UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2018~~2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-08454

ACCO Brands Corporation

(Exact Name of Registrant as Specified in Its Charter)



Delaware	36-2704017
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

Four Corporate Drive

Lake Zurich, Illinois 60047

(Address of Registrant’s Principal Executive Office, Including Zip Code)

(847) 541-9500

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ACCO	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April ~~24, 2018,~~23, 2019, the registrant had outstanding ~~107,206,084~~102,089,019 shares of Common Stock.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, operating strategies and similar matters are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.

Some of the factors that could affect our results or cause plans, actions and results to differ materially from current expectations are detailed in "Part I, Item 1. Business" and "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, and the financial statement line item discussions set forth in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q and from time to time in our other Securities and Exchange Commission (the "SEC") 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 charge on or through 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 soon as practicable after the Company files them with, or furnishes them to, the SEC.

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Condensed Consolidated Balance Sheets	4
Consolidated Statements of ~~Income~~Operations	5
Consolidated Statements of Comprehensive Income (Loss)	6
Condensed Consolidated Statements of Cash Flows	7
Consolidated Statement of Stockholders’ Equity	8
Notes to Condensed Consolidated Financial Statements	89
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2729
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3436
Item 4. Controls and Procedures	3436
PART II — OTHER INFORMATION	3537
Item 1. Legal Proceedings	3537
Item 1A. Risk Factors	3537
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3537
Item 3. Defaults Upon Senior Securities	3537
Item 4. Mine Safety Disclosures	3638
Item 5. Other Information	3638
Item 6. Exhibits	3638
SIGNATURES	3739

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
(in millions of dollars)	(unaudited)
(in millions)							(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	122.7		$	76.9		$	100.5		$	67.0
Accounts receivable, net	316.1			469.3			318.1			428.4
Inventories	294.5			254.2			399.7			340.6
Other current assets	51.5			29.2			49.1			44.2
Total current assets	784.8			829.6			867.4			880.2
Total property, plant and equipment	657.1			645.2			622.5			618.7
Less: accumulated depreciation	(376.8		)	(366.7		)	(362.2		)	(355.0		)
Property, plant and equipment, net	280.3			278.5			260.3			263.7
Right of use asset, leases							83.6			—
Deferred income taxes	132.9			137.9			106.3			115.1
Goodwill	667.9			670.3			706.9			708.9
Identifiable intangibles, net	838.1			839.9			776.2			787.0
Other non-current assets	50.7			42.9			26.7			31.5
Total assets	$	2,754.7		$	2,799.1		$	2,827.4		$	2,786.4
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable	$	0.7		$	—		$	9.5		$	—
Current portion of long-term debt	42.0			43.2			47.1			39.5
Accounts payable	188.6			178.2			193.4			274.6
Accrued compensation	40.4			60.9			38.2			41.6
Accrued customer program liabilities	98.5			141.1			92.9			114.5
Accrued interest	6.8			1.2
Lease liabilities							22.8			—
Other current liabilities	112.1			113.8			111.6			129.0
Total current liabilities	489.1			538.4			515.5			599.2
Long-term debt, net	908.4			889.2			949.4			843.0
Long-term lease liabilities							69.7			11.0
Deferred income taxes	174.8			177.1			173.4			176.2
Pension and post-retirement benefit obligations	268.3			275.5			245.9			257.2
Other non-current liabilities	149.1			144.8			108.7			110.1
Total liabilities	1,989.7			2,025.0			2,062.6			1,996.7
Stockholders' equity:
Common stock	1.1			1.1			1.1			1.1
Treasury stock	(33.9		)	(26.4		)	(38.2		)	(33.9		)
Paid-in capital	1,999.1			1,999.7			1,931.9			1,941.0
Accumulated other comprehensive loss	(467.4		)	(461.1		)	(467.0		)	(461.7		)
Accumulated deficit	(733.9		)	(739.2		)	(663.0		)	(656.8		)
Total stockholders' equity	765.0			774.1			764.8			789.7
Total liabilities and stockholders' equity	$	2,754.7		$	2,799.1		$	2,827.4		$	2,786.4

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of ~~Income~~Operations

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions of dollars, except per share data)	2018			2017
(in millions, except per share data)							2019			2018
Net sales	$	405.8		$	359.8		$	393.9		$	405.8
Cost of products sold	278.3			248.9			268.1			278.3
Gross profit	127.5			110.9			125.8			127.5
Operating costs and expenses:
Selling, general and administrative expenses	101.8			94.2			95.9			101.8
Amortization of intangibles	9.3			8.0			9.3			9.3
Restructuring charges	4.7			1.5			2.7			4.7
Total operating costs and expenses	115.8			103.7			107.9			115.8
Operating income	11.7			7.2			17.9			11.7
Non-operating expense (income):
Interest expense	9.4			9.8			10.4			9.4
Interest income	(1.0		)	(1.3		)	(0.9		)	(1.0		)
Non-operating pension income	(2.2		)	(2.1		)	(1.4		)	(2.2		)
Other (income) expense, net	(0.6		)	0.7
Other income, net							(0.2		)	(0.6		)
Income before income tax	6.1			0.1			10.0			6.1
Income tax benefit	(4.3		)	(3.5		)
Net income	$	10.4		$	3.6
Income tax expense (benefit)							10.6			(4.3		)
Net (loss) income							$	(0.6	)	$	10.4

Per share:
Basic income per share	$	0.10		$	0.03
Diluted income per share	$	0.09		$	0.03
Basic (loss) income per share							$	(0.01	)	$	0.10
Diluted (loss) income per share							$	(0.01	)	$	0.09

Weighted average number of shares outstanding:
Basic	106.8			108.3			102.3			106.8
Diluted	110.0			112.4			102.3			110.0

Dividends per common share	$	0.06		$	—

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

Three Months Ended March 31,
(in millions of dollars) 2018 2017
Net income $ 10.4
$ 3.6
Other comprehensive (loss) income, net of tax:
Unrealized income (loss) on derivative instruments, net of tax (expense) benefit of $(0.3) and $0.7, respectively 0.6
(1.9 )

Foreign currency translation adjustments, net of tax (expense) benefit of $(2.7) and $0.0, respectively (4.3 ) 12.5

Recognition of deferred pension and other post-retirement items, net of tax benefit of $0.9 and $0.1, respectively (2.6 ) (0.5 )
Other comprehensive (loss) income, net of tax (6.3 ) 10.1

Comprehensive income $ 4.1
$ 13.7



	Three Months Ended March 31,
(in millions)	2019			2018
Net (loss) income	$	(0.6	)	$	10.4
Other comprehensive income (loss), net of tax:
Unrealized income (loss) on derivative instruments, net of tax benefit (expense) of $0.4 and $(0.3), respectively	(1.1		)	0.6

Foreign currency translation adjustments, net of tax expense of $(3.8) and $(2.7), respectively	(3.1		)	(4.3		)

Recognition of deferred pension and other post-retirement items, net of tax benefit of $0.4 and $0.9, respectively	(1.1		)	(2.6		)
Other comprehensive (loss) income, net of tax	(5.3		)	(6.3		)

Comprehensive income (loss)	$	(5.9	)	$	4.1

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions of dollars)	2018			2017
(in millions)							2019			2018
Operating activities
Net income	$	10.4		$	3.6
Net (loss) income							$	(0.6	)	$	10.4
Amortization of inventory step-up	—			0.9			0.1			—
Loss on disposal of assets	0.1			—			0.1			0.1
Depreciation	9.0			9.0			8.8			9.0
Amortization of debt issuance costs	0.5			1.4			0.5			0.5
Amortization of intangibles	9.3			8.0			9.3			9.3
Stock-based compensation	3.2			2.4			2.0			3.2
Changes in balance sheet items:
Accounts receivable	162.0			165.3			108.1			162.0
Inventories	(43.5		)	(31.2		)	(57.3		)	(43.5		)
Other assets	(8.0		)	(0.8		)	(10.1		)	(8.0		)
Accounts payable	8.8			(4.3		)	(79.9		)	8.8
Accrued expenses and other liabilities	(78.7		)	(73.4		)	(41.1		)	(78.7		)
Accrued income taxes	(12.7		)	(15.5		)	(1.2		)	(12.7		)
Net cash provided by operating activities	60.4			65.4
Net cash (used) provided by operating activities							(61.3		)	60.4
Investing activities
Additions to property, plant and equipment	(8.0		)	(5.2		)	(7.2		)	(8.0		)
Proceeds from the disposition of assets	—			0.1			0.1			—
Cost of acquisitions, net of cash acquired	—			(292.6		)
Other assets acquired							(5.4		)	—
Net cash used by investing activities	(8.0		)	(297.7		)	(12.5		)	(8.0		)
Financing activities
Proceeds from long-term borrowings	21.5			412.0			123.7			21.5
Repayments of long-term debt	(11.6		)	(94.4		)	—			(11.6		)
Borrowings of notes payable, net	0.7			—			4.8			0.7
Payments for debt issuance costs	—			(3.4		)
Dividends paid	(6.4		)	—			(6.2		)	(6.4		)
Repurchases of common stock	(9.1		)	—			(10.5		)	(9.1		)
Payments related to tax withholding for stock-based compensation	(7.4		)	(9.2		)	(4.2		)	(7.4		)
Proceeds from the exercise of stock options	5.3			1.4			—			5.3
Net cash (used) provided by financing activities	(7.0		)	306.4
Net cash provided (used) by financing activities							107.6			(7.0		)
Effect of foreign exchange rate changes on cash and cash equivalents	0.4			1.3			(0.3		)	0.4
Net increase in cash and cash equivalents	45.8			75.4			33.5			45.8
Cash and cash equivalents
Beginning of the period	76.9			42.9			67.0			76.9
End of the period	$	122.7		$	118.3		$	100.5		$	122.7

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

(Unaudited)



(in millions)	Common Stock		Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Accumulated Deficit			Total
Balance at December 31, 2018	$	1.1	$	1,941.0		$	(461.7	)	$	(33.9	)	$	(656.8	)	$	789.7
Net loss	—		—			—			—			(0.6		)	(0.6		)
Gain on derivative financial instruments, net of tax	—		—			(1.1		)	—			—			(1.1		)
Translation impact	—		—			(3.1		)	—			—			(3.1		)
Pension and post-retirement adjustment, net of tax	—		—			(1.1		)	—			—			(1.1		)
Common stock repurchases	—		(11.0		)	—			—			—			(11.0		)
Stock-based compensation	—		2.0			—			—			—			2.0
Common stock issued, net of shares withheld for employee taxes	—		—			—			(4.3		)	—			(4.3		)
Dividends declared, $0.06 per share	—		—			—			—			(6.2		)	(6.2		)
Other	—		(0.1		)	—			—			0.1			—
Cumulative effect due to the adoption of ASU 2016-02	—		—			—			—			0.5			0.5
Balance at March 31, 2019	$	1.1	$	1,931.9		$	(467.0	)	$	(38.2	)	$	(663.0	)	$	764.8



	Common Stock		Treasury Stock	Net Shares
Shares at December 31, 2018	106,249,322		3,500,622	102,748,700
Common stock issued, net of shares withheld for employee taxes	1,437,021		458,987	978,034
Common stock repurchases	(1,260,163	)	—	(1,260,163	)
Shares at March 31, 2019	106,426,180		3,959,609	102,466,571

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

As used in this Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2018~~2019, the terms "ACCO Brands," "ACCO," the "Company," "we," "us," and "our" refer to ACCO Brands Corporation and its consolidated subsidiaries.

