualified defined contribution plans
Benefits
·Employee health and welfare plans that are the same as offered to all other salaried U.S.-based employees
·Supplemental and executive life and long-term disability insurance
Perquisites
·Certain limited executive perquisites which are principally legacy in nature
The Committee reviews the cash and long-term incentive compensation mix for executive officers at least annually to ensure alignment with the objectives of the Company’s compensation philosophy.
The following graphs illustrate the allocation of the principal compensation components for our named executive officers in 2011.  The percentages reflect the amounts of 2011 salary and targeted annual cash incentive compensation and the aggregate grant date fair value of LTIP awards granted in 2011.  At least 67% of these compensation components were variable and at risk for the named executive officers other than with respect to Mr. Keller, for which 76% of these compensation components were variable and at risk. The graph for Mr. Keller has been prepared on a normalized basis excluding the impact of the special retention award made to him in the first quarter of 2011 and discussed above.
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Elements of Compensation
Base Salaries
The Company uses base salaries to recognize individual experience, knowledge, job performance and skills.  Competitive base salaries allow the Company to attract high-caliber management leadership and retain their on-going services by providing them with an appropriate level of financial certainty.  Base salaries for executive officers are reviewed at least annually by the Committee and adjusted as deemed appropriate based on market conditions, promotions and the job performance of the individual.  The Committee utilizes performance assessments by the CEO, considers Company or applicable business unit performance, and competitive market data and information provided to the Committee by its compensation consultant and management to determine any adjustments to base salary.  In determining any salary adjustment for the CEO and other executive officers, the Committee typically seeks to establish salary levels that are, in the aggregate, at or near the 50th percentile for comparable positions at companies within the Peer Group and at levels consistent with its compensation philosophy.  Consistent with this the Committee may exercise discretion in setting individual base salaries higher or lower in relation to this objective when it deems that individual performance, a promotion and/or other factors warrant such action.
Base Salary Actions in 2011
In February, 2011 as part of its annual merit review process, the Committee approved 2011 base salary increases for Messrs. Keller and Fenwick as follows:
Name
Base Salary on 1/1/2010
Effective Date of Increase
New Base Salary
% Change
 
Robert J. Keller
$756,0004/4/2011$786,0004.0%
Neal V. Fenwick
$437,5004/4/2011$450,0003.3%


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The Committee determined that in light of their December 2010 salary increases, it would not consider increasing the base salaries for Messrs. Elisman, Franey and Shortt until the 2012 annual merit review process.  Based on competitive market data and a proxy pay analysis, we believe that Mr. Keller’s 2011 base salary was significantly below the 50th percentile, Mr. Fenwick’s base salary was near the 75th percentile, and the base salaries for each of Messrs. Elisman, Franey and Shortt were near the 50th percentile of the companies comprising the Peer Group.
Base Salary Actions in 2012
At its meeting in February, 2012 as part of the merit review process for 2012, the Committee approved salary increases for our named executive officers as follows:
Name
Base Salary on 1/1/2011
Effective Date of Increase
New Base Salary
% Change
 
Robert J. Keller
$786,0004/2/2012$825,0005.0%
Boris Elisman
$525,0004/2/2012$540,0002.9%
Neal Fenwick
$450,0004/2/2012$465,0003.3%
Christopher M. Franey$410,0004/2/2012$425,0003.7%
Thomas H. Shortt
$410,0004/2/2012$425,0003.7%

Based on competitive market data and a proxy pay analysis provided to the Committee by its independent consultant, we believe that Mr. Keller’s new base salary is below the 50th percentile, Mr. Fenwick’s new base salary is near the 75th percentile, and the new base salaries for each of Messrs. Elisman, Franey and Shortt are below the 50th percentile.  The increase for Mr. Keller exceeds the percentage increase for the other named executive officers as his prior salary was significantly below the 50th percentile which represents the Committee’s target level for salaried compensation.  This increase was intended to bring his salary closer to the targeted level.
The following discussion contains statements regarding future individual and Company performance targets and goals.  These targets and goals are disclosed in the limited context of ACCO Brands’ compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance.  We specifically caution investors not to apply these statements to other contexts.
Annual Incentives
We believe that annual cash-based incentives focus management on key operational performance objectives that, if achieved, can contribute to the creation of sustainable stockholder value.  The Company’s annual cash incentive program (“AIP”) is designed to reward actual performance during the fiscal year against pre-established financial and operating goals the achievement of which are within the control and influence of management.  Annual incentives are structured so that rewards are earned in line with performance, i.e., above-market rewards for superior performance and below-market or no rewards for inferior performance.
For the 2011 AIP, the Committee determined that the performance metric to be used to measure any award granted would be EBITDA (earnings before interest, taxes, depreciation and amortization) for all executive officers, subject to adjustments as described below.  The Committee believes that EBITDA is a key measure of the Company’s ability to generate profits and positive cash flows.  The threshold performance level for 2011 awards was set at an as-reported level of adjusted EBITDA of $164 million, adjusted for the Company’s mid-year divestiture of its Australian GBC Fordigraph business and above actual 2010 reported EBITDA of $158 million and consistent with the Company’s business plan.

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In light of the global economic uncertainty that existed in early 2011, management and the Committee implemented financial control mechanisms in the 2011 AIP structure to ensure that incentives would be provided to executive officers only if performance met or exceeded the Board’s planned expectations.  However, in light of the Company’s improved financial position and operational profitability, to fulfill management’s commitment to normalize its pay practices and to ensure top talent retention and motivation, the Committee discontinued actions implemented in 2010 that had reduced the target AIP cash award opportunity by 50% and restored the 2011 AIP target opportunities to normal levels.  As structured by the Committee, incentives would begin to accrue through a self-funding approach whereby EBITDA in excess of a reported $164 million, as adjusted, would fund the incentive pool on a basis of approximately fifty cents for each excess dollar until a level of earnings that would be necessary to pay the 2011 AIP incentives at the maximum award level was reached.  Target adjusted EBITDA, net of incentive plan accruals, was set at $178.2 million and an adjusted EBITDA of $195.5 million was set as the goal for a maximum award, both calculated using business plan foreign exchange translation rates and including the results of the GBC Fordigraph business that the Company later sold in June, 2011.
The annual incentive opportunities that were available for 2011 for the named executive officers are shown in the following table:
Name
Target AIP as %
of Salary (100% of Target)
Maximum AIP as % of Salary (200% of Target)
 
Robert J. Keller
                105%210%
Boris Elisman
                  80%160%
Neal V. Fenwick
                  65%130%
Christopher M. Franey                  65%130%
Thomas H. Shortt
                  65%130%

Reported EBITDA achievement for the year was an adjusted $168.3 million which exceeded the adjusted $164 million threshold required for any AIP awards to be earned and resulted in an achievement level of 45.1% of the target award.  Awards earned for each of the named executive officers are shown in the following table:
Name
Target AIP Opportunity
Actual AIP Award
 
Robert J. Keller
         $816,819                $368,385
Boris Elisman
       ��   420,000                  189,420
Neal V. Fenwick
           290,006                  130,793
Christopher M. Franey           266,500                  120,192
Thomas H. Shortt
           266,094                  120,008

Annual Incentives for 2012
For the 2012 AIP, the Committee has again determined that all executive officers will be measured on financial metrics only and the performance metric to be used to measure any award granted will be the Company’s reported EBITDA, subject to necessary adjustments, except for Mr. Franey who will have performance metrics of 20% based on EBITDA performance and 80% based on operating income performance of the two businesses for which he is responsible.  The Committee continues to believe that EBITDA, and operating income for the Company’s regional businesses, are key measures of the Company’s ability to generate profits and positive cash flows.  The Committee also approved the following target award levels under the 2012 AIP in the event of plan target achievement of the established performance goal:  Mr. Keller at 110% of base salary; Mr. Elisman at 90% of base salary;

15

and, Messrs. Fenwick, Franey, and Shortt at 65% of base salary.  The Committee increased the target award levels for Messrs. Keller and Elisman from the levels applicable in 2011 to bring their target cash earnings opportunity closer to the Committee’s 50th percentile target as shown by the proxy pay analysis used by the Committee but making a larger portion of their target cash compensation performance related.
Long-Term Incentives
We believe that long-term incentives must serve as a significant portion of an executive officer’s overall compensation package.  Stock-based awards are provided to motivate executive officers and other eligible employee participants to focus their efforts on activities that contribute to the creation of sustainable stockholder value over the long-term, thus aligning their interests with those of the Company’s stockholders.  Long-term incentives are structured so that rewards are earned in line with performance-above-market rewards for superior performance and below-market or no rewards for inferior performance.
Currently, awards are granted under the LTIP.  Pursuant to this plan, the Company may award to key employees, including all of the named executive officers, a variety of long-term incentives, including nonqualified stock options, incentive stock options, cash or stock-settled stock appreciation rights, restricted stock units, performance share units, and other stock-based incentives, as well as short and long-term cash incentive awards.
The Committee reviews the long-term incentive and equity award mix on an annual basis, consistent with both current and long-term Company goals as well as the current and projected level of shares of the Company’s common stock that would be available to issue under any granted awards.  The award mix is constructed to provide executives with a long-term incentive opportunity that rewards successful financial and operational performance, aligns management and employees with stockholder interests, and provides a necessary retention element.  Historically the Committee has used a combination of stock options, stock appreciation rights, RSUs and performance share units (“PSU”) in creating the annual mix of equity awards granted to management, including the named executive officers.  Consistent with its objective of rewarding executives for good performance the Committee, in determining annual equity awards, would prefer to provide a mix of approximately 50% PSUs, 25% RSUs and 25% stock options or stock-settled stock appreciation rights.  However, in the recent past the Committee has deviated from this strategy because of the limited number of equity-based units available for future grant under the LTIP.
We have granted PSUs under the LTIP annually since 2010.  Each year’s grant may result in an accrual of one-third of a PSU award annually based on performance attainment, but vests after the third calendar year following grant.  This approach provides the ability for our grants to overlap performance measurement cycles.  Each calendar year of the three-year performance period has specific performance metrics and targets as determined annually by the Committee.  This structure is intended to provide the Committee with greater flexibility to set meaningful performance metrics and/or targets in order to adapt to changing economic conditions, as well as future changes in the Company’s strategic direction or financial and business needs.  Participants have an opportunity in each year of the performance period to accrue from 50% to 150% of one-third of the value of the three-year long-term incentive award, based upon the level of achievement within a range of threshold to maximum performance targets.  PSUs and, where applicable, cash awards accrued each year vest upon completion of the third year of the performance period, except as otherwise provided in the LTIP or applicable award agreements.  The past two-years of PSU award details are further described below in addition to the awards granted in 2012.

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Long-term Incentive Awards for 2010-2012 Performance Period
As a result of the limited availability of equity-based award units at the time, the Committee granted to the Company’s executive officers long-term incentives in the form of three-year stock and cash-based performance awards for the 2010-2012 performance period.  Forty-one percent (41%) of the grant value of this long-term award was comprised of PSUs with the balance comprised of a long-term cash award.  No stock options or stock appreciation rights were granted during the 2010 year.
The Committee has established target long-term incentive grant levels as a percentage of base salary for all executive officers, including each of the named executive officers.  These grant levels are based on analysis of the compensation practices of the Peer Group, internal equity considerations, and the intent to maintain a compensation package that is balanced toward variable, performance-based compensation instead of base salary.  The target levels as determined by the Committee for the 2010 award for Mr. Keller were 160% of base salary and 100% of base salary for Messrs. Elisman, Fenwick, Franey and Shortt.  The table below shows the grants made to the named executive officers for the 2010-2012 performance period at target level opportunity.
 