The management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the condensed consolidated financial statements and notes contained in this Quarterly Report on Form 10-Q.

The condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the SEC. Although the Company believes the disclosures are adequate to make the information presented not misleading, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to those rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018.

The Condensed Consolidated Balance Sheet as of March 31, ~~2018,~~2019, the related Consolidated Statements of ~~Income~~Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 and Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 are unaudited. The December 31, ~~2017~~2018 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all annual disclosures required by GAAP. The above referenced financial statements included herein were prepared by management and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of results of operations and cash flows for the interim periods ended March 31, ~~2018~~2019 and ~~2017,~~2018, and the financial position of the Company as of March 31, ~~2018.~~2019. Interim results may not be indicative of results for a full year.

On ~~January 31, 2017, the Company~~July 2, 2018, we completed the acquisition (the ~~"Esselte~~"GOBA Acquisition") of ~~Esselte Group Holdings AB~~GOBA Internacional, S.A. de C.V. ("~~Esselte"~~GOBA")~~. Accordingly,~~, a leading provider of school and craft products in Mexico under the ~~financial~~Barrilito^®brand, for a preliminary purchase price of approximately $37.2 million, net of cash acquired, and subject to working capital and other adjustments. The GOBA Acquisition has increased the breadth and depth of our distribution, especially with wholesalers and retailers throughout Mexico, and complements our existing office products portfolio with a strong offering of school and craft products. The results of ~~Esselte~~GOBA are included in the ~~Company's condensed consolidated financial statements~~ACCO Brands International segment as of ~~February 1, 2017, and are reflected in all three of the Company's reportable segments.~~ July 2, 2018.

See "Note 3. ~~Acquisition"~~Acquisitions" for details on the ~~Esselte~~GOBA Acquisition.

~~In accordance with~~On January 1, 2019, the ~~adoption of the~~Company adopted accounting standard ASU No. ~~2017-07, Compensation - Retirement Benefits~~2016-02, Leases (Topic ~~715): Improving~~842), applying the ~~Presentation~~transition method in accounting standard ASU 2018-11 Leases (Topic 842), Targeted Improvements. ASU 2018-11 allows an entity to initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, the Company has retrospectively revised the presentation of the non-service components of periodic pension income/cost to "Non-operating pension income"retained earnings in the ~~Consolidated Statements~~period of ~~Income. See~~adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For more information, see "Note 2. Recent Accounting ~~Pronouncements"~~Pronouncements and Adopted Accounting Standards" and "Note 5. Leases."

Certain prior year amounts have been reclassified for ~~details on~~consistency with the ~~new standard.~~current year presentation in our Condensed Consolidated Balance Sheet, primarily due to the Company's adoption of ASU No. 2016-02, Leases (Topic 842) at the beginning of 2019.

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results could differ from those estimates.

2. Recent Accounting Pronouncements and Adopted Accounting Standards

Recent Accounting Pronouncements

In ~~February~~August 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. ~~2018-02, Income Statement~~2018-15, Intangibles - ~~Reporting Comprehensive Income (Topic 220)~~Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ~~In December 2017,~~This ASU aligns the ~~Tax Cuts~~requirements for capitalizing implementation costs

ACCO Brands Corporation and ~~Jobs Act (the "U.S. Tax Act") was signed into law. Prior~~Subsidiaries

Notes to ~~ASU 2018-02, GAAP required deferred tax assets and deferred tax liabilities to be adjusted for the effect of~~Condensed Consolidated Financial Statements (Unaudited) (Continued)

incurred in a ~~change in tax laws or rates~~hosting arrangement that is a service contract with the ~~effect included in income from continuing operations in the reporting period including the enactment date. The U.S. Tax Act reduces the historical U.S corporate tax rate and the effect of~~requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that ~~change is required to be included in income from continuing operations, even if the original tax effects were recorded in Accumulated Other Comprehensive Income ("AOCI")~~include an internal use software license). This could cause some tax effects to become stranded in AOCI as they are not updated to reflect the new tax rate. This new standard allows a company to elect to reclass the stranded tax effects resulting from the U.S. Tax Act from AOCI to retained earnings. The adoption of the new standard may be applied in the period of adoption or retrospectively to each period(s) effected by the change in the corporate tax rate. The Company is currently in the process of evaluating the impact of adoption of ASU ~~2018-02~~2018-15 on the Company’s consolidated financial statements. ASU ~~2018-02~~2018-015 is effective for fiscal years ~~and interim periods within those fiscal years beginning~~ending after December 15, ~~2018.~~2019. Early adoption of the standard is permitted, including adoption in any interim period for which financial statements have not been issued.

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

In August 2017, the FASB issued ASU No. 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The new standard improves certain aspects of the hedge accounting model, including making more risk management strategies eligible for hedge accounting and simplifying the assessment of hedge effectiveness. The Company is currently in the process of assessing the impact of adoption of ASU 2017-12 on the Company's consolidated financial statements. The Company will adopt ASU 2017-12 effective with its 2019 fiscal year.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU amends the existing accounting standard for leases. The amendments are intended to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. The new standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, and early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and disclosures, but expects the impact to the Company’s Consolidated Balance Sheets to be significant. At this time, the Company does not expect adoption of ASU 2016-02 to have a material impact on its Consolidated Statements of Income as the majority of its leases will remain operating in nature. The Company is in the process of analyzing existing leases, practical expedients, and deploying its implementation strategy. The Company will adopt ASU 2016-02 at the beginning of its 2019 fiscal year.

~~Other than the items mentioned above, there~~There are no other recently issued accounting standards that are expected to have a material effect on the Company’s financial condition, results of operations or cash flow.

Recently Adopted Accounting Standards

On January 1, ~~2018, we~~2019, the Company adopted ~~the~~ accounting standard ASU No. ~~2017-07, Compensation - Retirement Benefits~~2016-02, Leases (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires presentation of all components of net periodic pension and postretirement benefit costs, other than service costs, in an income statement line item outside of a subtotal of income from operations. The service cost component will continue to be presented in the same line item as other employee compensation costs. The Company used the practical expedient which permits an employer to use the amounts disclosed in its pension disclosures as the basis for842), applying the retrospective presentation requirements. On this basis, the Company restated its operating income which was reduced by $8.5 million for the year ended December 31, 2017 and $2.1 million for the three months ended March 31, 2017.

~~On January 1, 2018, we adopted the~~transition method in accounting standard ASU ~~2014-09, Revenue from Contracts with Customers~~2018-11 Leases (Topic 842), Targeted Improvements. ASU 2018-11 allows an entity to initially apply ASU 2016-02 at the adoption date and ~~all~~recognize a cumulative-effect adjustment to the ~~related amendments (Topic 606) and applied it to contracts which were not completed as~~opening balance of January 1, 2018 using the modified retrospective method. A completed contract is one where all (or substantially all) of the revenue was recognized in accordance with the revenue guidance that was in effect before the date of initial application of ASU 2014-09. We recognized the cumulative effect of $1.6 million, net of tax, upon adopting ASU 2014-09 as an addition to opening retained earnings asin the period of ~~January 1, 2018.~~adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The ~~majority~~cumulative effect of the changes on our ~~revenue is recognized at a point in time, when control is transferred~~January 1, 2019 opening Condensed Consolidated Balance Sheet due to ~~our customer, which is usually when products are shipped or delivered based upon~~ the ~~specific terms contained within the agreement. Our general payment terms are usually within 30-90 days. We do not have any significant financing components.~~adoption of ASU 2016-02 was as follows:



(in millions)	Balance at December 31, 2018			Adjustments due to ASU 2016-02			Balance at January 1, 2019
Assets:
Property, plant and equipment, net	$	263.7		$	(0.9	)	$	262.8
Right of use asset, leases	—			90.9			90.9

Liabilities and stockholders' equity:
Current portion of long-term debt	39.5			(0.1		)	39.4
Lease liabilities	—			24.1			24.1
Long-term debt, net	843.0			(0.1		)	842.9
Long-term lease liabilities	11.0			65.6			76.6
Accumulated deficit	(656.8		)	0.5			(656.3		)

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The ~~cumulative effect of the changes on our January 1, 2018 opening Condensed Consolidated Balance Sheet due to the adoption of ASU 2014-09 were as follows:~~

(in millions of dollars) Balance at December 31, 2017 Adjustments due to ASU 2014-09 Balance at January 1, 2018
Assets:
Inventories $ 254.2
$ (3.5 ) $ 250.7
Other current assets 29.2
6.9
36.1

Liabilities and stockholders' equity:
Accrued customer program liabilities 141.1
1.1
142.2
Other current liabilities 113.8
0.1
113.9
Deferred income taxes 177.1
0.6
177.7
Accumulated deficit (739.2 ) 1.6
(737.6 )

~~The~~ impact of the adoption of ASU ~~2014-09~~2016-02 on our ~~Consolidated Statements of Income and~~ Condensed Consolidated Balance Sheet for the ~~three-month~~ period ended March 31, ~~2018~~2019 was as follows:

Three Months Ended March 31, 2018
(in millions of dollars) As Reported Balances without adoption of ASU 2014-09 Effect of Change Higher/(Lower)
Consolidated Statements of Income:
Net sales $ 405.8
$ 405.7
$ 0.1
Cost of products sold 278.3
278.4
(0.1 )
Net income 10.4
10.2
0.2

Condensed Consolidated Balance Sheet:
Assets:
Accounts receivable, net 316.1
313.8
2.3
Inventories 294.5
297.3
(2.8 )
Other current assets 51.5
44.4
7.1

Liabilities and stockholders' equity:
Accrued customer program liabilities 98.5
97.9
0.6
Other current liabilities 112.1
108.5
3.6
Deferred income taxes 174.8
174.2
0.6
Accumulated deficit (733.9 ) (735.7 ) 1.8



	March 31, 2019
(in millions)	As Reported			Balances without adoption of ASU 2016-02			Effect of Change Higher/(Lower)
Condensed Consolidated Balance Sheet:
Assets:
Property, plant and equipment, net	$	260.3		$	261.1		$	(0.8	)
Right of use asset, leases	83.6			—			83.6

Liabilities and stockholders' equity:
Current portion of long-term debt	47.1			47.2			(0.1		)
Lease liabilities	22.8			—			22.8
Long-term debt, net	949.4			949.5			(0.1		)
Long-term lease liabilities	69.7			10.0			59.7
Accumulated deficit	(663.0		)	(663.5		)	0.5

See "Note 5. ~~Revenue Recognition"~~Leases" for further details and the required disclosures related to ASU ~~2014-09.~~2016-02.

The adoption of ASU 2016-02 did not materially affect our Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows.

There were no other accounting standards that were adopted in the first quarter of 2019 that had a material effect on the Company’s financial condition, results of operations or cash flow.

3. ~~Acquisition~~Acquisitions

On January 31, ~~2017, ACCO Europe Limited ("ACCO Europe"), an indirect wholly-owned subsidiary of~~2019, the Company completed the ~~Esselte Acquisition.~~purchase of certain assets, including inventory and certain identifiable intangibles, for the Cumberland brand (the "Cumberland Asset Acquisition") in Australia for a purchase price of A$8.2 million (US$6.0 million based on January 31, 2019 exchange rates), of which $0.6 million is expected to be paid during the second quarter of 2019. The ~~Esselte~~Cumberland Asset Acquisition ~~was made pursuant~~extends our presence in Australia into new product categories. The Company accounted for the transaction as an asset acquisition, as the set of assets acquired does not meet the criteria to be classified as a business under GAAP. During the quarter ended March 31, 2019, transaction costs related to the ~~share purchase agreement dated October 21, 2016,~~Cumberland Asset Acquisition were $0.1 million. These costs were reported as ~~amended (the "Purchase Agreement"~~selling, general and administrative ("SG&A")~~, among ACCO Europe,~~ expenses in the Company's Consolidated Statements of Operations.

The following table summarizes the fair value of assets acquired:



(in millions)	At January 31, 2019
Inventory	2.8
Identifiable intangibles	3.2
Fair value of assets acquired	$	6.0

Acquisition of GOBA

On July 2, 2018, the Company ~~and an entity controlled by J. W. Childs (the "Seller").~~

~~With~~completed the ~~acquisition of Esselte, ACCO Brands~~GOBA Acquisition. GOBA is a leading ~~European manufacturer~~provider of school and ~~marketer~~craft products in Mexico under the Barrilito^®brand. The GOBA Acquisition is expected to increase the breadth and depth of ~~branded consumer~~our distribution, especially with wholesalers and retailers throughout Mexico, and complements our existing office products portfolio with a strong offering of school and craft products. The results of GOBA are included in the ACCO Brands International segment as of July 2, 2018.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~office products. Esselte takes products to market under the Leitz~~^®~~, Rapid~~^® ~~and Esselte~~^® brands in the storage and organization, stapling, punching, business machines and do-it-yourself tools product categories. The combination improved ACCO Brands’ scale and enhanced its position as an industry leader in Europe.

The purchase price paid at closing was ~~€302.9~~Mex$796.8 million (US$~~326.8~~39.9 million based on ~~January 31, 2017~~July 2, 2018 exchange rates) ~~and was~~, subject to a working capital ~~adjustment~~and other adjustments that reduced it by ~~$0.3~~$0.8 million. The preliminary purchase price, net of cash acquired of ~~$34.2~~$1.9 million, was ~~$292.3~~$37.2 million. A portion of the purchase price ~~(€8.1~~(Mex$115.0 million (US$~~8.7~~5.8 million based on ~~January 31, 2017~~July 2, 2018 exchange rates)) is being held in an escrow account for a period of up to ~~two~~5 years after closing ~~as ACCO Europe’s sole recourse against Seller~~ in the event of any claims against ~~Seller~~the sellers under the ~~Purchase Agreement. A warranty and indemnity insurance policy held by~~stock purchase agreement. The Company may also make claims against the Company and ACCO Europe insures certain of Seller’s contractual obligations to ACCO Europe under the Purchase Agreement for up to €40.0 million (US$43.2 million based on January 31, 2017 exchange rates) for a period of up to seven years,sellers directly, subject to ~~certain deductibles and~~ limitations ~~set forth~~ in the ~~policy.~~

stock purchase agreement, if the escrow is depleted. The ~~Esselte~~GOBA Acquisition and related expenses were funded ~~through a term loan of €300.0 million (US$320.8 million based on January 27, 2017 exchange rates) and cash on hand.~~by increased borrowing under our revolving facility.

For accounting purposes, the Company iswas the acquiring enterprise. The ~~Esselte~~GOBA Acquisition is being accounted for as a purchase ~~combination and Esselte's results are included in the Company’s condensed consolidated financial statements as of February 1, 2017. Esselte contributed approximately $44.2 million of~~business combination. The net sales for GOBA for the ~~month~~three months ended ~~January~~March 31, ~~2018.~~2019 were $11.8 million.

The following table presents the preliminary allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of acquisition.


(in millions of dollars)	At January 31, 2017
(in millions)			At July 2, 2018
Calculation of Goodwill:
Purchase price, net of working capital adjustment	$	326.5	$	39.1

Plus fair value of liabilities assumed:
Accounts payable and accrued liabilities	121.9		10.2
Deferred tax liabilities	83.6		3.1
Pension obligations	174.1
Other non-current liabilities	5.8		5.6
Fair value of liabilities assumed	$	385.4	$	18.9

Less fair value of assets acquired:
Cash acquired	34.2		1.9
Accounts receivable	60.0		30.0
Inventory	41.9		7.1
Property, plant and equipment	75.6		0.6
Identifiable intangibles	277.0		10.3
Deferred tax assets	106.3		1.9
Other assets	10.4		4.2
Fair value of assets acquired	$	605.4	$	56.0

Goodwill	$	106.5	$	2.0

~~In the fourth quarter~~We are continuing our review of ~~2017, we finalized~~ 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 the acquisition date. ~~No additional adjustments~~The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill.

Our fair value estimate of assets acquired and liabilities assumed is pending the ~~goodwill~~completion of several elements, including the final determination of purchase price related to the ~~Esselte Acquisition will~~settlement of differences in working capital, and the valuation of the fair value of the assets acquired and liabilities assumed and final review by our management. The primary areas that are not yet finalized relate to income and other taxes. Accordingly, there could be ~~recognized.~~material adjustments to our condensed consolidated financial statements.

The final determination of the purchase price, fair values and resulting goodwill may differ significantly from what is reflected in these condensed consolidated financial statements.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill. The goodwill of $106.5 million is primarily attributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from the existence of an assembled workforce.

During the ~~three months~~year ended ~~March~~December 31, ~~2017,~~2018, transaction costs related to the ~~Esselte~~GOBA Acquisition were ~~$2.1 million. For the year ended December 31, 2017, transaction costs totaled $5.0~~$1.1 million. These costs were reported as ~~selling, general~~interest and ~~administrative expenses.~~SG&A expenses in the Company's Consolidated Statements of Operations.

4. Long-term Debt and Short-term Borrowings

Notes payable and long-term debt, listed in order of the priority of security interests in assets of the Company, consisted of the following as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018:


(in millions of dollars)	March 31, 2018		December 31, 2017
Euro Senior Secured Term Loan A, due January 2022 (floating interest rate of 1.50% at March 31, 2018 and 1.50% at December 31, 2017)	$	350.6	$	345.0
Australian Dollar Senior Secured Term Loan A, due January 2022 (floating interest rate of 3.44% at March 31, 2018 and 3.29% at December 31, 2017)	58.3		60.0
U.S. Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 3.57% at March 31, 2018 and 3.53% at December 31, 2017)	56.5		48.9
Australian Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 3.40% at March 31, 2018 and 3.28% at December 31, 2017)	91.4		85.0
(in millions)					March 31, 2019		December 31, 2018
Euro Senior Secured Term Loan A, due January 2022 (floating interest rate of 1.5% at March 31, 2019 and 1.50% at December 31, 2018)					$	283.6	$	289.0
Australian Dollar Senior Secured Term Loan A, due January 2022 (floating interest rate of 3.39% at March 31, 2019 and 3.56% at December 31, 2018)					43.2		43.0
U.S. Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 4.25% at March 31, 2019 and 4.36% at December 31, 2018)					222.2		106.8
Australian Dollar Senior Secured Revolving Credit Facility, due January 2022 (floating interest rate of 3.48% at March 31, 2019 and 3.54% at December 31, 2018)					77.8		73.9
Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)	400.0		400.0		375.0		375.0
Other borrowings	1.2		0.6		9.5		0.3
Total debt	958.0		939.5		1,011.3		888.0
Less:
Current portion	42.8		43.2		56.6		39.5
Debt issuance costs, unamortized	6.8		7.1		5.3		5.5
Long-term debt, net	$	908.4	$	889.2	$	949.4	$	843.0

~~In connection with the Esselte Acquisition, the~~The Company entered into a Third Amended and Restated Credit Agreement (the "2017 Credit Agreement"), dated as of January 27, 2017, among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other agents and various lenders party thereto. The 2017 Credit Agreement provides for a five-year senior secured credit facility, which consists of a €300.0 million (US$320.8 million based on January 27, 2017 exchange rates) term loan facility, aan A$80.0 million (US$60.4 million based on January 27, 2017 exchange rates) term loan facility, and a US$400.0 million multi-currency revolving credit facility (the "2017 Revolving Facility").

Effective July 26, 2018, the Company entered into the First Amendment (the "First Amendment") to the 2017 Credit Agreement among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto. The First Amendment increased the aggregate revolving credit commitments under the revolving facility by $100.0 million such that, after giving effect to such increase, the aggregate amount of revolving credit available under the 2017 Revolving Facility is $500.0 million. In addition, the First Amendment also affected certain technical amendments to the 2017 Credit Agreement, including the addition of provisions relating to LIBOR successor rate procedures if LIBOR becomes unascertainable or is discontinued in the future and to expressly permit certain intercompany asset transfers.

As of March 31, ~~2018,~~2019, there were ~~$147.9~~$300.0 million in borrowings outstanding under the 2017 Revolving Facility. The remaining amount available for borrowings as of March 31, 2019 was ~~$239.5~~$183.6 million (allowing for ~~$12.6~~$16.4 million of letters of credit outstanding on that date).

As ~~more fully~~ described in the Company's ~~2017~~2018 Annual Report on Form 10-K, we must meet certain restrictive debt covenants under the senior secured credit facilities. The indenture governing our outstanding senior unsecured notes also contains certain covenants. As of and for the periods ended March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company was in compliance with all applicable loan covenants.

5. ~~Revenue Recognition~~Leases

On January 1, ~~2018,~~2019, the Company adopted ~~the~~ accounting standard ASU ~~2014-09, Revenue from Contracts with Customers and all related amendments~~No. 2016-02, Leases (Topic ~~606)~~842), applying the ~~modified retrospective~~ transition method in accounting standard ASU 2018-11 Leases (Topic 842), Targeted Improvements. ASU 2018-11 allows an entity to ~~all contracts that were not completed as~~initially apply ASU 2016-02 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under ASU 2014-09, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net increase to beginning retained earnings ~~of $1.6 million as of January 1, 2018 due to the~~

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

in the period of adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company recorded a net increase to beginning retained earnings of $0.5 million as of January 1, 2019 due to the cumulative impact of adopting ASU ~~2014-09.~~2016-02. The impact ~~to revenues for the three months ended March 31, 2018 was immaterial as a result~~ of adopting ASU ~~2014-09.~~2016-02 on our Condensed Consolidated Balance Sheet was material, but the impact was immaterial for our Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows.