2010-2012 LTIP Grant
 
Name
Total Target Award Value
Target PSUs (Based on Free Cash Flow)
Target Cash (Based on Revenue Growth)
 
Robert J. Keller
        $1,148,03865,800$680,200
Boris Elisman
           $420,00022,900$236,800
Neal V. Fenwick
           $435,80023,800$245,400
Christopher M. Franey           $336,10018,400$188,900
Thomas H. Shortt
           $393,80021,500$221,800

For 2011, the award opportunity under the PSU component was based on the achievement of a free cash flow target and the award opportunity under the cash-based component was based on the achievement of a revenue growth target.  These metrics are independently calculated against their respective targets.  In establishing these metrics, the Committee sought to focus management on profitability and cash flow generation believing that targeted performance will give the Company greater flexibility to continue to either reduce its debt levels, invest in strategic product innovation or consummate product line or business acquisitions, all of which the Committee believes would benefit shareholder value.
In 2011, grant recipients, including the named executive officers, had the opportunity to earn up to one-third (1/3) of the grant levels shown above if the Company achieved its cash flow and revenue growth goals for the year.  In addition the Committee conditioned the accrual of any of these awards on the Company attaining minimum adjusted EBITDA of $164 million for the 2011 year.  In determining the level of achievement, the Committee adjusted the cash flow target to reflect the net positive impact on cash flow of the sale of the Australian GBC Fordigraph business as well as favorable foreign exchange impact and the negative impact of cash used in pursuing the MCOP acquisition.  The 2011 threshold, target and maximum performance levels for the PSU portion of the 2010 grant are shown in the following table. Adjusted free cash flow in 2011 was $60 million and as a result the target level of PSUs were accrued for payment to our executive officers, including the CEO and the named executive officers, which payment will be made at the end of the 2010-2012 performance period.
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2011 Free Cash Flow PSUs for the 2010-2012 LTIP Grant Period
Name
Threshold
($45 Million)
Target (and Actual)*
($60 Million)
Maximum
($75 Million)
 
Robert J. Keller
               10,967               21,933               32,900
Boris Elisman
                 3,817                 7,633               11,450
Neal V. Fenwick
                 3,967                 7,933               11,900
Christopher M. Franey                 3,067                 6,133                 9,200
Thomas H. Shortt
                 3,584                 7,167               10,751
_____________
*Reflects number of PSUs accrued for payment at end of performance period.
After adjusting for the effect of currency fluctuations and the sale of GBC Fordigraph, revenues declined in 2011 by 0.5% compared to 2010 levels. As the threshold level of 2.5% revenue growth was not met, no cash awards were accrued to any of the executive officers for the 2011 period and, as a result, one-third of the total target cash award for the 2010-2012 Performance Period was forfeited by each named executive officer.
Long-term Incentive Awards for 2011-2013 Performance Period
At its 2011 Annual Meeting, the Company’s shareholders approved making an additional 5,265,000 shares available for equity grants under the LTIP.  Having these additional shares available for awards permitted the Committee to follow its desired policy of having all LTIP awards be equity based with the majority of such awards being performance related.  While retaining discretion to vary award sizes and mix based on circumstances that may arise, the Committee reverted to its previously established normal award mix policy by eliminating the cash award portion and having the 2011 grants be comprised of:
·50% PSUs for the three-year performance period beginning January 1, 2011;
·25% RSUs; and
·25% Non-Qualified Stock Options (“NQSO”).
Target grants were valued at 160% of Mr. Keller’s base salary and 100% of the base salary of the other named executive officers.
The table below shows the grants made to the named executive officers on May 18, 2011, with the 2011-2013 performance period shown at the target level opportunity for PSUs.  The NQSOs were awarded on that date at a strike price of $8.93 per share which was the average of the high and low reported prices for the Company’s Common Stock on that day on the New York Stock Exchange (“NYSE”).
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2011-2013 LTIP Grant
Name
Total Target Award Value
NQSOs
RSUs
Target PSUs
 
Robert J. Keller
       $1,257,60087,70039,700          104,100
Boris Elisman
            682,50047,60021,600            56,500
Neal V. Fenwick
            450,00031,40014,200            37,300
Christopher M. Franey            410,00028,60013,000            34,000
Thomas H. Shortt
            410,00028,60013,000            34,000

In 2011, grant recipients, including the named executive officers, again had the opportunity to earn up to one-third (1/3) of the target PSU grant levels shown above if the Company achieved the cash flow and revenue growth goals for the year with each of those metrics representing 50% of that grant level. For 2011 the same financial performance targets were used as for the 2011 tranche of the 2010-2012 Performance Period described above.  Further any awards were again conditioned upon the Company achieving a minimum adjusted EBITDA of $164 million.  In determining the achievement levels, the same adjustments to revenue and cash flow were made as described above.  The 2011 threshold, target and maximum performance levels are shown in the tables below. Adjusted free cash flow in 2011 was $60 million and as a result the target level of PSUs as shown in the following table were accrued for payment to the executive officers, including the CEO and the named executive officers, which payment will be made at the end of the 2011-2013 performance period.
 
2011 Free Cash Flow PSUs for the 2011-2013 LTIP Grant Period
Name
Threshold
($45 Million)
Target (and Actual)*
($60 Million)
Maximum
($75 Million)
 
Robert J. Keller
8,675             17,350               26,025
Boris Elisman
4,709               9,417               14,126
Neal V. Fenwick
3,109               6,217                 9,326
Christopher M. Franey2,834               5,667                 8,501
Thomas H. Shortt
2,834               5,667                 8,501
_____________
*Reflects number of PSUs accrued for payment at end of performance period.
After adjusting for the effect of currency fluctuations and the sale of GBC Fordigraph, revenues declined in 2011 by 0.5% compared to 2010 levels. As the threshold level of 2.5% revenue growth was not met, no PSU awards targeted to the revenue growth metric were accrued to any of the executive officers for the 2011 period and, as a result,  one-sixth of the total target PSU award for the 2011-2013 Performance Period was forfeited by each executive officer.
Long-term Incentive Awards for 2012–2014 Performance Period
At its meetings in February, 2012 the Committee and the Board granted long-term incentive awards to the Company’s executive officers, including the CEO and the named executive officers, which were again comprised of:
·50% PSUs for the three-year performance period beginning January 1, 2012;
·25% RSUs; and
·25% NQSOs.

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The table below shows the grants made to the named executive officers, including PSUs for the 2012-2014 performance period at target level opportunity.  The NQSOs were awarded on that date at a strike price of $12.17 per share which was the average of the high and low reported prices for the Company’s common stock on that day on the NYSE.
 
2012-2014 LTIP Grant
Name
Total Target Award Value
NQSOs
RSUs
Target PSUs
 
Robert J. Keller
        $1,856,000          108,15950,822          133,911
Boris Elisman
           $775,000            45,16321,221            55,916
Neal V. Fenwick
           $465,000            27,09812,733            33,550
Christopher M. Franey           $500,000            29,13813,691            36,075
Thomas H. Shortt
           $380,000            22,14510,405            27,417

The performance metrics that will be used for the first year of the 2012-2014 PSU award, as well as the third year of the 2010-2012 PSU award and second year of the 2011-2013 PSU award, will be revenue growth weighted at 50%, working capital 12-month average days sales of inventory (“DSI”) weighted at 25%, and working capital 12-month average days sales outstanding (“DSO”) weighted at 25% respectively, to determine the total potential award that could be accrued.  The Committee decided to deviate from the use of cash flow as a performance metric in 2012 believing that the pending merger with MCOP, if consummated, would create significant measurement challenges.  The Committee believes that working capital ratio improvement will be easier to measure and is also a significant driver to increasing cash flow and EBITDA growth.
 
2012 Revenue Growth Target PSUs for the
2012-2014 LTIP Grant
Name
Threshold
Target
Maximum
 
Robert J. Keller
            11,160             22,319            33,479
Boris Elisman
              4,660               9,319            13,979
Neal V. Fenwick
              2,796               5,592              8,388
Christopher M. Franey              3,007               6,013              9,020
Thomas H. Shortt
              2,285               4,570              6,855

 
2012 Working Capital DSI Target PSUs for the
2012-2014 LTIP Grant
Name
Threshold
Target
Maximum
 
Robert J. Keller
5,580            11,160            16,740
Boris Elisman
2,330              4,660              6,990
Neal V. Fenwick
1,398              2,796              4,194
Christopher M. Franey1,504              3,007              4,511
Thomas H. Shortt
1,143              2,285              3,428

 
2012 Working Capital DSO Target PSUs for the
2012-2014 LTIP Grant
Name
Threshold
Target
Maximum
 
Robert J. Keller
5,580            11,159            16,739
Boris Elisman
2,330              4,660              6,990
Neal V. Fenwick
1,398              2,796              4,194
Christopher M. Franey1,504              3,007              4,511
Thomas H. Shortt
1,143              2,285              3,428


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Timing of Stock Option and SSAR Awards
All awards of Company stock options and SSARs under the LTIP are granted with exercise prices not less than the average of the high and low trading price of the Company’s stock on the New York Stock Exchange on the date of the award, or the next trading day if the awards are made on a day when the Exchange is closed.  Annual awards of stock options or SSARs, to executive officers and other eligible management employees, if granted, are made at the Company’s regular meeting of the Board of Directors scheduled for the first quarter of the year, typically in the month of February, absent special circumstances.  Off-cycle (non-annual) awards may be made if the CEO and the Committee deem it necessary for newly-promoted employees, strategic new hires, or in other special or unique circumstances.  For off-cycle awards, the grant date will be the date the Committee approves any such award.
Stock Ownership Guidelines/Hedging Policies
To further align the executive officers’ interests with those of stockholders, the Company has adopted share ownership guidelines which apply to all executive officers and have been approved by the Committee, as shown below:
Executive Title
Multiple of Base Salary
Chief Executive Officer
6X
Chief Operating Officer4.5X
CFO and Presidents
3X
Other Executives
2X

Stock counting towards ownership targets include shares held by the executive personally in both retirement and non-retirement accounts, shares beneficially owned through a trust, spouse and/or dependent child, unvested RSUs, accrued PSUs and unvested PSUs at target when awarded.  Executives are generally expected to achieve their respective ownership goals within five years of becoming an executive officer.
The Compensation Committee has the discretion to remedy any deficiency if ownership goals are not met on a timely basis.  Remedies may include providing a portion of annual incentive awards in Company stock or similar actions.  The Committee may also consider other factors, including general equity market conditions and the Company’s then-current stock price, when determining the need for any remedies.
Under our insider trading policy, our executives are prohibited from trading in the Company’s put, calls, options or similar securities or engaging in short sales of our stock.  As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC is scheduled to issue proposed rules later this year requiring disclosure in proxy materials of whether employees and directors are permitted to purchase financial instruments designed to hedge or offset a market value decrease of equity securities granted to them as compensation or otherwise held by them.  We intend to monitor the SEC rulemaking and revise our insider trading policy as appropriate.
Retirement Benefits
All of the Company’s named executive officers were participants in the Company’s tax-qualified 401(k) retirement savings plan during 2011.  The Company’s matching contribution of 4.5% (100% match on the first 3% of an employee’s contributions and 50% match on the next 3% of employee contributions) to the 401(k) plan are levels that management and the Committee consider to be market

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competitive and apply to all plan-participating employees, including named executive officers.  Theamount of benefits provided to the named executive officers in the form of 401(k) plan contributions are described in detail in the 2011 Summary Compensation Table.
In circumstances that the Committee has considered to be unique, and where it deemed such action to be in the Company’s best interests, it has in the past authorized the Company to enter into supplemental retirement agreements with certain of the Company’s named executive officers.  No such agreements were entered into in 2011.  The ACCO Brands Corporate Pension Plan for Salaried and Certain Hourly Paid Employees (the “ACCO Pension”) and the Company’s 2008 Amended and Restated Supplemental Retirement Plan (the “SRP”) were frozen in the first quarter of 2009.  As a result none of the executive officers that participate in the ACCO Pension or the SRP have accrued any additional benefits under those Plans since that time.  In line with the Committee’s overall philosophy of providing competitive retirement benefits, the Committee may, in the future, consider reinstating benefit accruals under the ACCO Pension and SRP or may consider the implementation of other forms of retirement benefits to be provided for the executive officers.
Employee Benefits
The employee medical and welfare benefits provided to executive officers are offered through broad-based plans available to all employees.  The Company also provides certain expatriate allowances, relocation expense reimbursements and tax equalization payments to employees, including any executive officer, assigned to work outside their home countries.  In those situations, the Company will reimburse the employee for any personal income taxes due on those items in accordance with the Company’s relocation policies in effect from time-to-time and will make tax equalization payments to the employee to ensure no greater tax burden is imposed on the employee resulting from his expatriate assignment.
Perquisites
The attributed costs to the Company and a description of personal benefits provided to the named executive officers are included in the “All Other Compensation” column of the 2011 Summary Compensation Table and related footnotes.  The Committee strives to limit the use of perquisites as an element of compensation for executive officers.  The Company does not gross–up income taxes for imputed income on the value of any executive officer perquisites that are not otherwise provided under a specific broad based plan, such as the relocation policies described above.
Employment and Severance Arrangements
The Company’s Executive Severance Plan (the “ESP”) is administered by the Committee and provides severance benefits to the Company’s executive officers and a limited number of other key executives in the event that their employment is terminated either involuntarily or voluntarily for good reason.  Executives will receive enhanced benefits if a termination of employment follows a change-in-control of the Company.  The change-in-control cash severance benefits are “double-triggered” meaning that both a change-in-control and an involuntary termination of employment or termination by the executive for “good reason” must occur to receive payment.  Management recommends potential participants to the Committee for their consideration and final approval.  All of the Company’s named executive officers currently participate in this Plan.  There are no individual employment contracts.
The ESP is intended to help the Company attract and retain executives in a talent marketplace where such employment protections are commonly offered.  The benefits provided by the Plan ease an executive’s transition due to an unexpected and involuntary employment termination due to changes in the Company’s employment needs.  The Committee believes that the existence of a severance plan helps executives to focus on maximizing shareholder value, with less concern for personal financial stability, in