~~Revenue~~The Company leases its corporate headquarters; various other facilities for distribution, manufacturing, and offices; and vehicles, forklifts, and other equipment. The Company determines if an arrangement is ~~recognized when control~~a lease at inception. Leases are included in "Right of use asset, leases" ("ROU") assets, the current portion of the ~~promised goods or services is transferred to our customers~~lease liability in ~~an amount reflective of~~"Lease liabilities" and the ~~consideration we expect to be receive~~non-current portion in ~~exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue. Incidental items incurred that are immaterial~~"Long-term lease liabilities" in the ~~context~~Condensed Consolidated Balance Sheet. The Company currently has an immaterial amount of ~~the contract are expensed. We have elected the practical expedient to not disclose contracts that have~~financing leases and leases with a term of ~~1 year or less.~~

~~Performance Obligations~~

Atless than 12 months. ROU assets and lease liabilities are recognized based on the ~~inception~~present value of ~~each contract,~~lease payments over the lease term. Because most of the Company’s leases do not provide an implicit rate of return, the Company ~~assesses~~uses its incremental collateralized borrowing rate, on a regional basis, in determining the ~~products and services promised and identifies each distinct performance obligation. To identify the performance obligations, the Company considers all products and services promised regardless~~present value of ~~whether they are explicitly stated or implied within the contract or by standard business practices.~~

Freight and distribution activities performed before the customer obtains control of the goods are not considered promised services under customer contracts and therefore are not distinct performance obligations.lease payments. The Company has ~~chosen to make an~~lease agreements with lease and non-lease components, which are combined for accounting policy election to account for shipping and handling activities that occur after the customer obtains control of the goods as a fulfillment activity, and therefore accrues the expense of freight and distribution in Cost of products sold when product is shipped.purposes.

~~Nature~~The components of ~~our Products and Services~~lease expense were as follows:



	Three Months Ended March 31,
(in millions)	2019
Operating lease cost	$	7.0
Sublease income	(0.4		)
Total lease cost	$	6.6

~~Products~~: ~~For our products, we transfer control and recognize~~Other information related to leases was as follows:



	Three Months Ended March 31,
(in millions, except lease term and discount rate)	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8.0
Right-of-use assets obtained in exchange for lease obligations:
Operating leases⁽¹⁾	$	(1.4	)

Weighted average remaining lease term:
Operating leases	5.4 years

Weighted average discount rate:
Operating leases	5.2		%

(1) In the first quarter of 2019, the Company signed a ~~sale when we either ship the product from our manufacturing facility or distribution center, procure the product from~~sub-lease for one of our vendors or upon delivery to a customer specified location depending upon the terms in the customer agreement. For consignment arrangements, revenue is not recognized until the products are sold to the end customer. The amount of consideration we receive and revenue we recognize is impacted by incentives ("Customer Program Costs"), including 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, offered to our customers; and allowance for returns and discounts. We generally recognize Customer Program Costs as a deduction to gross sales at the time that the associated revenue is recognized. We estimate discounts based upon an analysis of historical trends and record as reductions to "Net sales" and "Accounts receivable, net". We estimate and record a returns reserve, on a gross basis, as a reduction to "Net sales" and "Cost of products sold" with increases to "Other current liabilities" and "Inventories." We adjust our estimate of revenue when the most likely amount of consideration we expect to receive changes.its distribution centers.

~~Service or Extended Maintenance Agreements~~ ("EMAs"): Depending on the terms of a customer agreement, we may defer recognition of a portion of the consideration received because we have to satisfy a future obligation (e.g. EMAs). We use an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach, for our separately priced service/maintenance agreements that extend mechanical and maintenance coverage beyond our base warranty coverage to our Print Finishing Solutions ("PFS") customers. These agreements range in duration from three months to 60 months, but are primarily one year or less. We receive payment at inception of the EMAs and recognize revenue over the term of the agreement on a straight line basis or bill on a monthly/quarterly basis. As of January 1, 2018, $5.2 million of unearned revenue associated with outstanding contracts was primarily reported in "Other current liabilities". $3.9 million of unearned revenue was recognized during the three months ended March 31, 2018. As of March 31, 2018, the amount of unearned revenue was $5.0 million. We expect to recognize approximately $4.3 million of the unearned amount in the next 12 months and $0.7 million in future periods beyond the next 12 months.

~~Disaggregation of Revenues~~

In accordance with ASU 2014-09, the following table disaggregates revenue from contracts with customers into regional geographies. The Company has determined that disaggregating revenue into these categories provides appropriate disclosure and achieves associated objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~The following table presents our revenue disaggregated by regional geography~~⁽¹⁾~~, based upon our reporting segments~~Future minimum lease payments, net of sub-lease income, for ~~the three months ended~~all non-cancelable leases as of March 31, ~~2018 and 2017:~~2019 were as follows:

Three Months Ended March 31,
(in millions of dollars) 2018 2017
United States $ 144.4
$ 154.7
Canada 21.2
20.2
ACCO Brands North America 165.6
174.9

ACCO Brands EMEA⁽²⁾
154.5
96.5

Australia/N.Z. 39.8
43.2
Latin America 33.5
33.2
Asia-Pacific 12.4
12.0
ACCO Brands International 85.7
88.4
Net sales $ 405.8
$ 359.8



(in millions)
2019	$	21.2
2020	23.2
2021	18.8
2022	15.3
2023	9.9
2024	7.0
Thereafter	11.9
Total minimum lease payments	107.3
Less imputed interest	14.8
Future minimum payments for leases, net of sublease rental income and imputed interest	$	92.5

~~(1) Net sales are attributed to geographic areas based on~~As of March 31, 2019, the ~~location~~Company had one operating lease for property that had not yet commenced. In addition, early in the second quarter of 2019, the Company signed a renewal of the ~~selling subsidiaries.~~

~~(2) ACCO Brands EMEA is comprised largely of Europe, but also includes export sales to the Middle East and Africa.~~

~~The following table presents our revenue disaggregated by the timing of revenue recognition~~lease for ~~the three months ended March 31, 2018:~~

Three Months Ended March 31,
(in millions of dollars) 2018
Product and Services transferred at a point in time $ 391.4
Product and Services transferred over time 14.4
Net sales $ 405.8
its corporate headquarters.

6. Pension and Other Retiree Benefits

The components of net periodic benefit (income) cost for pension and post-retirement plans for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 were as follows:


	Three Months Ended March 31,																		Three Months Ended March 31,
	Pension												Post-retirement						Pension												Post-retirement
	U.S.						International												U.S.						International
(in millions of dollars)	2018			2017			2018			2017			2018			2017
(in millions)																			2019			2018			2019			2018			2019			2018
Service cost	$	0.4		$	0.3		$	0.5		$	0.3		$	—		$	—		$	0.4		$	0.4		$	0.3		$	0.5		$	—		$	—
Interest cost	1.7			1.8			3.4			2.9			—			—			1.8			1.7			3.4			3.4			0.1			—
Expected return on plan assets	(2.9		)	(3.1		)	(5.9		)	(4.9		)	—			—			(2.9		)	(2.9		)	(5.1		)	(5.9		)	—			—
Amortization of net loss (gain)	0.6			0.5			0.9			0.7			(0.1		)	(0.1		)	0.5			0.6			0.8			0.9			(0.1		)	(0.1		)
Amortization of prior service cost (credit)	0.1			0.1			—			—			—			—
Net periodic benefit (income) expense⁽¹⁾	$	(0.1	)	$	(0.4	)	$	(1.1	)	$	(1.0	)	$	(0.1	)	$	(0.1	)
Amortization of prior service cost																			0.1			0.1			—			—			—			—
Net periodic benefit income⁽¹⁾																			$	(0.1	)	$	(0.1	)	$	(0.6	)	$	(1.1	)	$	—		$	(0.1	)


(1)	The components, other than service cost, are included in the line "Non-operating pension income" in the Consolidated Statements of ~~Income.~~Operations.

We expect to contribute approximately $~~20.3~~21.2 million to our defined benefit plans in ~~2018~~2019. For the three months ended March 31, ~~2018~~2019, we have ~~already~~ contributed $~~11.3~~7.5 million to these plans.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

7. Stock-Based Compensation

The following table summarizes our stock-based compensation expense (including stock options, restricted stock units ("RSUs") and performance stock units ("PSUs")) for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018:


	Three Months Ended March 31,				Three Months Ended March 31,
(in millions of dollars)	2018		2017
(in millions)					2019		2018
Stock option compensation expense	$	0.5	$	0.6	$	0.5	$	0.5
RSU compensation expense	0.9		1.0		1.0		0.9
PSU compensation expense	1.8		0.8		0.5		1.8
Total stock-based compensation expense	$	3.2	$	2.4	$	2.0	$	3.2

We generally recognize compensation expense for stock-based awards ratably over the vesting period. During the first quarter of ~~2018,~~2019, the Company's Board of Directors approved a stock compensation ~~grant~~grants which consisted of ~~769,477~~1,303,255 stock options, ~~387,789~~ 354,695 RSUs and ~~747,996~~ 365,893 PSUs.

The following table summarizes our unrecognized compensation expense and the weighted-average period over which the expense will be recognized as of March 31, ~~2018:~~2019:

March 31, 2018

March 31, 2019

Unrecognized

Weighted Average

Unrecognized

Weighted Average

Compensation

Years Expense To Be

Compensation

Years Expense To Be

(in millions of dollars, except weighted average years)

Expense

Recognized Over

(in millions, except weighted average years)

Expense

Recognized Over

Stock options

$5.0

2.6

$5.8

2.5

RSUs

$8.6

2.4

$7.4

2.2

PSUs

$17.8

2.1

$5.5

2.1

8. Inventories

The components of inventories were as follows:


(in millions of dollars)	March 31, 2018		December 31, 2017
(in millions)					March 31, 2019		December 31, 2018
Raw materials	$	45.3	$	38.2	$	65.4	$	55.4
Work in process	4.5		4.1		4.2		4.3
Finished goods	244.7		211.9		330.1		280.9
Total inventories	$	294.5	$	254.2	$	399.7	$	340.6

9. Goodwill and Identifiable Intangible Assets

Goodwill

As more fully described in the Company’s ~~2017~~2018 Annual Report on Form 10-K, we test goodwill for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company performed this annual assessment, on a qualitative basis, as allowed by GAAP, in the second quarter of ~~2017~~2018 and concluded that no impairment existed.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Changes in the net carrying amount of goodwill by segment were as follows:

(in millions of dollars) ACCO
Brands
North America ACCO
Brands
EMEA ACCO
Brands
International Total

Balance at December 31, 2017 $ 375.6
$ 129.4
$ 165.3
$ 670.3
Translation —
(2.4 ) —
(2.4 )
Balance at March 31, 2018 $ 375.6
$ 127.0
$ 165.3
$ 667.9



(in millions)	ACCO Brands North America		ACCO Brands EMEA			ACCO Brands International			Total
(in millions)	ACCO Brands North America		ACCO Brands EMEA			ACCO Brands International			Total
Balance at December 31, 2018	$	375.6	$	165.6		$	167.7		$	708.9
GOBA Acquisition	—		—			(0.3		)	(0.3		)
Foreign currency translation	—		(1.7		)	—			(1.7		)
Balance at March 31, 2019	$	375.6	$	163.9		$	167.4		$	706.9

The goodwill balance is net of $215.1 million of accumulated impairment ~~losses.~~losses, which occurred prior to December 31, 2016.

Identifiable Intangible Assets

The valuation of identifiable intangible assets of $3.2 million acquired in the Cumberland Asset Acquisition includes an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows.

The amortizable trade name is expected be amortized over 10 years on a straight-line basis while the customer relationships will be amortized on an accelerated basis over 7 years from January 31, 2019, the date the Cumberland assets were acquired by the Company. The allocations of the identifiable intangibles acquired in the Cumberland Asset Acquisition were as follows:



(in millions)	Fair Value		Remaining Useful Life Ranges
Trade name - amortizable	$	0.8	10 Years
Customer relationships	2.4		7 Years
Total identifiable intangibles acquired	$	3.2

The valuation of identifiable intangible assets of $10.3 million acquired in the GOBA Acquisition include an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows.

The amortizable trade name is expected to be amortized over 15 years on a straight-line basis, while the customer relationships will be amortized on an accelerated basis over 10 years from July 2, 2018, the date GOBA was acquired by the Company. The allocations of the identifiable intangibles acquired in the GOBA Acquisition were as follows:



(in millions)	Fair Value		Remaining Useful Life Ranges
Trade name - amortizable	$	3.8	15 Years
Customer relationships	6.5		10 Years
Total identifiable intangibles acquired	$	10.3

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, ~~2018~~2019 and December 31, ~~2017 were~~2018 was as follows:


	March 31, 2018								December 31, 2017								March 31, 2019								December 31, 2018
(in millions of dollars)	Gross Carrying Amounts		Accumulated Amortization				Net Book Value		Gross Carrying Amounts		Accumulated Amortization				Net Book Value
(in millions)																	Gross Carrying Amounts		Accumulated Amortization				Net Book Value		Gross Carrying Amounts		Accumulated Amortization				Net Book Value
Indefinite-lived intangible assets:
Trade names	$	603.1	$	(44.5	)	⁽¹⁾	$	558.6	$	599.5	$	(44.5	)	⁽¹⁾	$	555.0	$	469.1	$	(44.5	)	⁽¹⁾	$	424.6	$	471.7	$	(44.5	)	⁽¹⁾	$	427.2
Amortizable intangible assets:
Trade names	196.6		(62.1		)		134.5		195.3		(59.4		)		135.9		306.1		(73.9		)		232.2		306.0		(70.5		)		235.5
Customer and contractual relationships	245.4		(105.7		)		139.7		243.0		(99.3		)		143.7		241.0		(126.0		)		115.0		240.2		(120.5		)		119.7
Patents	5.9		(0.6		)		5.3		5.8		(0.5		)		5.3		5.4		(1.0		)		4.4		5.5		(0.9		)		4.6
Subtotal	447.9		(168.4		)		279.5		444.1		(159.2		)		284.9		552.5		(200.9		)		351.6		551.7		(191.9		)		359.8
Total identifiable intangibles	$	1,051.0	$	(212.9	)		$	838.1	$	1,043.6	$	(203.7	)		$	839.9	$	1,021.6	$	(245.4	)		$	776.2	$	1,023.4	$	(236.4	)		$	787.0


(1)	Accumulated amortization prior to the adoption of authoritative guidance on goodwill and ~~indefinite-lived~~other intangible assets, at which time further amortization ceased.

The Company’s intangible amortization expense was $9.3 million and ~~$8.0~~$9.3 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

Estimated amortization expense for amortizable intangible assets as of March 31, ~~2018~~2019 for the current year and the next five years are as follows:


(in millions of dollars)	2018		2019		2020		2021		2022		2023
(in millions)													2019		2020		2021		2022		2023		2024
Estimated amortization expense⁽²⁾	$	34.3	$	30.8	$	27.3	$	23.8	$	20.3	$	18.2	$	35.5	$	31.9	$	28.3	$	24.7	$	22.4	$	20.8


(2)	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.

We test indefinite-lived intangibles for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. We performed this annual assessment, on a qualitative basis, as allowed by GAAP, ~~for the majority of indefinite-lived trade names~~ in the second quarter of ~~2017~~2018 and concluded that no impairment existed. ~~For~~

10. Restructuring

The Company recorded restructuring expenses for the ~~Mead~~^® ~~indefinite-lived trade name that is not substantially above its carrying values, we performed a quantitative test~~three months ended March 31, 2019 of $2.7 million primarily for severance costs related to additional changes in the ~~second quarter~~operating structure of ~~2017. A 1.5% long-term growth rate~~our North America and ~~a 10.5% discount rate were used. We concluded that the Mead~~^® ~~trade name was not impaired.~~ International segments.

The ~~fair value~~summary of the ~~Mead~~^® ~~trade name was less than 30% above its carrying value as of~~activity in the ~~second quarter of 2017 test. As of~~restructuring account for the three months ended March 31, ~~2018,~~2019 was as follows:



(in millions)	Balance at December 31, 2018		Provision		Cash Expenditures			Non-cash Items/ Currency Change		Balance at March 31, 2019
Employee termination costs⁽¹⁾	$	7.9	$	2.7	$	(2.9	)	$	—	$	7.7
Termination of lease agreements⁽²⁾	1.8		—		(1.0		)	—		0.8
Total restructuring liability	$	9.7	$	2.7	$	(3.9	)	$	—	$	8.5

(1) We expect the ~~carrying value~~remaining $7.7 million employee termination costs to be substantially paid in the next twelve months.

(2) We expect the remaining $0.8 million termination of lease costs to be substantially paid in the ~~Mead~~^® ~~trade name was $113.3 million.~~next three months.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~10. Restructuring~~

During the first quarter of 2018, the Company recorded restructuring expenses of $4.7 million, primarily related to additional changes to the operating structure of the ACCO Brands North America segment and the continued integration of Esselte within the ACCO Brands EMEA segment. Not included in these numbers are exit costs and liabilities associated with exiting a leased facility of $2.4 million and a contract related termination of $0.1 million that were not recorded yet, pursuant to GAAP rules.

During 2017, cost savings initiatives undertaken by the Company in 2016 to further enhance its operations in the ACCO Brands North America segment were expanded to include the realignment of the operating structure of our former Computer Products Group and other projects to enhance the future long-term performance of the North America business.

~~For the three months ended March 31, 2018 and 2017, we recorded restructuring charges of $4.7 million and $1.5 million, respectively.~~

The summary of the activity in the restructuring account for the three months ended March 31, 2018 was as follows:


(in millions of dollars)	Balance at December 31, 2017		Provision		Cash Expenditures			Non-cash Items/ Currency Change			Balance at March 31, 2018
(in millions)													Balance at December 31, 2017		Provision		Cash Expenditures			Non-cash Items/ Currency Change			Balance at March 31, 2018
Employee termination costs⁽¹⁾	$	12.0	$	3.8	$	(2.6	)	$	0.3		$	13.5	$	12.0	$	3.8	$	(2.6	)	$	0.3		$	13.5
Termination of lease agreements⁽²⁾	0.8		0.9		(0.7		)	—			1.0		0.8		0.9		(0.7		)	—			1.0
Other⁽³⁾	0.5		—		(0.1		)	(0.1		)	0.3		0.5		—		(0.1		)	(0.1		)	0.3
Total restructuring liability	$	13.3	$	4.7	$	(3.4	)	$	0.2		$	14.8	$	13.3	$	4.7	$	(3.4	)	$	0.2		$	14.8

~~(1) We expect~~

11. Income Taxes

For the ~~remaining $13.5~~three months ended March 31, 2019, we recorded an income tax expense of $10.6 million ~~employee termination costs~~on income before taxes of $10.0 million, for an effective rate of 106.0%. The high effective tax rate for the quarter is primarily due to ~~be substantially paid~~the Company increasing its reserves for uncertain tax positions in connection with the Brazil Tax Assessments (see Brazil Tax Assessments below) in the ~~next fifteen months.~~

~~(2) We expect~~amount of $5.6 million, the ~~remaining $1.0 million termination~~recording of ~~lease costs to be substantially paid~~deferred state taxes on unremitted non-U.S. earnings in the ~~next twelve months.~~amount of $0.8 million and other reserves related to various tax contingencies.

~~(3) We expect~~

Immaterial Out-of-Period Adjustment

The $5.6 million increase in tax expense resulting from the ~~remaining $0.3 million of other costs, principally contract exit costs, to be substantially paid~~increase in the ~~next nine months.~~

~~The summary of~~reserve related to uncertain tax positions in connection with the ~~activity~~Brazil Tax Assessments that was recorded in the ~~restructuring account~~first quarter of 2019 should properly have been recorded in 2018 when the Company decided to appeal the administrative decision to the judicial level. The impact of recording this out-of-period adjustment to our Consolidated Statements of Operations for the three months ended March 31, ~~2017~~2019 is a $5.6 million increase in our income tax expense and a $5.6 million decrease to our Net Income, resulting in a Net Loss; the Company has concluded that this amount would not have been material to its Net Income for the twelve months ended December 31, 2018 or its expected Net Income for the twelve months ended December 31, 2019. Further, the impact of the correction was ~~as follows:~~

(in millions of dollars) Balance at December 31, 2016 Esselte Acquisition (4) Provision Cash
Expenditures Balance at March 31, 2017
Employee termination costs $ 1.4
$ 1.4
$ 1.3
$ (0.4 ) $ 3.7
Termination of lease agreements 0.1
2.0
0.2
(0.1 ) 2.2
Other —
0.1
—
(0.1 ) —
Total restructuring liability $ 1.5
$ 3.5
$ 1.5
$ (0.6 ) $ 5.9

~~(4) Restructuring liabilities assumed~~not material to either our Condensed Consolidated Balance Sheets or our Condensed Consolidated Statements of Cash Flows. This amount is not expected to be paid in cash in the ~~Esselte Acquisition.~~

~~ACCO Brands Corporation~~foreseeable future, and ~~Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

~~11. Income Taxes~~

~~The reconciliation of income taxes for~~would only be paid in the ~~three months ended March 31, 2018 and 2017, computed at~~event that we do not ultimately prevail in the ~~U.S. federal statutory income tax rate, compared to our effective income tax rate, was as follows:~~

Three Months Ended March 31,
(in millions of dollars) 2018 2017
Income tax expense computed at U.S. statutory income tax rate (21% and 35%, respectively) $ 1.3
$ —
Interest on Brazilian Tax Assessment 0.3
0.7
Partial release of reserve for the Brazilian Tax Assessment (5.6 ) —
Excess tax benefit from stock-based compensation (2.5 ) (5.3 )
Net operating losses not benefited 1.0
0.4
Miscellaneous 1.2
0.7
Income tax benefit as reported $ (4.3 ) $ (3.5 )
Effective tax rate NM
NM
case.