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the event of a change-in-control.  Please refer to “Executive Compensation — Potential Payments and Benefits Upon Termination of Employment” and the related tables and footnotes for additional information concerning severance arrangements.
The Committee has determined that the pending merger of MCOP with the Company is not a “Change in Control” as that term is defined in the ESP.  However, the Committee recognizes that as a result of the merger it is possible that an executive officer could have his employment terminated due to redundancies that might be caused by the merger.  In such an event, the Committee may, in its sole discretion, decide to provide a terminated executive officer severance benefits in excess of the benefits provided for in the ESP in the event of an involuntary termination of employment.  For the Committee to consider providing any enhanced benefits, which would not exceed the amounts provided for a Change in Control event under the ESP, any such redundancy-related termination would have to occur within one-year following consummation of the merger.
Clawback and Recoupment Policy
We have a policy allowing ACCO Brands to recoup or “clawback” compensation paid or payable to executive officers in the event of a financial restatement.  Under the policy, executives who receive any incentive compensation are required to reimburse the Company in the event:
·the amount was based upon the achievement of financial results that were subsequently the subject of an accounting restatement due to the material noncompliance with any financial reporting requirement under the federal securities laws;
·the executive engaged in knowing or intentional fraudulent or illegal conduct that caused or partially caused the need for the restatement; and
·a lower amount would have been paid to the executive based upon the restated results.
In such circumstances the Company will, to the extent practicable and permitted by governing law, seek to recover from the executive the amount by which the executive’s incentive payments exceeded the lower payment that would have been made based on the restated financial results.
The recently enacted Dodd-Frank Act requires companies to adopt a policy that, in the event the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement, the Company will recover incentive compensation received by the executive prior to the accounting restatement resulting from erroneous financial data.  We will review our existing policy and make any necessary amendments once the final rules required to be issued under the Dodd-Frank Act are adopted.
Tax and Accounting Implications
Tax Deductibility
Section 162(m) of the Code limits the allowable tax deduction that we may take for compensation paid to the CEO and certain other executive officers.  We believe that compensation paid under our various incentive plans is generally fully deductible by the Company for federal income tax purposes.  However, in certain situations, the Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of compensation for the named executive officers.  While there is no certainty that all executive compensation will be fully deductible under Section 162(m), efforts will be made to maximize its deductibility.  We believe that all AIP compensation earned by the Company’s executive officers was fully deductible for the year 2011.

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REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of ACCO Brands Corporation oversees the compensation programs of the Company on behalf of the Board.  In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management of the Company the Compensation Discussion and Analysis included in this Form 10-K/A.
In reliance on the review and discussions referred to above, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and in the proxy statement for the Company’s 2012 annual meeting of stockholders, each of which has been or will be filed with the SEC.Securities and Exchange Commission prior to April 30, 2013 and is incorporated herein by reference.

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Table of Contents


Members of the Compensation Committee:
Norman H. Wesley (Chairperson)
George V. Bayly
Thomas Kroeger
Sheila G. Talton
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Form 10-K/A into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
EXECUTIVE COMPENSATION
2011 Summary Compensation Table
The table below provides information regarding the total compensation paid or earned by each of Robert J. Keller, Chairman of the Board and Chief Executive Officer, Neal V. Fenwick, Executive Vice President and Chief Financial Officer; and the Company’s three other most highly compensated executive officers, for each of the fiscal years ended December 31, 2011, 2010 and 2009:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
 
Year
Salary ($)
Bonus ($)
 
Stock Awards ($)(1)(2)
Option Awards ($)(1)
Non-Equity Incentive ($)(3)
Change in Pension ($)(4)
All Other Comp ($)(5)
Total ($)
 
Robert J. Keller
         
Chairman of the Board and Chief Executive Officer2011777,923   —      5,431,634        337,645      368,385               —35,725      6,951,312
2010755,446   —         467,838                 —      440,826               —35,353      1,699,463
2009619,805   —                  —          68,250               —               —20,592         708,647
Boris Elisman         
President and Chief Operating Officer2011525,000   —         697,433        183,260      189,420         18,00027,599      1,640,712
2010424,942   —         162,819                —      157,260         14,00027,527         786,548
2009349,971   —                 —          31,500               —         18,00018,974         418,445
Neal V. Fenwick         
Executive Vice President
and Chief FinancialOfficer		2011446,164   —         459,895        120,890      130,793       259,57534,885      1,452,202
2010435,431   —         169,218                —      162,048       236,21434,626      1,037,537
2009363,095    —                 —          31,500               —    1,444,00026,949      1,865,544


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(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
 
Year
Salary ($)
Bonus ($)
Stock Awards
($)(1)(2)
Option Awards
($)(1)
Non-Equity Incentive ($)(3)
Change in Pension ($)(4)
All Other Comp ($)(5)
Total ($)
Christopher M. Franey         
Executive Vice President and President, International and Kensington2011410,000         419,710      110,110      120,192                —      62,771      1,122,783
2010367,920             —        130,824               —      122,135                —      57,040         677,919
2009290,107
     176,500(6)
                 —        21,000               —                —    122,298         609,905
Thomas H. Shortt         
Executive Vice President and President, Product Strategy and Development2011409,375             —         419,710      110,110      120,008                —      27,063      1,086,266
2010393,462             —         152,865               —      146,447                —      32,676         725,450
2009260,192             —                 —        26,250               —                —    476,184         762,626
_____________
(1)The amounts in columns (e) and (f) reflect the aggregate grant date fair value for the fiscal year ended December 31 for each year shown that is attributable to stock and option awards made under the Company’s Amended and Restated 2011 Incentive Plan as determined in accordance with FASB ASC Topic 718.  Assumptions used in the calculation of these amounts are included in Note 5 to the Company’s audited financial statements for the fiscal year ended December 31 for each year shown included in the Company’s Annual Reports on Form 10-K filed with the Securities and Exchange Commission.
(2)The amounts in column (e) also include the grant date fair value of RSUs and PSUs granted in 2011.  These awards are described in more detail in the footnotes to the tables in “Grants of Plan-Based Awards” and the “Outstanding Equity Awards at Fiscal Year End”.  The values of the PSUs shown in this table are the target payout levels, based on the probable outcome of the performance conditions, determined as of the grant date.  The maximum value of the PSUs granted in 2011 would equal 150% of the target award.  Mr. Keller’s maximum potential 2011 PSU award value would be $1,394,420; for Messrs. Elisman, Fenwick, Franey and Shortt, the maximum potential 2011 PSU award values would be $756,818, $499,634, $455,430, and $455,430 respectively.
(3)The amounts shown include the annual incentive award earned under the AIP by each of the named executive officers for the year 2011, which was paid at 45.1% of the target award opportunity.  The 2011 one-year measurement cycle of the three-year 2010 LTIP cash award resulted in no accrual for 2011.  See “Compensation Discussion and Analysis—Long-term Incentive Awards for 2010-2012 Performance Period.”  For 2010, the amounts shown include the annual incentive award earned under the AIP by each of the named executive officers for that year and the amount earned for the one-year measurement cycle of the three-year 2010 LTIP cash award, which was accrued at 98.8% of target.  For 2009, the amount listed represents the amount of the AIP award earned by each named executive officer under the AIP for that year.
(4)The amounts listed represent the aggregate change in actuarial present value during each year shown for the named executive officer’s accumulated benefit provided under the ACCO Pension, SRP and, as to Mr. Fenwick, the retirement agreements described under “Pension Benefits.” None of the named executive officers earned any preferential amounts on their accounts in the nonqualified deferred compensation plans of which they are a participant.  Messrs. Keller, Shortt, and Franey were not eligible to participate in the ACCO Pension and SRP at the time both plans were frozen, as they did not meet the minimum service requirement of the plans.  During 2009, the accumulated benefit for Mr. Fenwick increased due to an increase in the inflation rate, a decrease in the discount rate, and an increase in the foreign exchange rate used in the actuarial present value calculation, which caused the significant change for that year.  Further details about these plans are detailed under “Pension Benefits” and “Nonqualified Deferred Compensation” below.
(5)The following table provides details about each component of the “All Other Compensation” column in the 2011 Summary Compensation Table.
 
Automobile
Allowance ($)
Company Contributions to Defined Contribution Plans ($)(a)
Tax Gross Ups, Tax Equalization and Relocation Expenses
($)(b)
Miscellaneous Perquisites ($)
Total ($)
 
Mr. Keller                                       
15,99611,025                —
8,704(c)
35,725
Mr. Elisman                                       13,99211,025                —
2,582(c)
27,599
Mr. Fenwick                                       13,99211,025                —
9,868(d)
34,885
Mr. Franey                                       13,99211,025          33,685
4,069(c)
62,771
Mr. Shortt                                       13,99211,025                —
2,046(c)
27,063
____________
(a)The amounts represent the Company’s 2011 contribution to the tax-qualified 401(k) savings plan account for each of the named executive officers.
(b)This amount represents the incremental cost incurred by the Company in connection with Mr. Franey’s expatriate assignment in the United Kingdom.  Included in this amount is $12,039 for income and payroll tax gross ups.
(c)Represents the cost to the Company for premiums paid on excess Long-term Disability and Group Term Life Insurance.

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(d)
Represents the costs to the Company of personal benefits and perquisites for Mr. Fenwick, including premiums paid on excess long-term disability and group term life insurance, income tax preparation fees, and personal travel for himself and family members.
(6)This amount includes a $76,500 sign-on bonus paid in conjunction with Mr. Franey joining the company and a $100,000 discretionary bonus awarded and paid for the year 2009.
Grants of Plan-Based Awards
The following table sets forth information concerning each grant of an award made to a named executive officer under any of the Company’s incentive plans during the fiscal year ended December 31, 2011.
Name
Grant
Date for Awards
Estimated Future Payouts
under Non-Equity Incentive
Plan Awards(1)
Estimated Future Payouts under Equity Incentive
Plan Awards(2)
All Other Stock
Awards:  Number
of Shares of Stock
or Units#(3)
All Other Option
Awards:  Number
of Securities
Underlying
Options #(4)
Exercise or
Base Price of
Option Awards
($/Share)(5)
Grant Date
Fair Value
of Stock and
Option
Awards ($)(6)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
 
Robert J. Keller
02/24/11206,325825,3001,650,600                  —
 05/18/11   52,050104,100156,150       929,613
 05/18/11      539,700  4,502,021
 05/18/11       87,7008.93    337,645
 
Boris Elisman
02/24/11105,000420,000   840,00028,250  56,500  84,750  21,60047,6008.93            —
 05/18/11             504,545
 05/18/11             192,888
 05/18/11             183,260
 
Neal V. Fenwick
02/24/11  73,125292,500   585,000                  —
 05/18/11   18,650  37,300  55,950       333,089
 05/18/11         14,200      126,806
 05/18/11       31,4008.93    120,890
 
Christopher M. Franey
02/24/11  66,625266,500   533,000                  —
 05/18/11   17,000  34,000  51,000       303,620
 05/18/11         13,000      116,090
 05/18/11       28,6008.93    110,110
 
Thomas H. Shortt
02/24/11  66,625266,500   533,000                  —
 05/18/11   17,000  34,000  51,000       303,620
 05/18/11         13,000      116,090
 05/18/11       28,6008.93    110,110
_____________
(1)The amounts shown were the potential AIP earnings for 2011 at threshold, target and maximum performance.  The actual amounts of AIP awards for 2011 are included in column g of the Summary Compensation Table and further described in footnote (3) thereto.
(2)Represents the threshold, target and maximum number of PSUs granted in 2011 to be earned based on achievement of performance metrics established by the Board of Directors annually for each year of the 2011-2013 three-year performance period.  Any awards earned for each of the first two years are accrued and do not vest until completion of the three-year performance period.
(3)Reflects RSUs which vest on the third anniversary date of the grant and for Mr. Keller includes a special retention award of 500,000 RSUs which vests on January 2, 2015, unless otherwise accelerated.  See “Compensation Discussion and Analysis—Special Retention Award for Mr. Keller.”
(4)Amounts shown represent unqualified stock options awarded under the LTIP.
(5)The exercise price per share of each stock option award equals the average of the high and low sales price of a share of Company common stock on the date of grant as reported on the New York Stock Exchange.
(6)Amounts represent the grant date fair value of each equity award granted in 2011 in accordance with FAS 123 (R).
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning unexercised stock options and stock settled stock appreciation rights, restricted stock units that have not vested and equity incentive plan awards as of December 31, 2011 for each of the executive officers named in the 2011 Summary Compensation Table.
26
 
Option and SSAR Awards
Stock Awards
Name
Number of Securities Underlying Unexercised Options (#) or SSARs Exercisable
Number of Securities Underlying Unexercised Options (#)
 or SSARs Unexercisable(1)
Option or SSARs Exercise Price ($)
Option or SSARs Expiration Date
Number of Shares or Units of Stock That Have Not Vested (#)
Market Value of Shares of Units That Have Not Vested ($)(3)
Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(4)
Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)(3)
 
Robert J. Keller
         —              87,700          8.93 5/18/2017
500,000(5)
4,825,00045,667440,687
          —
108,333(2)
          0.81 2/25/2016
  39,700(6)
   383,105  
 105,000    —          2.59 11/7/2015
  23,000(7)
  221,950  
     
  32,900(9)
  317,485  
     
    17,350(10)
  167,428  
 
Boris Elisman
         —              47,600          8.93 5/18/2017
   21,600(6)
  208,44022,650218,573
 100,000
              50,000(2)
          0.81 2/25/2016
   11,000(8)
  106,150  
   21,400    —        14.02   4/6/2015
    11,450(9)
  110,493  
     7,000    —        21.49 3/15/2014
       9,417(10)
   90,874  
   40,000    —        22.68  12/6/2012    
   39,877    —        19.5911/28/2014    
 
Neal V. Fenwick
        —              31,400          8.93  5/18/2017
    14,200(6)
  137,03016,400158,260
 100,000
              50,000(2)
          0.81  2/25/2016
    11,000(8)
  106,150  
   21,400    —        14.02  3/18/2015
    11,900(9)
  114,835  
   14,500    —        21.49  3/15/2014
       6,217(10)
   59,994  
   90,000    —        22.68  12/6/2012    
   71,780    —        18.25 10/27/2014    
   39,877    —        14.42    9/28/2013    
   20,400    —        12.32    9/22/2012    
 
Christopher M. Franey
        —              28,600          8.93    5/18/2017
   13,000(8)
  125,45014,400138,960
   66,667
              33,333(2)
          0.81    2/25/2016
     4,530(8)
    43,715  
     9,600   —        14.02  12/10/2015
      9,200(9)
    88,780  
     
        5,667(10)
    54,687  
 
Thomas H. Shortt
        —             28,600          8.93    5/18/2017
     13,000(6)
 125,45014,916143,939
    83,333
             41,667(2)
          1.09    3/31/2016
     10,751(9)
 103,747  
     
         5,667(10)
   54,687  
_____________
(1)Unless otherwise noted, stock option and stock-settled stock appreciation awards vest ratably over the first three anniversaries of their original grant dates.  Un-exercisable stock options and SSARs would accelerate and become immediately exercisable upon the death or disability of the named executive officer or upon a change-in-control.
(2)Award is in the form of SSARs.
(3)Reflects the value as calculated based on the $9.65 closing price of the Company’s common stock on December 30, 2011.
(4)These amounts consist of unearned PSUs for the remainder of the respective 2010-2012 and 2011-2013 performance periods at a threshold level of performance.  The vesting of these unearned PSUs could accelerate under the following circumstances:
Event
Result
Involuntary termination
Award would vest pro-rata, provided that the termination occurs after June 30 of the last year of the three-year performance grant cycle.
RetirementAward would vest pro-rata.
Death, Disability or Change-in-ControlAward would fully vest.

(5)Time vested restricted stock units that vest and convert into the right to receive an equal number of shares of the Company’s common stock on January 2, 2015 provided Mr. Keller remains an employee of the company at that time.  The vesting of these stock units could accelerate under the following circumstances:
Event
Result
Involuntary Termination
Award would fully vest provided the termination occurs following the pending merger with MCOP.
RetirementAward would not vest.
Death, Disability or Change-in-ControlThe award would fully vest.

(6)Time vested restricted stock units that vest and convert into the right to receive an equal number of shares of the Company’s common stock on May 18, 2014 provided the named executive officer remains and employee of the Company at that time.  The vesting of these stock units could accelerate under the following circumstances and conditions.
27
Event
Result
Involuntary termination
Award would be prorated to date of separation.
RetirementAward would vest pro-rata.
Death, Disability or Change-in-ControlAward would fully vest.

(7)Time vested restricted stock units that vest and convert into the right to receive an equal number of shares of the Company’s common stock on November 7, 2012 provided Mr. Keller remains in the employ of the Company at that time.  The vesting of these stock units could accelerate under same conditions as described in footnote (6) above.
(8)Time vested restricted stock units that vest and convert into the right to receive an equal number of shares of the Company’s common stock on March 19, 2012 for Messrs. Fenwick and Elisman and December 10, 2012 for Mr. Franey, provided the named executive officer remains an employee of the Company at that time.  The vesting of these stock units could accelerate as discussed in the footnote (6) above.
(9)Represents PSUs from the 2010-2012 grant that have been earned based on 2010 and 2011 performance and will vest and convert into an equal number of shares of the Company’s common stock on December 31, 2012, provided that the officer remains in the employ of the Company as of that date.  Under the events described in footnote (4) above, earned PSUs may become fully vested, except in the case of an involuntary termination that occurs prior to June 30 of the third year of the three-year performance cycle.
(10)Represents PSUs from the 2011-2013 grant that have been earned based on 2011 performance and will vest and convert into an equal number of shares of the Company’s common stock on December 31, 2013 provided that the officer remains in the employ of the Company as of that date.  Under the events described in footnote (4) above, earned PSUs may become fully vested, except in the case of an involuntary termination that occurs prior to June 30 of the third year of the three-year performance cycle.
2011 Option Exercises and Stock Vested
The following table describes the number of shares acquired and the dollar amounts realized by named executive officers during the most recent fiscal year on vesting of restricted stock and exercise of SSARs.  There was no exercise of stock options or vesting of PSUs by any of the named executive officers for the fiscal year ended December 31, 2011.
Name
SSAR Awards
Number of Shares
Acquired on Exercise (#)
SSAR Awards Value Realized on Exercise
($)(3)
Stock Awards Number of Shares Acquired on Vesting (#)
Stock Awards
Value Realized on Vesting ($)(3)
 
Robert J. Keller                                
216,667
837,418(1)
15,000(2)
105,975
Boris Elisman                                ——
  3,500(2)
  30,905
Neal V. Fenwick                                ——
  6,000(2)
  52,980
Christopher M. Franey——  ——
Thomas H. Shortt                                ——  ——
_____________
(1)The value realized represents the difference between the strike price of the SSAR and the fair market value of the Company’s common stock on the date of exercise.
(2)The value realized on the vesting of stock awards is the fair market value of our common stock at the time of vesting.  For Mr. Keller, these RSUs were granted November 7, 2008 and vested November 7, 2011; for Messrs. Elisman and Fenwick, these RSUs were granted on March 16, 2007 and vested March 16, 2011.
(3)The fair market value of our common stock used for purposes of this table is the average of the high and low share trade prices of the underlying stock on the date of exercise or vesting as the case may be as reported on the New York Stock Exchange.
PENSION BENEFITS
Name
Plan Name
Years of Credited Service (1) (#)
Present Value of Accumulated Benefit(2) ($)
Payments During Last Fiscal Year ($)
 
Robert J. Keller                                 
ACCO Pension                        —            ——
 Supplemental Pension                        —            ——
 
Boris Elisman                                 
ACCO Pension                          4      59,000—
 Supplemental Pension                          4      56,000—
 
Neal V. Fenwick                                 
ACCO Europe Pension                        223,370,629—
 ACCO Pension                          3     48,000—
 Supplemental Pension                          3     59,000—
28
 Retirement Agreement                          3                     102,000—
 
Christopher M. Franey
ACCO Pension                        —                              ——
 Supplemental Pension                        —                              ——
 
Thomas H. Shortt                                 
ACCO Pension                        —                              ——
 Supplemental Pension                        —                              ——
_____________
(1)The Pension Benefits table provides information regarding the number of years of credited service, the present value of accumulated benefits, and any payments made during the last fiscal year with respect to the ACCO Pension, the Company’s 2008 Amended and Restated Supplemental Retirement Plan (“Supplemental Pension”), the ACCO Europe Pension Plan (“ACCO Europe Pension”), and the retirement agreement for Mr. Fenwick.
(2)Amounts reported above as the actuarial present value of accumulated benefits under the ACCO Pension and the Supplemental Pension are computed using the interest and mortality assumptions that the Company applies to amounts reported in its financial statement disclosures, and are assumed to be payable at age 65.  The interest rate assumption is 5.01% for both plans.  The mortality table assumption for the ACCO Pension is the 2011 Static Table for Annuitants per section 1.430(h)(3)-1(e) of the Internal Revenue Code for healthy lives.  The mortality table assumption for the Supplemental Pension is the same.  Amounts reported above as the actuarial present value of accumulated benefit for Mr. Fenwick under the ACCO Europe Pension assumes an interest rate of 4.7%, an inflation rate of 2.5%, an exchange rate (as of December 31, 2011) of $ 1.5391 to One British Pound and utilizes the PCMA00 Base table with Year-of-Birth Medium Cohort improvements and a 1% floor.  Amount reported as the actuarial present value of accumulated benefit for Mr. Fenwick under his retirement agreement is computed using the same U.S. mortality and interest assumptions as apply under his respective U.S. pension plans, above, net of the applicable offset for those other benefits provided under his retirement agreement.
The ACCO Pension is a broad-based, tax-qualified defined benefit pension plan, which provides a monthly cash benefit upon retirement to eligible employees of the Company.  In general, eligible employees include all salaried and certain hourly paid employees (regularly scheduled to work at least twenty hours per week) of the Company, except leased employees, independent contractors, certain collectively-bargained employees, and employees accruing benefits under an affiliated company foreign pension plan.  Employees must complete one year of service to participate in the ACCO Pension and five years of service to vest in the benefit.  The determination of benefits under the ACCO Pension is based upon years of credited service with the Company and its participating U.S. subsidiaries and the average of the highest five consecutive years of earnings within the last ten years of vesting service.  “Eligible Earnings” include base pay and certain regularly occurring bonuses, but do not include amounts that have been deferred and, for years of credited service prior to 2002, annual bonuses.  All benefit service and accruals for benefits under the ACCO Pension and the Supplemental Pension (described below) have been frozen as of March 6, 2009.  As a result no additional benefits will accrue from that date for any of the named executive officers unless action is taken by the Board of Directors to reinstate any such benefits.
The Supplemental Pension is an unfunded nonqualified defined benefit pension plan which covers compensation and benefit amounts in excess of the Internal Revenue Code’s qualified plan limits in the ACCO Pension, and taking into account in determining benefits any compensation amounts deferred under the Company’s former deferred compensation plan.  None of the named executive officers participated in that plan.  Otherwise, the provisions of the Supplemental Pension are generally the same as those of the ACCO Pension.  Participants in the Supplemental Pension may separately elect from the optional forms of payment of benefits available under the ACCO Pension other than a lump-sum.  Certain other restrictions on payment apply to the Supplemental Pension, consistent with the requirements of Internal Revenue Code Section 409A.
Benefits under the ACCO Pension and Supplemental Pension are calculated in the following manner:  A participant’s benefit for credited service accrued prior to January 1, 2002 equals the product of (A) his years of credited service multiplied by (B) the sum of (i) 0.75% of Eligible Earnings up to the participant’s applicable Social Security-covered compensation amount, plus (ii) 1.25% of the participant’s final Eligible Earnings in excess of the participant’s applicable Social Security-covered compensation

29

amount (up to a maximum of thirty years).  The participant’s benefit for credited service accrued since January 1, 2002 equals the product of (C) his years of credited service multiplied by (D) 1.25% of the participant’s final average Eligible Earnings, except that for years of credited service since January 1, 2007, the annual benefit accrual rate is 1.00% instead of 1.25%.  As described above for the year 2009, Eligible Earnings and credited service will be determined as of March 6, 2009 unless subsequent action to reinstate benefit accruals is taken by the Compensation Committee of the Board of Directors.  Participants are fully vested in benefits after five years of service, with no vesting prior to that date.  None of the above named executives are entitled to additional credited service other than that which has been earned during their employment.
Several forms of benefit payments are available under the ACCO Pension and the Supplemental Pension.  The Pension Plan offers a single life annuity option, 5 and 10-year period certain and life annuity options, 50%, 75% and 100% joint and contingent beneficiary options, and a social security benefit adjustment option.  Minimum lump-sum distributions of benefits are available if less than or equal to $1,000.  The payout option must be elected by the participant before benefit payments begin.  Each option available under the Pension Plan is actuarially equivalent.
Normal retirement benefits commence at age 65.  Under the ACCO Pension and Supplemental Pension, early retirement benefit payments are available in an actuarially reduced amount to participants upon attainment of age 55 and completion of at least five years of vesting service.  The ACCO Pension and Supplemental Pension both recognize prior service with Fortune Brands, Inc. and other companies previously related to the Company, for periods before the spin-off of the Company on August 16, 2005, for vesting purposes.
Mr. Fenwick is also entitled to a pension benefit under the ACCO Europe Pension in which he participated until April 1, 2006.  The ACCO Europe Pension is a broad-based, defined benefit pension plan which provides a benefit upon retirement to eligible employees of ACCO UK Limited and certain other European subsidiaries of the Company.  Mr. Fenwick was eligible to participate in the ACCO Europe Pension Plan based on his prior European employment with the Company.  Benefits are payable upon retirement at or after age 62 with twenty years of credited service, as a single life annuity, in an amount equal to two-thirds (2/3) of Mr. Fenwick’s final Pensionable Earnings while a participant in this plan.  Pensionable Earnings are defined as Mr. Fenwick’s base salary for the preceding full year prior to April 1, 2006 together with the average annual bonus paid for the preceding three years.  Benefits under this plan are based on the higher of (1) pensionable earnings for the full year immediately prior to April 1, 2006, or (2) the average of any three consecutive years of pensionable earnings in the last ten years prior thereto.  Mr. Fenwick is fully vested in this benefit.  He became eligible for early retirement under this plan upon attainment of age 50 in 2011.
Mr. Fenwick has entered into a retirement agreement with the Company that provides him a supplemental retirement benefit based on credit for his service prior to April 1, 2006 with predecessors of the Company and its then-affiliates while participating as an employee of the Company’s United Kingdom subsidiary.  Under the retirement agreement, Mr. Fenwick is entitled to a supplemental nonqualified benefit upon retirement over and above what is provided them under the Company’s defined benefit pension plans.  The benefit provided under the retirement agreement equals the excess of (i) a tentative benefit under the Company’s defined benefit pension plans, as described above, computed based on his combined service with the Company and its non-participating then-affiliates but applying the Company Pension accrual rate as in effect on January 1, 2007 (1.00% per year of service, as described above) over (ii) the sum of the actual benefit amounts due to him from such Company and then-affiliate pension plans in respect of his participation in such plans.  In each case, the benefit is expressed as an unreduced single life annuity payable at an age 65 normal retirement age.