For the three months ended March 31, 2018, we recorded an income tax benefit of $4.3 million on income before taxes of $6.1 million. The ~~net~~ tax benefit for the three months ended March 31, 2018 was primarily due to ~~(1)~~ the ~~partial release of $5.6 million of the reserve for the Brazil Tax Assessment (see below) due to the expiration of the statute of limitations, and (2)~~ excess tax benefit ~~of $2.5 million~~resulting from the realization of stock-based compensation related tax ~~deductions. Additionally,~~deductions, the ~~low effective~~partial release of the reserve for the Brazil Tax Assessments resulting from the expiration of the statute of limitation for the 2011 tax ~~rate for 2018 includes tax~~year, the positive impacts attributable to the U.S. Tax Act ~~which~~and foreign tax refunds. This was ~~signed into law on December 22, 2017.~~

~~For~~partially offset by the ~~three months ended March 31, 2017, we recorded an income~~revaluation of the deferred tax ~~benefit of $3.5 million on income before taxes of $0.1 million. The low effective tax rate for the three months ended March 31, 2017 was primarily due to the excess tax benefit of $5.3 million~~assets and liabilities resulting from the ~~realization of stock-based compensation related~~decrease in the Swedish corporate tax ~~deductions.~~rate.

The U.S. federal statute of limitations remains open for the ~~year 2014~~years 2015 and forward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 2 to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include Australia (2014 forward), Brazil (2013 forward), ~~Brazil (2012 forward),~~ Canada ~~(2009~~(2014 forward), Germany ~~(2011~~(2014 forward), Sweden ~~(2011~~(2013 forward) and the U.K. ~~(2016~~(2017 forward). We are currently under examination in certain foreign jurisdictions.

Brazil Tax ~~Reform~~

On December 22, 2017, the U.S. Tax Act was signed into law. The U.S. Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to: (i) reducing the future U.S. federal corporate tax rate from 35 percent to 21 percent; (ii) requiring companies to pay a one-time transition tax on certain undistributed earnings of foreign subsidiaries (the "Transition Toll Tax"); and (iii) bonus depreciation that will allow for full expensing of qualified property.

The U.S. Tax Act also established new tax laws that will affect 2018, including, but not limited to: (i) the reduction of the U.S. federal corporate tax rate discussed above; (ii) a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (iii) a new provision designed to tax global intangible low-taxed income ("GILTI"); (iv) the repeal of the domestic production activity deductions; (v) limitations on the deductibility of certain executive compensation; (vi) limitations on the use of foreign tax credits to reduce the U.S. income tax liability; and (vii) a new provision that allows a domestic corporation an immediate deduction for a portion of its foreign derived intangible income ("FDII").

The SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting for the tax effects of the U.S. Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the enactment date for companies to complete the related accounting under ASC 740, ~~Accounting for Income Taxes~~. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the U.S. Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for a certain income tax effect of the U.S. Tax Act is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the U.S. Tax Act.

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

The Company’s accounting for certain components of the U.S. Tax Act is not complete. However, the Company was able to make reasonable estimates of the effects and recorded provisional estimates for these items. Changes in tax rates and tax laws are accounted for in the period of enactment. Therefore, during the year ended December 31, 2017, we recorded a net tax benefit totaling $25.7 million related to our provisional estimate of the impact of the U.S. Tax Act. The benefit consists of an expense of $24.0 million, net of foreign tax credit carryforwards of $14.0 million, for the one-time Transition Toll Tax and a net benefit of $49.7 million in connection with the revaluation of the deferred tax assets and liabilities resulting from the decrease in the U.S. corporate tax rate.

During the three months ended March 31, 2018, we have made no adjustments to the provisional amounts recorded at December 31, 2017. However, the ultimate impact of the U.S. Tax Act may differ from the current estimates, possibly materially, due to changes in interpretations and assumptions the Company has made, future guidance that may be issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, or actions the Company may take. Adjustments to the provisional amounts may materially affect our provision for income taxes and effective tax rate in the period in which the adjustments are made. Accounting for the tax effects of the U.S. Tax Act will be completed prior to December 31, 2018.

~~Income Tax Assessment - Tilibra~~Assessments

In connection with our May 1, 2012 acquisition of the Mead Consumer and Office Products ~~Business~~business ("Mead C&OP"), we assumed all of the tax liabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment ~~(the "Brazilian Tax Assessment")~~ against Tilibra, ~~which challenged~~challenging the tax deduction of goodwill from Tilibra's taxable income for the year 2007 (the "First Assessment"). A second assessment challenging the deduction of goodwill from Tilibra's taxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013 (the "Second Assessment" and together with the First Assessment, the "Brazil Tax Assessments"). Tilibra is disputing both of the tax assessments.

~~Recently, the~~The final administrative appeal of the Second Assessment was decided against the ~~Company. We intend~~Company in 2017. In 2018, the Company decided to ~~challenge~~appeal this decision to the judicial level. In the event we do not prevail at the judicial level, the Company will be required to pay an additional amount representing attorneys' costs and fees. Accordingly, in ~~court.~~March 2019, the Company recorded an additional

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

reserve in the amount of $5.6 million reflecting the increased liability bringing the total reserve to $27.5 million for the Second Assessment. In connection with the judicial challenge, we ~~are~~were required to ~~post~~provide security to guarantee payment of the Second Assessment, ~~which represents $24.6 million of the current reserve,~~ should we not prevail. The First Assessment is still being challenged through established administrative procedures.

We believe we have meritorious defenses and intend to vigorously contest ~~these matters;~~both of the assessments; however, there can be no assurances that we will ultimately prevail. The ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which is expected to take a number of years. In addition, Tilibra's 2012 tax year remains open and subject to audit, and there can be no assurances that we will not receive additional tax assessments regarding the goodwill for 2012. The time limit for issuing an assessment for 2012 will expire in January 2019. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.

Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, we consider the outcome of ~~this dispute~~these disputes to be uncertain. Since it is not more likely than not that we will prevail, in 2012, we recorded a reserve in the amount of $44.5 million (at December 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price and which included the 2007-2012 tax years plus penalties and interest through December 2012. Included in this reserve is an assumption of penalties at 75%, which is the standard penalty. While there is a possibility that a penalty of 150% could be imposed in connection with the First Assessment, based on the facts in our case and existing precedent, we believe the likelihood of a 150% penalty is not more likely than not as of March 31, ~~2018.~~2019. We will continue to actively monitor administrative and judicial court decisions and evaluate their impact, if any, on our legal assessment of the ultimate outcome of our ~~case.~~disputes. In addition, we will continue to accrue interest related to this contingency until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. The time limit for issuing an assessment for 2011 expired in January 2018 and we did not receive an assessment; we ~~have~~ therefore reversed $5.6 million of reserves related to ~~2011.~~2011 in the first quarter of 2018. During the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, we accrued additional interest as a charge to current income tax expense of $0.3 million and ~~$0.7~~$0.3 million, respectively. At current exchange rates, our accrual through March 31, ~~2018,~~2019, including tax, penalties and interest is ~~$33.4~~$35.1 million.

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

12. Earnings per Share

Total outstanding shares as of March 31, ~~2018~~2019 and ~~2017~~2018 were ~~107.8~~102.5 million and ~~109.5~~107.8 million, respectively. Under our stock repurchase program, for the three months ended March 31, 2019 and 2018, we repurchased and retired 1.3 million and 0.8 million ~~shares. No~~ shares, ~~were repurchased during~~respectively. For the three months ended March 31, ~~2017. For each of the three months ended March 31,~~2019 and 2018, ~~and 2017,~~ we acquired ~~0.6~~0.5 million and ~~0.7~~0.6 million shares, respectively, related to tax withholding for share-based compensation.

The calculation of basic earnings per share of common stock is based on the weighted average number of shares of common stock outstanding in the year, or period, over which they were outstanding. Our calculation of diluted earnings per share of common stock assumes that any shares of common stock outstanding were increased by shares that would be issued upon exercise of those stock ~~units~~awards 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.

Our weighted-average shares outstanding for the three months ended March 31, 2019 and 2018 was as follows:


	Three Months Ended March 31,		Three Months Ended March 31,
(in millions)	2018	2017	2019	2018
Weighted-average number of shares of common stock outstanding - basic	106.8	108.3	102.3	106.8
Stock options	1.2	1.5	—	1.2
Restricted stock units	2.0	2.6	—	2.0
Adjusted weighted-average shares and assumed conversions — diluted	110.0	112.4
Weighted-average shares and assumed conversions - diluted⁽¹⁾			102.3	110.0

(1)

Due to the net loss during the three months ended March 31, 2019, the denominator in the diluted earnings per share calculation does not include the effects of the stock awards for which the average market price for the period exceeds the exercise price, as it would result in a less dilutive computation. As a result, reported diluted earnings per share for the three months ended March 31, 2019 are the same as basic earnings per share.

Awards of potentially dilutive shares of common stock, which have exercise prices that were higher than the average market price during the period, are not included in the computation of dilutive earnings per share as their effect would have been ~~anti-dilutive.~~anti-

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

dilutive. For the three months ended March 31, ~~2018~~2019 and ~~2017~~,2018 the number of anti-dilutive shares ~~were~~was approximately 5.8 million and 2.8 million, ~~and 2.3 million,~~ respectively.

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 U.S. dollar, Euro, Australian dollar, Canadian dollar, Swedish krona, British pound and Japanese yen. 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.

When hedge accounting is applicable, on the date 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 with third parties 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 (the Euro, the Swedish krona and the British pound), Australia, Canada, Brazil, and Mexico.

Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada, Japan and ~~Japan,~~New Zealand, and are designated as cash flow hedges. Unrealized gains and losses on these contracts are deferred in ~~accumulated other comprehensive income (loss)~~Accumulated Other Comprehensive Income ("AOCI") until the contracts are settled and the underlying hedged transactions relating to inventory purchases are recognized, at which time the deferred gains or losses will be reported in the "Cost of products sold" line in the "Consolidated Statements of ~~Income.~~Operations." As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we had cash-flow-designated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of ~~$119.9~~$96.3 million and ~~$93.5~~$98.7 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 ~~(income) expense,~~income, net" in the "Consolidated

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

Statements of ~~Income"~~Operations" and are largely offset by the change in the current translated 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 March ~~2019,~~2020, except for one relating to intercompany loans which extends to December 2020. As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we had undesignated foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of ~~$96.1~~$150.3 million and ~~$95.0~~$113.3 million, respectively.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table summarizes the fair value of our derivative financial instruments as of March 31, ~~2018~~2019 and December 31, ~~2017:~~2018:


	Fair Value of Derivative Instruments										Fair Value of Derivative Instruments
	Derivative Assets					Derivative Liabilities					Derivative Assets					Derivative Liabilities
(in millions of dollars)	Balance Sheet Location	March 31, 2018		December 31, 2017		Balance Sheet Location	March 31, 2018		December 31, 2017
(in millions)											Balance Sheet Location	March 31, 2019		December 31, 2018		Balance Sheet Location	March 31, 2019		December 31, 2018
Derivatives designated as hedging instruments:
Foreign exchange contracts	Other current assets	$	1.8	$	0.5	Other current liabilities	$	0.7	$	0.5	Other current assets	$	1.8	$	3.3	Other current liabilities	$	0.1	$	0.1
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current assets	0.4		0.4		Other current liabilities	1.2		0.7		Other current assets	0.4		0.6		Other current liabilities	1.2		1.7
Foreign exchange contracts	Other non-current assets	32.2		24.2		Other non-current liabilities	32.2		24.2		Other non-current assets	7.9		12.7		Other non-current liabilities	7.9		12.7
Total derivatives		$	34.4	$	25.1		$	34.1	$	25.4		$	10.1	$	16.6		$	9.2	$	14.5