30

See also “Retirement Benefits” in the Compensation Discussion and Analysis section of this Proxy Statement for additional discussion of the Company’s defined benefit and other retirement plans.
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE-IN-CONTROL
The Company does not have written employment agreements with any of its executive officers.  Although the Company has entered into a severance and change-in-control agreement with one executive officer, none of the named executive officers are covered by any such agreement.  Executive officers, including the named executive officers, are covered by the Company’s Executive Severance Plan at December 31, 2011 and continue to be so covered as of the date of this Proxy Statement.
The Company’s Executive Severance Plan provides the named executive officers the following payments and benefits upon (i) an involuntary termination without “cause” and (ii) voluntary termination for “good reason” or involuntary termination without “cause” within 24 months after (and in certain circumstances preceding) a change-in-control:
·Involuntary Termination:  24 months of base salary and two years of target bonus for the year of separation for Mr. Keller and 21 months of base salary, one year of target bonus for each of the other named executive officers.
·Change in Control Termination:  2.99 times base salary plus 2.99 times bonus for the year of separation for Mr. Keller and 2.25 times base salary plus 2.25 times bonus for the year of separation for each of the other named executive officers.  The bonus amount is based on the greater of (i) a target bonus for the year of the named executive officer’s termination, or (ii) the bonus that would be paid using the Company’s most recent financial performance outlook report that is available as of the named executive officer’s termination date.  The executive would also receive a pro-rata annual bonus for the year of the executive’s  termination up through and including the termination effective date based on the greater of the latest projected performance level of the Company for that year or the target award.
·Outplacement services for an amount not to exceed $60,000 for Mr. Keller and $30,000 for each other named executive officer.
·Gross-up payment for any “golden parachute” excise tax that may be payable by them under Section 4999 of the Internal Revenue Code, plus any income and employment taxes on the gross-up payment, with respect to the severance payments and other benefits due to them (whether under the Executive Severance Plan or otherwise), unless the amount of any “excess parachute payments” paid or payable by them does not exceed 330% of the executive’s “base pay” as determined pursuant to Section 280G of the Internal Revenue Code, in which case the gross-up payment is not paid and the severance and other golden parachute payments would be reduced so that no amount would constitute an “excess parachute payment” for purposes of Sections 280G and 4999 of the Internal Revenue Code; and
·Any amounts payable under the Executive Severance Plan are reduced by amounts payable to a named executive officer under any other severance plan applicable to the executive or agreement that has been entered into between the Company and the executive.

31

Medical and other welfare benefits continue for the executive’s severance period on the same cost-sharing basis as if employment had not terminated.  No severance or change-in-control payments would be made until the named executive officer executes a release waiving any and all claims the executive may have against the Company.
The following tables set forth for each named executive officer the estimated payments and other benefit amounts that would have been received by the named executive officer or his estate if his employment had terminated on December 31, 2011, under the following circumstances:
·termination by the executive for retirement;
·termination by the Company without cause; or
·following (or in certain circumstances preceding) a change-in-control, a termination by the Company without “cause” or by the executive for “good reason”; or termination as a result of death or disability.
No enhanced benefits would be provided to an executive if a termination was involuntary for cause or voluntary (except in the case of a retirement) except at the discretion of the Board of Directors.
In preparing the tables it is assumed that the named executive officer has no earned but unpaid salary or accrued and unused vacation benefits at the time of termination and that the values reflect compensation in addition to what they would have earned had the described event not occurred.
Robert J. Keller
  
Termination
by Executive
for Retirement
  
Termination
by Company
without cause
  
Termination by the
Company without cause
or by the executive for
“good reason” following
a change in control
  
Death
or
Disability
 
Payments and Benefits Compensation:            
Cash severance(1) 
 $—  $3,222,600  $4,817,787  $— 
Annual incentive(1) 
  —   825,300   825,300   — 
Benefits:                
Continuation of benefits(2)
  —   18,258   27,296   — 
Outplacement services
  —   60,000   60,000   — 
Additional 401(k) Plan Contributions(3)
  —   —   32,965   — 
Long-Term Incentive Awards Acceleration:                
Value of Stock Options and SSARs(4)
  13,079   —   1,020,808   970,743 
Value of Restricted Stock Units(5)
  1,316,241   1,316,241   5,430,055   1,363,632 
Value of Performance Share Units(6)
  484,913   —   1,912,795   484,913 
Value of Long-Term Cash Awards(7)
  224,013   —   904,213   450,746 
Federal Excise Tax and Gross-up(8)
  —   —   5,209,802   — 
Total
 $2,038,246  $5,442,399  $$20,241,021  $3,270,034 
_____________
32

(1)The cash severance represents base salary and incentive opportunity at target performance.  Assumes a base salary of $786,000; a 2011 target bonus of 105% of bonus eligible earnings.
(2)Represents the approximate value of the employer subsidy to broad-based employee benefit plans for the executive’s benefit during the severance period.
(3)Represents 2.99 x the maximum annual Company contribution to Mr. Keller’s account under the Company’s 401(k) Plan.
(4)Reflects the excess of the fair market value as of December 31, 2011 of the underlying shares over the exercise price of all unvested options and SSARs, the vesting of which accelerates in connection with the specified event.
(5)Reflects the fair market value as of December 31, 2011 of the shares underlying all unvested restricted stock units which vest in connection with the specified event.
(6)Reflects the unvested fair market value as of December 31, 2011 of the shares underlying unvested performance share units which would vest in connection with the specified event.
(7)Reflects unvested long-term cash incentives as of December 31, 2011 which would vest in connection with the specified event.
(8)Upon a change-in-control of the Company, Mr. Keller may be subject to certain excise taxes pursuant to Section 4999 of the Internal Revenue Code of 1986, as discussed above.
Boris Elisman
  
Termination
by Executive
for Retirement
  
Termination
by Company
without cause
  
Termination by the
Company without
cause or by the
executive for “good
reason” following a
change in control
  
Death or Disability
 
Payments and Benefits Compensation:            
Cash severance(1) 
 $—  $1,338,750  $2,126,250  $— 
Annual incentive(1) 
  —   420,000   420,000   — 
Benefits:                
Continuation of benefits(2)
  —   21,806   28,036   — 
Outplacement services  —   30,000   30,000   — 
Additional 401(k) Plan Contributions(3)
  —   —   24,806   — 
Pension enhancement(4)
  —   —   56,000   — 
Long-Term Incentive Awards Acceleration:                
Value of Stock Options and SSARs(5)
  7,098   —   476,272   449,098 
Value of Restricted Stock Units(6)
  143,592   143,592   314,590   149,324 
Value of Performance Share Units(7)
  201,367   —   893,918   201,367 
Value of Long-Term Cash Awards(8)
  77,987   —   314,787   156,921 
Federal Excise Tax and Gross-up(9)
          1,882,303     
Total
 $430,044  $1,954,148  $6,566,962  $956,710 
_____________
(1)The cash severance represents base salary and incentive opportunity at target performance.  Assumes a base salary of $525,000; a 2011 target bonus of 80% of bonus eligible earnings.
(2)Represents the approximate value of the employer subsidy to broad-based employee benefit plans for the executive’s benefit during the severance period.
(3)Represents 2.25 x the maximum annual Company contribution to Mr. Elisman’s account under the Company’s 401(k) Plan.
(4)Represents the additional benefit, payable under the SERP, computed using the interest and mortality assumptions that the Company applies to amounts reported in its financial statement disclosures, and are assumed to be payable at age

33

65.  The interest rate assumption is 4.7%.  The mortality table assumption is the 2011 Static Table for Annuitants per section 1.430(h)(3)-1(e) of the Internal Revenue Code for healthy lives.
(5)Reflects the excess of the fair market value as of December 31, 2011 of the underlying shares over the exercise price of all unvested options and SSARs, the vesting of which accelerates in connection with the specified event.
(6)Reflects the fair market value as of December 31, 2011 of the shares underlying all unvested restricted stock units which vest in connection with the specified event.
(7)Reflects the unvested fair market value as of December 31, 2011 of the shares underlying unvested performance share units which would vest in connection with the specified event.
(8)Reflects unvested long-term cash incentives as of December 31, 2011 which would vest in connection with the specified event.
(9)Upon a change-in-control of the Company, Mr. Elisman may be subject to certain excise taxes pursuant to Section 4999 of the Internal Revenue Code of 1986, as discussed above.
Neal V. Fenwick
  
Termination
by Executive
for Retirement
  
Termination
by Company
without cause
  
Termination by the
Company without
cause or by the
executive for “good
reason” following a
change in control
  
Death or Disability
 
Payments and Benefits Compensation:            
Cash severance(1) 
 $—  $1,080,000  $1,670,625  $— 
Annual incentive(1) 
  —   292,500   292,500   — 
Benefits:                
Continuation of benefits(2)
  —   21,806   28,036   — 
Outplacement services  —   30,000   30,000   — 
Additional 401(k) Plan Contributions(3)
  —   —   24,806   — 
Pension enhancement(4)
  —   —   161,000   — 
Long-Term Incentive Awards Acceleration:                
Value of Stock Options and SSARs(5)
  4,683   —   464,608   446,683 
Value of Restricted Stock Units(6)
  128,808   128,808   243,180   134,540 
Value of Performance Share Units(7)
  174,829   —   687,891   174,829 
Value of Long-Term Cash Awards(8)
  80,818   —   326,218   162,818 
Federal Excise Tax and Gross-up(9)
  —   —   1,363,012   — 
Total
 $389,138  $1,553,114  $5,291,876  $918,670 
_____________
(1)The cash severance represents base salary and incentive opportunity at target performance.  Assumes a base salary of $450,000; a 2011 target bonus of 65% of bonus eligible earnings.
(2)Represents the approximate value of the employer subsidy to broad-based employee benefit plans for the executive’s benefit during the severance period.
(3)Represents 2.25 x the maximum annual Company contribution to Mr. Fenwick’s account under the Company’s 401(k) Plan.
(4)Represents the additional benefit, payable under the SERP, as well as a special retirement agreement, computed using the interest and mortality assumptions that the Company applies to amounts reported in its financial statement disclosures, and are assumed to be payable at age 65.  The interest rate assumption is 4.7%.  The mortality table
34

assumption is the 2011 Static Table for Annuitants per section 1.430(h)(3)-1(e) of the Internal Revenue Code for healthy lives.
(5)Reflects the excess of the fair market value as of December 31, 2011 of the underlying shares over the exercise price of all unvested options and SSARs, the vesting of which accelerates in connection with the specified event.
(6)Reflects the fair market value as of December 31, 2011 of the shares underlying all unvested restricted stock units which vest in connection with the specified event.
(7)Reflects the unvested fair market value as of December 31, 2011 of the shares underlying unvested performance share units which would vest in connection with the specified event.
(8)Reflects unvested long-term cash incentives as of December 31, 2011 which would vest in connection with the specified event.
(9)Upon a change-in-control of the Company, Mr. Fenwick may be subject to certain excise taxes pursuant to Section 4999 of the Internal Revenue Code of 1986, as discussed above.
Christopher M. Franey
  
Termination
by Executive
for Retirement
  
Termination
by Company
without cause
  
Termination by the
Company without
cause or by the
executive for “good
reason” following a
change in control
  
Death or Disability
 
             
Payments and Benefits Compensation:            
Cash severance(1) 
 $—  $984,000  $1,522,125  $— 
Annual incentive(1) 
  —   266,500   266,500   — 
Benefits:                
Continuation of
benefits(2) 
  —   15,976   20,540   — 
Outplacement services  —   30,000   30,000   — 
Additional 401(k) Plan Contributions(3)
  —   —   24,806   — 
Long-Term Incentive Awards Acceleration:                
Value of Stock Options and SSARs(4)
  4,265   —   315,058   298,731 
Value of Restricted Stock Units(5)
  59,357   59,357   169,165   69,702 
Value of Performance Share Units(6)
  143,467   —   589,944   143,467 
Value of Long-Term Cash Awards(7)
  62,211   —   251,109   125,177 
Federal Excise Tax and Gross-up(8)
  —   —   1,413,226   — 
Total
 $269,300  $1,355,833  $4,602,473  $637,077 
_____________
(1)The cash severance represents base salary and incentive opportunity at target performance.  Assumes a base salary of $410,000; a 2011 target bonus of 65% of bonus eligible earnings.
(2)Represents the approximate value of the employer subsidy to broad-based employee benefit plans for the executive’s benefit during the severance period.
(3)Represents 2.25 x the maximum annual Company contribution to Mr. Franey’s account under the Company’s 401(k) Plan.
(4)Reflects the excess of the fair market value as of December 31, 2011 of the underlying shares over the exercise price of all unvested options and SSARs, the vesting of which accelerates in connection with the specified event.
(5)Reflects the fair market value as of December 31, 2011 of the shares underlying all unvested restricted stock units which vest in connection with the specified event.