The following tables summarize the pre-tax effect of our derivative financial instruments on the condensed consolidated financial statements for the three months ended March 31, ~~2018~~2019 and ~~2017:~~2018:


		The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Financial Statements													The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Condensed Consolidated Financial Statements
		Amount of Gain (Loss) Recognized in AOCI (Effective Portion)						Location of (Gain) Loss Reclassified from AOCI to Income	Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)						Amount of Gain (Loss) Recognized in AOCI (Effective Portion)					Location of (Gain) Loss Reclassified from AOCI to Income	Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion)
		Three Months Ended March 31,							Three Months Ended March 31,						Three Months Ended March 31,						Three Months Ended March 31,
(in millions of dollars)		2018			2017				2018		2017
(in millions)															2019		2018				2019			2018
Cash flow hedges:	Cash flow hedges:													Cash flow hedges:
Foreign exchange contracts	Foreign exchange contracts	$	(0.3	)	$	(1.5	)	Cost of products sold	$	1.2	$	(1.1	)	Foreign exchange contracts	$	0.2	$	(0.3	)	Cost of products sold	$	(1.7	)	$	1.2


	The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Operations						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					Location of (Gain) Loss Recognized in Income on Derivatives	Amount of (Gain) Loss Recognized in Income
		Three Months Ended March 31,						Three Months Ended March 31,
(in millions of dollars)		2018		2017
(in millions)								2019		2018
Foreign exchange contracts	Other (income) expense, net	$	0.4	$	(0.8	)	Other income, net	$	1.2	$	0.4

~~ACCO Brands Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)~~

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 1	Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or
	Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or
	Inputs other than quoted prices that are observable for the asset or liability
Level 3	Unobservable 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.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

We have determined that our financial assets and liabilities described in "Note 13. Derivative Financial Instruments" 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 March 31, ~~2018~~2019 and December 31, ~~2017:~~2018:


(in millions of dollars)	March 31, 2018		December 31, 2017
(in millions)					March 31, 2019		December 31, 2018
Assets:
Forward currency contracts	$	34.4	$	25.1	$	10.1	$	16.6
Liabilities:
Forward currency contracts	$	34.1	$	25.4	$	9.2	$	14.5

Our forward currency contracts are included in "Other current assets," "Other non-current assets," "Other current liabilities" or "Other non-current ~~liabilities" and do not extend beyond March 2019, except for one which extends to December 2020.~~liabilities." The forward foreign currency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by 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 ~~$958.0~~$1,011.3 million and ~~$939.5~~$888.0 million and the estimated fair value of total debt was $~~960.0~~1,003.8 million and $~~951.5~~848.6 million at March 31, ~~2018~~2019 and December 31, ~~2017~~2018, 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 time to maturity.

15. Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss) is defined as net (loss) 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), net of tax were as follows:

(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, 2017 $ 0.2
$ (305.4 ) $ (155.9 ) $ (461.1 )
Other comprehensive loss before reclassifications, net of tax (0.3 ) (4.3 ) (3.8 ) (8.4 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 0.9
—
1.2
2.1
Balance at March 31, 2018 $ 0.8
$ (309.7 ) $ (158.5 ) $ (467.4 )



(in millions)	Derivative Financial Instruments			Foreign Currency Adjustments			Unrecognized Pension and Other Post-retirement Benefit Costs			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018	$	2.1		$	(299.2	)	$	(164.6	)	$	(461.7	)
Other comprehensive loss before reclassifications, net of tax	(0.1		)	(3.1		)	(2.2		)	(5.4		)
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax	(1.0		)	—			1.1			0.1
Balance at March 31, 2019	$	1.0		$	(302.3	)	$	(165.7	)	$	(467.0	)

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The reclassifications out of accumulated other comprehensive income (loss) for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 were as follows:


	Three Months Ended March 31,							Three Months Ended March 31,
	2018			2017				2019			2018
(in millions of dollars)	Amount Reclassified from Accumulated Other Comprehensive Income						Location on Income Statement
(in millions)							Location on Income Statement	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Location on Income Statement
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income						Location on Income Statement							Location on Income Statement
(Loss) gain on cash flow hedges:							Location on Income Statement
Gain (loss) on cash flow hedges:
Foreign exchange contracts	$	(1.2	)	$	1.1		Cost of products sold	$	1.7		$	(1.2	)	Cost of products sold
Tax benefit (expense)	0.3			(0.4		)	Income tax benefit
Tax (expense) benefit								(0.7		)	0.3			Income tax expense (benefit)
Net of tax	$	(0.9	)	$	0.7			$	1.0		$	(0.9	)
Defined benefit plan items:
Amortization of actuarial loss	$	(1.4	)	$	(1.1	)	(1)	$	(1.2	)	$	(1.4	)	(1)
Amortization of prior service cost	(0.1		)	(0.1		)	(1)	(0.1		)	(0.1		)	(1)
Total before tax	(1.5		)	(1.2		)		(1.3		)	(1.5		)
Tax benefit	0.3			0.3			Income tax benefit	0.2			0.3			Income tax expense (benefit)
Net of tax	$	(1.2	)	$	(0.9	)		$	(1.1	)	$	(1.2	)

Total reclassifications for the period, net of tax	$	(2.1	)	$	(0.2	)		$	(0.1	)	$	(2.1	)


(1)	These accumulated other comprehensive income components are included in the computation of net periodic benefit cost for pension and post-retirement ~~plans (See~~plans. See "Note 6. Pension and Other Retiree Benefits" for additional ~~details).~~details.

16. Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount reflective of the consideration we expect to be received in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue. Incidental items incurred that are immaterial in the context of the contract are expensed.

At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. To identify the performance obligations, the Company considers all products and services promised regardless of whether they are explicitly stated or implied within the contract or by standard business practices.

Freight and distribution activities performed before the customer obtains control of the goods are not considered promised services under customer contracts and therefore are not distinct performance obligations. The Company has chosen to account for shipping and handling activities as a fulfillment activity, and therefore accrues the expense of freight and distribution in "Cost of products sold" when product is shipped.

Service or Extended Maintenance Agreements ("EMAs") As of December 31, 2018, there was $5.0 million of unearned revenue associated with outstanding EMAs, primarily reported in "Other current liabilities." During the three months ended March 31, 2019, $1.6 million of the unearned revenue was recognized. As of March 31, 2019, the amount of unearned revenue was $5.4 million. We expect to recognize approximately $4.1 million of the unearned amount in the next 12 months and $1.3 million in future periods beyond the next 12 months.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following tables presents our net sales disaggregated by regional geography⁽¹⁾, based upon our reporting business segments and our net sales disaggregated by the timing of revenue recognition for the three months ended March 31, 2019 and 2018:



	Three Months Ended March 31,
(in millions)	2019		2018
United States	$	140.0	$	144.4
Canada	20.4		21.2
ACCO Brands North America	160.4		165.6

ACCO Brands EMEA⁽²⁾	146.5		154.5

Australia/N.Z.	32.9		39.8
Latin America	42.3		33.5
Asia-Pacific	11.8		12.4
ACCO Brands International	87.0		85.7
Net sales	$	393.9	$	405.8

(1) Net sales are attributed to geographic areas based on the location of the selling subsidiaries.

(2) ACCO Brands EMEA is comprised largely of Europe, but also includes export sales to the Middle East and Africa.



	Three Months Ended March 31,
(in millions)	2019		2018
Product and services transferred at a point in time	$	373.4	$	391.4
Product and services transferred over time	20.5		14.4
Net sales	$	393.9	$	405.8

17. Information on Business Segments

The Company has three operating business segments each of which is comprised of different geographic regions. The Company's three segments are as follows:



Operating Segment		Geography
ACCO Brands North America		United States and Canada
ACCO Brands EMEA		Europe, Middle East and Africa
ACCO Brands International		Australia/N.Z., Latin America and Asia-Pacific

Each of the Company's three operating segments designs, markets, sources, manufactures and sells recognized consumer and other end-user demanded ~~brands~~branded products used in businesses, schools and homes. Product designs are tailored based on end-user preferences in each geographic region.

Our product categories include storage and organization; stapling; punching; laminating, binding and shredding machines and related consumable supplies; whiteboards; notebooks; calendars; computer accessories; and do-it-yourself tools, among others. Our portfolio of consumer and other end-user demanded brands includes both globally and regionally recognized brands.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

ACCO Brands North America

The ACCO Brands North America segment is comprised of the United States and Canada where the Company is a leading branded supplier of consumer and business products under brands such as AT-A-GLANCE^®, Five Star^®, GBC^®, Hilroy^®, Kensington^®, Mead^®, Quartet^®, and Swingline^®.The ACCO Brands North America segment designs, sources or manufactures and distributes school notebooks, calendars, whiteboards, storage and organization products (such as three-ring binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, and computer accessories, among others, which are primarily used in schools, homes and businesses. The majority of revenue in this segment is related to consumer and home products and is associated with the "back-to-school" season and year-end calendar ~~year-end purchases; we~~purchases. We expect sales of consumer products to become an increasingly greater percentage of our revenue as ~~they are~~demand for consumer products is faster growing than most business-related products.

ACCO Brands EMEA

The ACCO Brands EMEA segment is comprised largely of Europe, but also includes export sales to the Middle East and Africa. The Company is a leading branded supplier of consumer and business products under brands such as Derwent^®, Esselte^®, GBC^®, Kensington^®, Leitz^®, NOBO^®, Rapid^®, and Rexel^®.The ACCO Brands EMEA segment designs, manufactures or sources and distributes storage and organization products (such as lever-arch binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, do-it-yourself tools, and computer accessories, among others, which are primarily used in businesses, homes and schools.

ACCO Brands International

The ACCO Brands International segment is comprised of Australia/N.Z., Latin America and Asia-Pacific where the Company is a leading branded supplier of consumer and business products under brands such as Artline^®, Barrilito^®, GBC^®, Kensington^®, Marbig^®, Quartet^®, Rexel^®, Tilibra^®, and Wilson Jones^®, among others. The ACCO Brands International segment designs, sources or manufactures and distributes school notebooks, calendars, whiteboards, storage and organization products (such as three-ring binders, sheet protectors and indexes), stapling, punching, laminating, binding and shredding products, writing instruments, and janitorial supplies, among others, which are primarily used in schools, businesses ~~schools~~ and homes. The majority of revenue in this segment is related to consumer products and is associated with the "back-to-school" season and year-end calendar ~~year-end purchases; we~~purchases. We expect sales of consumer products to become an increasingly greater percentage of our revenue as ~~they are~~demand for consumer products is faster growing than most business-related products.

Customers

We distribute our products through a wide variety of retail and commercial channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers; e-tailers; discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independent office product dealers; office superstores; wholesalers; and contract stationers. We also sell directly to commercial and consumer end-users through our e-commerce platform and our direct sales organization.