35

(6)Reflects the unvested fair market value as of December 31, 2011 of the shares underlying unvested performance share units which would vest in connection with the specified event.
(7)Reflects unvested long-term cash incentives as of December 31, 2011 which would vest in connection with the specified event.
(8)Upon a change-in-control of the Company, Mr. Franey may be subject to certain excise taxes pursuant to Section 4999 of the Internal Revenue Code of 1986, as discussed above.
Thomas H. Shortt
  
Termination
by Executive
for Retirement
  
Termination
by Company
without cause
  
Termination by the
Company without
cause or by the
executive for “good
reason” following a
change in control
  
Death or Disability
 
Payments and Benefits Compensation:            
Cash severance(1) 
 $—  $984,000  $1,522,125  $— 
Annual incentive(1) 
  —   266,500   266,500   — 
Benefits:                
Continuation of
benefits(2) 
  —   —   —   — 
Outplacement services  —   30,000   30,000   — 
Additional 401(k) Plan Contributions(3)
  —   —   24,806   — 
Long-Term Incentive Awards Acceleration:                
Value of Stock Options and SSARs(4)
  4,265   —   388,928   372,601 
Value of Restricted Stock Units(5)
  25,987   25,987   125,450   25,987 
Value of Performance Share Units(6)
  158,434   —   624,848   158,434 
Value of Long-Term Cash Awards(7)
  73,047   —   294,847   146,980 
Federal Excise Tax and Gross-up(8)
  —       1,245,810     
Total
 $261,733  $1,306,487  $4,523,314  $704,002 
_____________
(1)The cash severance represents base salary and incentive opportunity at target performance.  Assumes a base salary of $410,000; a 2011 target bonus of 65% of bonus eligible earnings.
(2)Mr. Shortt did not elect to participate in the Company’s welfare benefit plans in 2011, and would not be eligible for those benefits upon termination of his employment.
(3)Represents 2.25 x the maximum annual Company contribution to Mr. Shortt’s account under the Company’s 401(k) Plan.
(4)Reflects the excess of the fair market value as of December 31, 2011 of the underlying shares over the exercise price of all unvested options and SSARs, the vesting of which accelerates in connection with the specified event.
(5)Reflects the fair market value as of December 31, 2011 of the shares underlying all unvested restricted stock units which vest in connection with the specified event.
(6)Reflects the unvested fair market value as of December 31, 2011 of the shares underlying unvested performance share units which would vest in connection with the specified event.
(7)Reflects unvested long-term cash incentives as of December 31, 2011 which would vest in connection with the specified event.
(8)Upon a change-in-control of the Company, Mr. Shortt may be subject to certain excise taxes pursuant to Section 4999 of the Internal Revenue Code of 1986, as discussed above.

36

DIRECTOR COMPENSATION
Cash Compensation.  Each non-employee director of ACCO Brands is paid an annual retainer of $63,000 for services as a director and receives an attendance fee of $1,500 for each meeting of the Board of Directors attended and for attendance at each meeting of a committee of the Board of Directors on which such director serves.  The annual retainer was increased to $63,000 from $60,000 in May, 2011.  This was the first increase in the annual retainer since the Company became public in August, 2005.  Committee chairpersons receive additional annualized fees totaling $12,000 for each of the Audit and Compensation Committees and $6,000 for the Corporate Governance and Nominating Committee.  In addition, the Presiding Independent Director is paid an annual fee of $20,000.
Insurance.  Directors traveling on Company business are covered by our business travel accident insurance policy which generally covers all of our employees and directors.
Travel Expenses.  We also reimburse our directors for travel and other related expenses incurred in connection with their service as a director.
Equity-based Compensation for Non-employee Directors.  Each non-employee director typically receives a $73,500 annual restricted stock unit grant under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (“LTIP”).  The value of the annual restricted stock unit grant was increased from $70,000 in May, 2011.  Non-employee directors appointed to the Board other than at an annual meeting receive a pro-rata portion of such amount based on the time between that date of appointment and the date of the next annual meeting.  Under the terms of the LTIP and each individual director’s restricted stock unit award agreement, each restricted stock unit represents the right to receive one share of our common stock and is fully vested and non-forfeitable on the date of grant.  The payment of all restricted stock units to non-employee directors are deferred under our Deferred Compensation Plan for Directors (the “Deferred Plan”), which provides that such awards are payable within 30 days after the conclusion of service as a director or immediately upon a change of control of ACCO Brands.  Directors holding deferred restricted stock units are credited with additional restricted stock units based on the amount of any dividend that may be paid by ACCO Brands.
Upon filing a timely election, a director may also elect to defer the cash portion of his or her compensation under the Deferred Plan.  In such an event the director can choose to have his deferral account credited in either or both of a phantom fixed income or phantom stock unit account.  The phantom stock unit account would correspond to the value of, and the dividend rights associated with, an equivalent number of shares of ACCO Brands’ common stock.  The balance in a phantom stock unit account, upon the conclusion of service as a director or upon a change in control, would be paid to the director in either a lump-sum cash distribution or a lump-sum distribution of shares of ACCO Brands’ common stock, as the director may elect.  The balance in a phantom fixed income account, upon the conclusion of service as a director or upon a change in control, would be paid to the director in a lump-sum cash distribution.  Our obligation to redeem a phantom account is unsecured and is subject to the claims of our general creditors.  For the year 2011 none of the directors elected to defer any of their cash compensation.  As of December 31, 2011 Mr. Hargrove held a total of 33,235 phantom stock units having a total market value of $320,718 and Mr. Jenkins held a total of 16,094 phantom stock units having a total market value of $155,307 based on that day’s closing price of the Company’s common stock on the New York Stock Exchange of $9.65.

37

The following table sets forth the amount of cash, equity and aggregate compensation paid to non-employee members of our Board of Directors in 2011:
Name
Fees Earned or Paid in Cash
Stock Awards(1)
Total
 
George V. Bayly
$81,750$73,500$155,250
Kathleen S. Dvorak  98,250  73,500  171,750
G. Thomas Hargrove102,750  73,500  176,250
Robert H. Jenkins110,750  73,500  184,250
Thomas Kroeger  93,750  73,500  167,250
Michael Norkus104,250  73,500  177,750
Sheila G. Talton  93,750  73,500  167,250
Norman H. Wesley  93,750  73,500  167,250
_____________
(1)Represents the proportionate amount of the total grant date fair value of stock awards determined in accordance with FASB ASC Topic 718.  The assumptions used in determining the grant date fair values of these awards are set forth in Note 3 to the Company’s consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC.
The aggregate number of RSUs held by each non-employee director as of December 31, 2011 was as follows:
Director
Number of RSUs
George V. Bayly
32,849
Kathleen S. Dvorak18,478
G. Thomas Hargrove32,849
Robert H. Jenkins28,766
Thomas Kroeger20,888
Michael Norkus20,888
Sheila G. Talton18,478
Norman H. Wesley32,849

Compensation Committee Interlocks and Insider Participation
All current members of the Compensation Committee are considered independent under our Corporate Governance Principles.  No interlocking relationships exist between the Board of Directors or the Compensation Committee and the Board of Directors or compensation committee of any other company.
ITEM 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information

The following table gives information, as of December 31, 2011,2012, about our common stock that may be issued upon the exercise of options, stock-settled appreciation rights (“SSARs”) and other equity awards under all compensation plans under which equity securities are reserved for issuance.
Plan category
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(a)
 
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
 
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
 
Equity compensation plans approved by security holders(1)
4,878,553
 $10.12
 11,295,208
(2) 
Equity compensation plans not approved by security holders—
 —
 —
  
Total4,878,553
 $10.12
 11,295,208
(2) 
 
38
Plan category
 
Number of
securities to be
Issued upon
exercise of
outstanding
options, warrants
and rights (a)
  
Weighted-average
exercise price of
outstanding
options, warrants
and rights (b)
  
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a)) (c)
 
 
Equity compensation plans approved by security holders(1)
  6,108,456  $12.23   2,432,992(2)
Equity compensation plans not approved by security holders  —   —   — 
Total  6,108,456  $12.23   2,432,992(2)
_____________
(1)This number includes 4,268,1423,385,219 common shares that were subject to issuance upon the exercise of stock options/SSARs granted under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (the “Restated Plan”), and 1,840,3141,493,334 common shares that were subject to issuance upon the exercise of stock options/SSARs pursuant to the Company’s 2005 Assumed Option and Restricted Stock Unit Plan. The weighted-average exercise price in column (b) of the table reflects all such options/SSARs.

(2)
These are shares available for grant as of December 31, 20112012 under the Restated Plan pursuant to which the compensation committeeCompensation Committee of 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 share units. In addition to these shares, the following shares may become available for grant under the Restated Plan and, to the extent such shares have become available as of December 31, 2011,2012, they are included in the table as available for grant: shares covered by outstanding awards under the Plan that were forfeited or otherwise terminated.

Other information required under this Item is contained in the Company’s 2013 Definitive Proxy Statement, which is to be filed with the Securities and Exchange Commission prior to April 30, 2013, and is incorporated herein by reference.

Security OwnershipITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required under this Item is contained in the Company’s 2013 Definitive Proxy Statement, which is to be filed with the Securities and Exchange Commission prior to April 30, 2013 and is incorporated herein by reference.

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required under this Item is contained in the Company’s 2013 Definitive Proxy Statement, which is to be filed with the Securities and Exchange Commission prior to April 30, 2013 and is incorporated herein by reference.

92

PART IV

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The table below sets forth the beneficial ownership of the Company’s common stock as of March 7, 2012.  The table sets forth the beneficial ownershipfollowing Exhibits are filed herewith or are incorporated by the following individuals or entities:
·each person known to us that owns more than 5% of the outstanding shares of the Company’s common stock;
·our executive officers;
·our directors; and
·all directors and executive officers of the Company as a group.
Beneficial ownership is determined in accordancereference to exhibits previously filed with the rules of the SEC.  ExceptCommission, as otherwise indicated each person named in the table has sole voting and investment powerdescription of each. We agree to furnish to the Commission upon request a copy of any instrument with respect to all shareslong-term debt not filed herewith as to which the total amount of common stock shown as beneficially owned, subject to applicable community property laws.  Assecurities authorized thereunder does not exceed 10 percent of March 7, 2012, 55,513,520 shares of common stock were outstanding.  In computing the number of shares of common stock beneficially owned byour total assets on a person and the percentage ownership of that person, shares of Company common stock that are subject to employee stock options or SSARs held by that person that are exercisable on or within 60 days of March 7, 2012 are deemed outstanding.  These shares are not, however, deemed outstanding for the purpose of computing the percentage ownership of any other person.consolidated basis.
 
(a)Financial Statements, Financial Statement Schedules and Exhibits

1.All Financial Statements
The following consolidated financial statements of the Company and its subsidiaries are filed as part of this report under Item 8 - Financial Statements and Supplementary Data:

39


Beneficial Ownership
Name
Number of
Shares
Number of
Shares Subject
to Options and
SSARs(1)
Number of
Shares
Subject to
RSUs(2)
Total
Percent
 
Wellington Management Company, LLP
75 State St.
Boston, MA 02109(3)
 
           7,666,990
 
                          —
 
                      —
 
        7,666,990
 
        13.8%
 
Invesco Ltd.
1555 Peachtree St. NE
Atlanta, GA 30309(4)
 
           5,968,241
 
                           —
 
                      —
 
        5,968,241
 
         10.8%
 
BlackRock, Inc.
40 East 52nd St
New York, NY 10022(6)
 
           5,955,364
 
                           —
 
                      —
 
        5,955,364
 
          10.7%
 
Wells Fargo & Company
420 Montgomery St.
San Francisco, CA 94163(5)
 
          4,771,039
 
                           —
 
                      —
 
        4,771,039
 
            8.6%
 
JP Morgan Chase & Co.
270 Park Ave.
New York, NY 10017(7)
 
          2,907,904
 
                           —
 
                      —
 
        2,907,904
 
            5.2%
 
George V. Bayly
 
               20,000
 
                           —
 
               32,849
 
             52,849
 
*
Kathleen S. Dvorak                     —                           —               18,478             18,478*
G. Thomas Hargrove               80,000                           —               32,849           112,849*
Robert H. Jenkins               12,000                           —               28,766             40,766*
Robert J. Keller             224,127                  213,333               11,961           449,421*
Thomas Kroeger                     —                           —               20,888             20,888*
Michael Norkus               52,000                           —               20,888             72,888*
Sheila Talton                     —                           —               18,478             18,478*
Norman H. Wesley               29,671                           —               32,849             62,520*
Mark C. Anderson                    685                    62,200                 5,800             68,685*
Boris Elisman                 8,398                  258,277               11,000           277,675*
Neal V. Fenwick(8)
               76,543                  427,957               11,000           515,410*
Christopher M. Franey(9)
                    625                  109,600                     —           110,225*
David L. Kaput(10)
               19,079                    79,400                 6,800           105,279*
Thomas P. O’Neill, Jr.(11)
               63,981                    54,266                 6,200           124,447*
Steven Rubin(12)
               71,917                  110,266               11,000           193,183*
Thomas H. Shortt(13)
                 2,645                  125,000                     —           127,645*
Thomas W. Tedford                     —                           —                     —                   —*
All directors and executive officers as a group (18 persons)             661,671               1,440,299             269,806        2,371,776            4.3%
_____________
* Less than 1%
Page
Reports of Independent Registered Public Accounting Firm
47
Management’s Report on Internal Control Over Financial Reporting
48
Consolidated Balance Sheets as of December 31, 2012 and 2011
49
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010
50
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010
51
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
52
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2012, 2011 and 2010
53
Notes to Consolidated Financial Statements
54


(1)Indicates
2.Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts and Reserves, for each of the years ended December 31, 2012, 2011 and 2010.
The separate consolidated financial statements of Pelikan-Artline Pty Ltd, the Company’s 50 percent owned joint venture as of September 30, 2012 and 2011 and for each of the years in the three-year period ended September 30, 2012 required to be included in this report pursuant to Rule 3-09 of Regulation S-X, are filed as Exhibit 99.1.

3.Exhibits:

A list of exhibits filed or furnished with this Report on Form 10-K (or incorporated by reference to exhibits previously filed or furnished by the Company) is provided in the accompanying Exhibit Index.


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Table of Contents
EXHIBIT INDEX

Number    Description of Exhibit



2.1Agreement and Plan of Merger, dated November 17, 2011, by and among MeadWestvaco Corporation, Monaco SpinCo Inc., ACCO Brands Corporation and Augusta Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed by the numberRegistrant on November 22, 2011 (File No. 001-08454))

2.2Amendment No. 1, dated as of sharesMarch 19, 2012, to the Agreement and Plan of Merger, dated as of November 17, 2011, by and among MeadWestvaco Corporation, Monaco SpinCo Inc., ACCO Brands Corporation and Augusta Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed by the Registrant on March 22, 2012 (File No. 001-08454))

2.3Share Sale Agreement dated May 25, 2011 entered into by and between GBC Australia Pty Ltd, ACCO Brands Corporation, Neopost Holding Pty Ltd and NEOPOST S.A. (incorporated by reference to Exhibit 2.1 to Form 10-Q filed by the Registrant on July 27, 2011 (File No. 001-08454))

3.1Restated Certificate of Incorporation of ACCO Brands common stock issuable uponCorporation, as amended (incorporated by reference to Exhibit 3.1 to Form 8-K filed by the exerciseRegistrant on May 19, 2008 (File No. 001-08454))

3.2Certificate of options or SSARs exercisableDesignation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on or within 60 days of March 7, 2012.Form 8-K filed August 17, 2005)

(2)Indicates the number of shares subject to vested restricted stock units (RSUs) and RSUs that vest within 60 days of March 7, 2012.  For members of our Board of Directors, these units represent the right to receive one share
3.3By-laws of ACCO Brands common stock upon cessationCorporation, as amended through February 20, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed February 26, 2013)

4.1Rights Agreement, dated as of serviceAugust 16, 2005, between ACCO Brands Corporation and Wells Fargo Bank, National Association, as a memberrights agent (incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Registrant on August 17, 2005 (File No. 001-08454))

4.2Indenture, dated as of April 30, 2012, among Monaco SpinCo Inc., as issuer, the guarantors named therein, and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 10.3 of the BoardRegistrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

4.3First Supplemental Indenture, dated as of Directors or a change-in-controlMay 1, 2012, among the Company, Monaco SpinCo Inc., the guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 10.4 of ACCO Brands.the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

(3)
4.4Second Supplemental Indenture, dated as of May 1, 2012, among the Company, Mead Products LLC, the guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 10.5 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

4.5Registration Rights Agreement, dated as of May 1, 2012, among Monaco SpinCo Inc., the Company, the guarantors named therein, and representatives of the initial purchasers named therein (incorporated by reference to Exhibit 10.6 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

10.1ACCO Brands Corporation 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454))

10.2ACCO Brands Corporation 2005 Assumed Option and Restricted Stock Unit Plan, together with Sub-Plan A thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 3,2005 and filed August 8, 2005 (File No. 001-08454))

10.3ACCO Brands Corporation Annual Executive Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454))

10.4Tax Allocation Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001-08454))

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Number    Description of Exhibit


10.5Tax Allocation Agreement, dated as of August 16, 2005, between General Binding Corporation and Lane Industries, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001-08454))

10.6Employee Matters Agreement, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation and General Binding Corporation (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946))

10.7Executive Severance/Change in Control Agreement, dated as of August 26, 2000, by and between Steven Rubin and GBC (incorporated by reference to Exhibit 10.15 to General Binding Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-08454))

10.8Letter Agreement, dated as of September 5, 2003, between ACCO World Corporation and Neal Fenwick (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946))

10.9Letter Agreement, dated November 8, 2000, as revised in January 2001, between ACCO World Corporation and Neal Fenwick (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946))

10.10Letter Agreement, dated September 8, 1999, between ACCO World Corporation and Neal Fenwick (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-4 (File No. 333-124946))

10.11Amended and Restated ACCO Brands Corporation 2005 Incentive Plan (incorporated by reference to Annex A of the Registrant’s definitive proxy statement filed April 4, 2006 (File No. 001-08454))

10.12Amendment to the Amended and Restated ACCO Brands Corporation 2005 Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on May 19, 2008 (File No. 001-08454))

10.13ACCO Brands Corporation Executive Severance Plan (effective December 1, 2007) (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on November 29, 2007 (File No. 001-08454))

10.142008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.31 to Form 10-K filed by the Registrant on February 29, 2008 (File No. 001-08454))

10.15Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on January 22, 2009 (File No. 001-08454))

10.16Retirement Agreement for David D. Campbell effective as of May 1, 2008 (incorporated by reference to Exhibit 10.3 to Form 10-Q filed by the Registrant on May 7, 2008 (File No. 001-08454))

10.17Retirement Agreement for Neal V. Fenwick effective as of May 1, 2008 (incorporated by reference to Exhibit 10.4 to Form 10-Q filed by the Registrant on May 7, 2008 (File No. 001-08454))

10.18Letter Agreement dated November 4, 2008, between ACCO Brands Corporation and Robert J. Keller (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on November 5, 2008 (File No. 001-08454))

10.19Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on December 24, 2008 (File No. 001-08454))

10.20Form of Stock-settled Stock Appreciation Rights Agreement under the ACCO Brands Corporation Amended and Restated 2005 Long-Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.46 to Form 10-K filed by the Registrant on March 2, 2009 (File No. 001-08454))

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Number    Description of Exhibit


10.21Letter agreement, dated October 11, 2007, from ACCO Brands Corporation to David A. Kaput (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on March 3, 2009 (File No. 001-08454))

10.22Amended and Restated ACCO Brands Deferred Compensation Plan for Non-Employee Directors, effective December 14, 2009 (incorporated by reference to Exhibit 10.41 to Form 10-K filed by the Registrant on February 26, 2010 (File No. 001-089454))

10.23Letter agreement, dated November 4, 2008, from ACCO Brands Corporation to Christopher M. Franey (incorporated by reference to Exhibit 10.42 to Form 10-K filed by the Registrant on February 26, 2010 (File No. 001-08454))

10.24Letter agreement, dated March 6, 2009, from ACCO Brands Corporation to Thomas H. Shortt (incorporated by reference to Exhibit 10.43 to Form 10-K filed by the Registrant on February 26, 2010 (File No. 001-08454))

10.25Form of 2010-2012 Cash Based solelyAward Agreement under the ACCO Brands Corporation Amended and Restated 2005 Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Registrant on a Schedule 13G/AMay 7, 2010 (File No. 001-08454))
10.26Form of 2010-2012 Performance Stock Unit Award Agreement under the ACCO Brands Corporation Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.2 to Form 10-Q filed by the Registrant on May 7, 2010 (File No. 001-08454))

10.27Description of certain compensation arrangements with respect to the Registrant's named executive officers (incorporated by reference to Item 5.02 of Registrant's Form 8-K filed on March 1, 2010 (File No. 001-08454))

10.28Description of changes to compensation arrangements for Christopher M. Franey (incorporated by reference to Item 5.02 of Registrant's Form 8-K filed on September 21, 2010 (File No. 001-08454))

10.29Description of changes to compensation arrangements for Boris Elisman (incorporated by reference to Item 5.02 of Registrant's Form 8-K filed on December 14, 2010 (File No. 001-08454))

10.30Amended and Restated 2005 Incentive Plan Restricted Stock Unit Award Agreement, effective as of February 24, 2011 between Robert J. Keller and ACCO Brands Corporation (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on February 15, 2011 (File No. 001-08454))

10.312011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on February 14, 2012May 20, 2011 (File No. 001-08454))

10.32Form of Directors Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by Wellington Management Company, LLP and affiliated persons.  Wellington Management Company, LLP does not have sole dispositive power over any of the shares and has shared voting power over 6,396,040 of the shares.
(4)Based solelyreference to Exhibit 10.2 to ACCO Brands Corporation's Current Report on a Schedule 13G/A filed with the SEC by Invesco Ltd. and affiliated persons on February 6, 2012.  Of these shares, Invesco Ltd. has sole voting and dispositive power over 5,898,195 shares.

40

(5)Based solely on a Schedule 13GForm 8-K filed with the SEC on January 24, 2012May 20, 2011 (File No. 001-08454))

10.33Form of Nonqualified Stock Option Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by Wells Fargo & Companyreference to Exhibit 10.3 to ACCO Brands Corporation's Current Report on its own behalf and on behalf of certain subsidiaries.  Of these shares, Wells Fargo & Company has sole voting power over 4,628,100 shares and sole dispositive power over 4,765,568 shares.
(6)Based solely on a Schedule 13G/AForm 8-K filed with the SEC on January 10, 2012May 20, 2011 (File No. 001-08454))

10.34Form of Restricted Stock Unit Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by BlackRock, Inc. which has sole voting and dispositive power over all of the shares.
(7)Based solelyreference to Exhibit 10.4 to ACCO Brands Corporation's Current Report on a Schedule 13G/AForm 8-K filed with the SEC on January 25, 2012.  Of these shares, JP Morgan Chase & Co. has sole voting power over 2,717,859 sharesMay 20, 2011 (File No. 001-08454))

10.35Form of Performance Stock Unit Award Agreement under the 2011 Amended and sole dispositive power over 2,901,446 shares.Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.5 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454))


(8)Includes 430 shares owned by Mr. Fenwick’s wife and 1,000 shares held for the benefit of his children.
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(9)All of the shares are owned by Mr. Franey through ACCO’s 401(k) plan.
(10)Includes 979 shares owned by Mr. Kaput through ACCO’s 401(k) plan.
(11)Includes 3,952 shares owned by Mr. O’Neill through ACCO’s 401(k) plan.
(12)Includes 1,035 shares owned by Mr. Rubin through ACCO’s 401(k) plan.
(13)All of these shares are owned by Mr. Shortt through ACCO’s 401(k) plan.
ITEM 13.  Certain Relationships and Related Transactions, and Director Independence
Transactions with Certain Related Persons and Other Matters
The Company recognizes that transactions between the Company and anyTable of its directors or executives can present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company and its stockholders.  Therefore, as a general matter and in accordance with the Company’s Code of Business Conduct and Ethics, it is the Company’s preference to avoid such transactions.  Nevertheless, the Company recognizes that there are situations where such transactions may be in, or may not be inconsistent with, the best interests of the Company.  Therefore, the Company has adopted a formal written policy which requires the Company’s Audit Committee to review and, if appropriate, to approve or ratify any such transactions.  Pursuant to the policy, the Committee will review any transaction in which the Company is or will be a participant and the amount involved exceeds $120,000, and in which any of the Company’s directors or executive officers had, has or will have a direct or indirect material interest.  After its review the Committee will only approve or ratify those transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders, as the Committee determines in good faith.  The Committee has also directed the Company’s General Counsel and internal audit department to review the Company’s compliance with this policy on at least an annual basis.
During 2011, the Company was not involved in any transaction of the type the Committee would need to review.
Director Independence
ContentsThe Board of Directors has adopted Corporate Governance Principles to address significant issues of corporate governance, such as Board composition and responsibilities, director compensation, and executive succession planning.  The Corporate Governance Principles provide that a majority of the members of the Board of Directors, and each member of the Audit, Compensation and Corporate Governance and Nominating Committees, must meet certain criteria for independence.  Based on the New York Stock Exchange independence requirements, the Corporate Governance Principles (which are available on our website, www.accobrands.com
) set forth certain guidelines to assist in determining director independence.  Section A.3 of the Corporate Governance Principles states:
A director shall be considered independent only if the Board of Directors affirmatively determines that the director has no material relationship with ACCO Brands, either directly or as a partner, stockholder, director or officer of an organization that has a material relationship with ACCO Brands.

41

Under no circumstances shall any of the following persons be considered an independent director for purposes of this guideline:
(a) any current employee of ACCO Brands, its subsidiaries, or ACCO Brands’ independent auditors;
(b) any former employee of ACCO Brands or its subsidiaries until three years after the employment has ended;
(c) any person who (1) is a current partner or employee of the firm that is ACCO Brands’ internal or external auditor; (2) has been within the last three years or has an immediate family member that has been within the last three years a partner or employee of such firm and worked on ACCO Brands’ audit during that time; or (3) has an immediate family member who is currently or within the last three years has been an employee of such firm and participates in the audit, assurance, or tax compliance (but not tax planning) practice;
(d) any person who is employed as an executive officer by another company on whose compensation committee one of ACCO Brands’ executive officers serves or has served during the prior three years;
(e) any person who receives, or who in any twelve month period within the last three years has received, more than $120,000 per year in direct compensation from ACCO Brands, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on future service);
(f) any person who is an executive officer or an employee of a company that makes payments to, or receives payments from, ACCO Brands for property or services in an amount that exceeds, in any of the last three fiscal years, the greater of $1 million or 2% of the other company’s consolidated gross revenues; and
(g) any person who has an immediate family member (as defined by the New York Stock Exchange Listed Company Manual) who falls into one of the previous six categories.
Each member of the Board of Directors, other than Mr. Keller, has been determined by the Board to be independent as defined in the New York Stock Exchange Listed Company Manual and to meet the independence criteria set forth in ACCO Brands’ Corporate Governance Principles.  All members of the Audit Committee, Corporate Governance and Nominating Committee, and Compensation Committee are independent.
Robert H. Jenkins currently serves as the Presiding Independent Director to preside at all executive sessions of the non-employee directors of the Board.  Executive sessions of non-employee directors are held at every regularly scheduled meeting of the Board of Directors.

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ITEM 14.  Principal Accountant Fees and Services
Audit and Non-Audit Fees
Our independent registered public accounting firm for the 2010 and 2011 fiscal years was KPMG LLP.  The following table summarizes the fees paid or payable by ACCO Brands to KPMG for services rendered during 2010 and 2011 respectively:
  
2010
  
2011
 
Audit Fees
 $2,195,000  $2,376,000 
Audit-related fees
  —   — 
Tax fees
  243,000   237,000 
All other fees
  54,000   535,000 
Total
 $2,492,000  $3,148,000 

Audit fees include fees for the audit of our annual financial statements, the review of the effectiveness of the Company’s internal control over financial reporting, the review of our financial information included in our Form 10-Q quarterly reports filed with the SEC and services performed in connection with other statutory and regulatory filings or engagements. The tax services provided in both 2010 and 2011 primarily involved domestic and international tax compliance work and tax planning.  Other fees for 2011 were related primarily to financial and tax due diligence associated with the Company’s proposed merger of the Consumer and Office Products Division of MeadWestvaco Corporation into the Company.  Other fees for 2010 were for payroll service reviews in Europe and acquisition due diligence procedures in Australia and New Zealand.
Approval of Audit and Non-Audit Services
All audit and non-audit services provided to the Company by KPMG were approved in advance by the Audit Committee. The Audit Committee has adopted the following policies and procedures for the pre-approval of all audit and permissible non-audit services provided by our independent registered public accounting firm. The Audit Committee annually reviews the audit and non-audit services to be performed by the independent registered public accounting firm during the upcoming year. The Audit Committee considers, among other things, whether the provision of specific non-audit services is permissible under existing law and whether it is consistent with maintaining the registered public accounting firm’s independence. The Audit Committee then approves the audit services and any permissible non-audit services it deems appropriate for the upcoming year. The Audit Committee’s pre-approval of non-audit services is specific as to the services to be provided and includes pre-set spending limits. The provision of any additional non-audit services during the year, or the provision of services in excess of pre-set spending limits, must be pre-approved by either the Audit Committee or by the Chairman of the Audit Committee, who has been delegated authority to pre-approve such services on behalf of the Audit Committee. Any pre-approvals granted by the Chairman of the Audit Committee must be reported to the full Audit Committee at its next regularly scheduled meeting. All of the fees described above for services provided to ACCO Brands under audit fees, audit-related fees, tax fees and all other fees were pre-approved by the Audit Committee pursuant to the Company’s pre-approval policies and procedures.

43


Number    Description of Exhibit

10.36Form of Stock-Settled Stock Appreciation Rights Award Agreement under the 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation's Current Report on Form 8-K filed with the SEC on May 20, 2011 (File No. 001-08454))

10.37Separation Agreement, dated November 17, 2011, by and between MeadWestvaco and Monaco SpinCo Inc. (incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed on November 22, 2011 (File No. 001-08454))

10.38Employee Benefits Agreement, dated as of November 17, 2011, by and among MeadWestvaco Corporation, Monaco Spinco Inc. and ACCO Brands Corporation. (incorporated by reference to Exhibit 10.3 of Registrant's Form S-4/A filed on February 13, 2012 (File No. 333-178869))

10.39Amendment to the February 24, 2011 Amended and Restated 2005 Restricted Stock Unit Award Agreement, made and entered into as of December 7, 2011, between Robert J. Keller and ACCO Brands Corporation (incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed on December 12, 2011 (File No. 001-08454))

10.40Amendment No. 1, dated as of March 19, 2012, to the Separation Agreement, dated as of November 17, 2011, by and among MeadWestvaco Corporation and Monaco SpinCo Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on March 22, 2012 (File No. 001-08454))

10.41Credit Agreement, dated as of March 26, 2012, among ACCO Brands Corporation, certain direct and indirect subsidiaries of ACCO Brands Corporation, Barclays Bank PLC and Bank of Montreal, as administrative agents, and the other agents and lenders named therein (incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant on March 30, 2012 (File No. 001-08454))

10.42Amendment of 2011 Amended and Restated ACCO Brands Corporation Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed on April 24, 2012 (File No. 001-08454))

10.43Transition Services Agreement, effective as of May 1, 2012, between Monaco SpinCo Inc. and MeadWestvaco Corporation (incorporated by reference to Exhibit 10.1 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

10.44Tax Matters Agreement, effective as of May 1, 2012, among the Company, MeadWestvaco Corporation and Monaco SpinCo Inc. (incorporated by reference to Exhibit 10.2 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

10.45Amendment to the 2008 Amended and Restated ACCO Brands Corporation Supplemental Retirement Plan (incorporated by reference to Exhibit 10.8 of the Registrant's Form 8-K filed on May 7, 2012 (File No. 001-08454))

10.46Amendment of the ACCO Brands Corporation Executive Severance Plan, adopted as of October 23, 2012 (incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Registrant on October 31, 2012 (File No. 001-08454))

21.1Subsidiaries of the Registrant*

23.1Consent of KPMG LLP*

23.2Consent of BDO*

24.1Power of attorney*

31.1Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*


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Number    Description of Exhibit

32.1Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

99.1
Pelikan-Artline Pty Ltd Audited Financial Statements as of September 30, 2012*

101
The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2012 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2012 and 2011, (ii) the Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010, (v) Consolidated Statements of Stockholders Equity (Deficit) for the years ended December 31, 2012, 2011 and 2010, and (vi) related notes to those financial statements+

*Filed herewith.

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








98

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

REGISTRANT:

ACCO BRANDS CORPORATION
By:/s/ Robert J. Keller
Robert J. Keller
 
Chairman of the Board and Chief Executive
Officer (principal executive officer)
By:/s/ Neal V. Fenwick
Neal V. Fenwick
Executive Vice President and Chief Financial
Officer (principal financial officer)
By:/s/ Thomas P. O’Neill, Jr.
Thomas P. O’Neill, Jr.
ACCO Brands CorporationSenior Vice President, Finance and Accounting (principalaccounting officer)
February 28, 2013
Pursuant 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 the Registrant and in the capacities and on the dates indicated.
(Registrant)
SignatureTitleDate
/s/ Robert J. Keller
Chairman of the Board and
Chief Executive Officer
(principal executive officer)
February 28, 2013
Robert J. Keller 
    
/s/ Neal V. Fenwick  By:
Executive Vice President and
Chief Financial Officer
(principal financial officer)
/s/Steven RubinFebruary 28, 2013
Neal V. Fenwick 
  Steven Rubin
/s/ Thomas P. O’Neill, Jr.Senior Vice President, Finance and Accounting (principal accounting officer)February 28, 2013
Thomas P. O’Neill, Jr. 
  Senior Vice President, Secretary
/s/ James A. Buzzard*DirectorFebruary 28, 2013
James A. Buzzard 
  and General Counsel
/s/ Kathleen S. Dvorak*DirectorFebruary 28, 2013
Kathleen S. Dvorak 
  
March 14, 2012
/s/ G. Thomas Hargrove*DirectorFebruary 28, 2013
G. Thomas Hargrove 

99

44
EXHIBIT INDEX
Exhibit No.
Signature  
Description of Exhibit
31.1
Title		 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Date
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
/s/ Robert H. Jenkins*DirectorFebruary 28, 2013
Robert H. Jenkins
/s/ Thomas Kroeger*DirectorFebruary 28, 2013
Thomas Kroeger
/s/ Michael Norkus*DirectorFebruary 28, 2013
Michael Norkus
/s/ Sheila G. Talton*DirectorFebruary 28, 2013
Sheila G. Talton
/s/ Norman H. Wesley*DirectorFebruary 28, 2013
Norman H. Wesley
/s/ Neal V. Fenwick
* Neal V. Fenwick as
Attorney-in-Fact

100
Table of Contents
ACCO Brands Corporation
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II

Allowances for Doubtful Accounts
Changes in the allowances for doubtful accounts were as follows:
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Balance at beginning of year$5.1
 $5.2
 $6.9
Additions charged to expense2.2
 1.4
 3.3
Deductions—write offs(3.0) (1.3) (5.3)
Mead C&OP acquisition2.1
 —
 —
Foreign exchange changes0.1
 (0.2) 0.3
Balance at end of year$6.5
 $5.1
 $5.2
Allowances for Sales Returns and Discounts
Changes in the allowances for sales returns and discounts were as follows:
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Balance at beginning of year$7.7
 $9.2
 $9.8
Additions charged to expense41.0
 41.6
 31.8
Deductions—returns(41.6) (43.1) (32.1)
Mead C&OP acquisition2.8
 —
 —
Foreign exchange changes0.7
 —
 (0.3)
Balance at end of year$10.6
 $7.7
 $9.2
Allowances for Cash Discounts
Changes in the allowances for cash discounts were as follows:
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Balance at beginning of year$1.1
 $1.2
 $1.2
Additions charged to expense16.4
 11.0
 11.3
Deductions—discounts taken(16.0) (11.0) (11.1)
Mead C&OP acquisition0.6
 —
 —
Foreign exchange changes0.1
 (0.1) (0.2)
Balance at end of year$2.2
 $1.1
 $1.2

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ACCO Brands Corporation
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II (Continued)


Warranty Reserves
Changes in the reserve for warranty claims were as follows:
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Balance at beginning of year$2.7
 $3.1
 $2.8
Provision for warranties issued3.3
 3.0
 3.2
Settlements made (in cash or in kind)(3.2) (3.4) (2.9)
Balance at end of year$2.8
 $2.7
 $3.1
Income Tax Valuation Allowance
Changes in the deferred tax valuation allowances were as follows:
 Year Ended December 31,
(in millions of dollars)2012 2011 2010
Balance at beginning of year$204.3
 $193.2
 $188.9
Charges/(credits) to expense(145.1) 5.4
 15.7
Charged to other accounts(4.3) 7.0
 (7.6)
Foreign exchange changes0.5
 (1.3) (3.8)
Balance at end of year$55.4
 $204.3
 $193.2



























See accompanying report of independent registered public accounting firm.

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