Net sales by business segment for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 were as follows:


	Three Months Ended March 31,				Three Months Ended March 31,
(in millions of dollars)	2018		2017
(in millions)					2019		2018
ACCO Brands North America	$	165.6	$	174.9	$	160.4	$	165.6
ACCO Brands EMEA	154.5		96.5		146.5		154.5
ACCO Brands International	85.7		88.4		87.0		85.7
Net sales	$	405.8	$	359.8	$	393.9	$	405.8

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Operating income by business segment for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 was as follows:


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions of dollars)	2018			2017
(in millions)							2019			2018
ACCO Brands North America	$	2.9		$	5.8		$	6.8		$	2.9
ACCO Brands EMEA	14.1			3.6			15.9			14.1
ACCO Brands International	5.8			10.1			5.6			5.8
Segment operating income	22.8			19.5			28.3			22.8
Corporate	(11.1		)	(12.3		)	(10.4		)	(11.1		)
Operating income⁽¹⁾	11.7			7.2			17.9			11.7
Interest expense	9.4			9.8			10.4			9.4
Interest income	(1.0		)	(1.3		)	(0.9		)	(1.0		)
Non-operating pension income	(2.2		)	(2.1		)	(1.4		)	(2.2		)
Other (income) expense, net	(0.6		)	0.7
Other income, net							(0.2		)	(0.6		)
Income before income tax	$	6.1		$	0.1		$	10.0		$	6.1


(1)	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 charges.

~~17.~~18. Commitments and Contingencies

Pending Litigation - Brazil Tax ~~Assessment~~Assessments

In connection with our May 1, 2012 acquisition of the Mead C&OP business, we assumed all of the tax liabilities for the acquired foreign operations including Tilibra Produtos de Papelaria Ltda. ("Tilibra"). For further information, see "Note 11. Income Taxes - ~~Income~~Brazil Tax ~~Assessment - Tilibra~~Assessments" for details on tax assessments issued by the FRD against Tilibra ~~which challenged~~challenging the tax deduction of goodwill from Tilibra's taxable income for the years 2007 through 2010. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.

Other Pending Litigation

We are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement and employee terminations as well as other claims incidental to our business. In addition, we may be unaware of third party claims of intellectual property infringement relating to our technology, brands or products and we may face other claims related to business operations. Any litigation regarding patents or other intellectual property could be costly and time-consuming and might require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale of certain of our products.

It is the opinion of management that (other than the ~~Brazilian~~Brazil Tax ~~Assessment)~~Assessments) the ultimate resolution of currently outstanding matters will not have a material adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further, future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations and financial condition.

Environmental

We are subject to national, state, provincial and/or local environmental 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. This includes environmental laws and regulations that affect the design and composition of certain of our products. 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 and results of operations or competitive position.

ACCO Brands Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

~~18.~~

19. Subsequent Events

Dividends

On May ~~1, 2018,~~2, 2019, the Company's Board of Directors declared a cash dividend of $0.06 per share on its common stock. The dividend is payable on June ~~20, 2018~~19, 2019 to stockholders of record as of the close of business on ~~June 1, 2018.~~May 24, 2019. The declaration and payment of future dividends will be at the discretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results of operations, cash flows, debt covenant compliance, anticipated liquidity needs, and other factors.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, ~~2018~~2019 and ~~2017~~2018 should be read in conjunction with the unaudited condensed consolidated financial statements of ACCO Brands Corporation and the accompanying notes contained therein.

Overview of the Company

ACCO Brands is a designer, marketer and manufacturer of recognized consumer and other end-user demanded brands used in businesses, schools, and homes. Our widely known brands include AT-A-GLANCE^®, Barrilito^®, Derwent^®, Esselte^®, Five Star^®, GBC^®, Hilroy^®, Kensington^®,Leitz^®, Marbig^®, Mead^®, NOBO^®, Quartet^®, Rapid^®, Rexel^®, Swingline^®, Tilibra^® and Wilson Jones^®. More than ~~80%~~75% of our net sales come from brands that occupy the number-one or number-two positions in the select product categories in which we compete. We distribute our products through a wide variety of retail and commercial channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independent office product dealers; office superstores; wholesalers; and contract stationers. Our products are sold primarily in the U.S., Europe, Australia, Canada, Brazil and Mexico. For the year ended December 31, ~~2017,~~2018, approximately ~~55%~~42% of our net sales were ~~outside~~in the U.S.~~, up~~; down from ~~43%~~45% in ~~2016.~~2017. This ~~increase~~decrease was primarily the result of the Esselte and ~~Pelikan Artline~~GOBA acquisitions, which further extended our geographic reach.

~~Over the past several years~~The Company's strategy is to grow its global portfolio of consumer brands, increase its presence in faster growing geographies and channels and diversify its customer base. The Company continues to focus on leveraging its cost structure through synergies and productivity savings to drive long-term profit improvement and on strong free cash flow generation. We plan to supplement organic growth globally with strategic acquisitions in both existing and adjacent product categories.

In furtherance of our strategy, we have transformed our business ~~by: divesting certain non-core commercially-oriented product lines;~~by acquiring companies with consumer and other end-user demanded brands, and by continuing to diversify our distribution channels. In 2012, we acquired the Mead Consumer and Office Products business ("Mead C&OP"), which substantially increased our presence in North America and Brazil in school and calendar products with well-known consumer brands. In 2016, we purchased the remaining equity interest in Pelikan Artline from our joint venture partner, which enhanced our competitive position in school and business products in Australia and New Zealand and added new ~~consumer~~ categories, including writing instruments and janitorial supplies. In early 2017, we acquired Esselte Group Holdings AB ("Esselte"), which more than doubled our presence in Europe and added several iconic business brands, a significant base of independent dealer customers, and a new product category of do-it-yourself hardware tools. On July 2, 2018, we completed the acquisition of GOBA Internacional, S.A. de C.V. in Mexico to extend our presence into new categories. Together these ~~three~~ acquisitions have meaningfully expanded our portfolio of well-known end-user demanded brands, enhanced our competitive position from both a product and channel perspective, and added scale to our business operations.

Today our Company is a global enterprise focused on developing innovative branded consumer products for use in businesses, schools and homes. We believe our leading product category positions provide the scale to enable us to invest in marketing and product innovation to drive profitable growth. We expect to derive much of our growth, over the long term, in faster-growing emerging geographies such as Latin America and parts of Asia, the Middle East and Eastern Europe, which exhibit ~~stronger~~growing demand for our product ~~categories than in developed markets.~~categories. In all of our markets, we see opportunities to grow sales through share gains, channel expansion and innovative products. ~~We plan to supplement organic growth globally with strategic acquisitions in both existing and adjacent product categories.~~

~~Esselte Group Holdings AB~~Acquisitions

GOBA Internacional, S.A. de C.V. Acquisition

On ~~January 31, 2017, the Company~~July 2, 2018, we completed the acquisition (the ~~"Esselte~~"GOBA Acquisition") of ~~Esselte. Accordingly,~~GOBA Internacional, S.A. de C.V. ("GOBA"), a leading provider of school and craft products in Mexico under the Barrilito^®brand, for a preliminary purchase price of approximately $37.2 million, net of cash acquired, and subject to working capital and other adjustments. The GOBA Acquisition has increased the breadth and depth of our distribution, especially with wholesalers and retailers throughout Mexico, and complements our existing office products portfolio with a strong offering of school and craft products. The results of ~~Esselte~~GOBA are included in the ~~Company's condensed consolidated financial statements from February 1, 2017 forward and are reported in all three of the Company's segments, but primarily in the~~ ACCO Brands ~~EMEA segment. The acquisition~~International segment as of ~~Esselte made ACCO Brands a leading European manufacturer and marketer of branded consumer and office products and improved ACCO Brands' scale. Esselte products are primarily marketed under the Leitz~~July 2, 2018.^®~~, Rapid~~^® ~~and Esselte~~^® ~~brands in the storage and organization, stapling, punching, binding and laminating equipment and do-it-yourself tools product categories.~~

For further information on the ~~Esselte~~GOBA Acquisition, see "Note 3. ~~Acquisition"~~Acquisitions" to the condensed consolidated financial statements contained in Item 1. of this report.

OVERVIEW OF PERFORMANCE

Our financial results for the three months ended March 31, ~~2018~~2019 reflect the ~~significant benefit~~positive impact of price increases, cost reductions and improved operating efficiencies, which increased the operating income and operating income margin in our North America segment, and the impact of the ~~Esselte~~GOBA Acquisition which ~~was completed on January 31, 2017. The inclusion~~contributed $11.8 million of ~~the Esselte January 2018 results are largely reflected in~~net sales and $2.5 million of operating income to our ~~EMEA~~International segment. Conversely, foreign currency translation negatively impacted our net sales by $21.6 million, our operating income by $2.2 million.

~~Foreign currency translation also impacted~~The quarterly average foreign exchange rates have moved relative to the prior-year quarter as follows for our ~~consolidated financial statements favorably~~major currencies relative to the U.S. dollar:



		2019 1^ST QTR Average Versus 2018 1^ST QTR Average
Currency		Increase/(Decline)
Euro		(8)%
Australian dollar		(9)%
Canadian dollar		(5)%
Brazilian real		(14)%
Swedish krona		(12)%
British pound		(6)%
Mexican peso		(2)%
Japanese yen		(1)%

In North America, price increases and cost savings initiatives were initiated in late 2018 in order to offset the negative impact of inflationary increases in input costs, as well as increased tariffs that increased our cost of goods sold and reduced our gross profit margins during the second half of 2018. While we expect these higher input costs and tariffs will continue to negatively impact on our costs of goods sold in 2019, we expect the price increases and additional cost reduction initiatives we have already implemented to fully offset currently known inflation. Should the rate of tariffs on purchased finished goods we source from China increase again, or should we experience additional cost inflation, we may need to increase prices again which may result in a decrease in sales volume.

Operating cash flow for the three months ended March 31, 2019 decreased by $121.7 million compared to the prior-year quarter primarily due to the payments for inventory in the first quarter of 2019 that was purchased at the end of 2018. ~~Where necessary~~The 2018 inventory purchases were primarily in the U.S. in order to secure paper supply and pricing for the 2019 back-to-school season and to mitigate the previously expected additional inflationary cost increases on purchased finished goods sourced from China. Due to this shift in timing of inventory purchases, we ~~adjust sales prices~~also anticipate a much lower cash outflow in the second quarter of 2019 when compared to ~~cover inflationary impacts~~second quarter of ~~currency fluctuation on our cost~~2018 because the normal buildup of ~~products sold.~~back-to-school inventory will be offset by a reduction in the previously purchased inventory.

Consolidated Results of Operations for the Three Months Ended March 31, ~~2018~~2019 and March 31, ~~2017~~:2018


	Three Months Ended March 31,						Amount of Change						Three Months Ended March 31,						Amount of Change
(in millions of dollars, except per share data)	2018			2017			$			%/pts
(in millions, except per share data)													2019			2018			$			%/pts
Net sales	$	405.8		$	359.8		$	46.0		13	%		$	393.9		$	405.8		$	(11.9	)	(2.9	)%
Cost of products sold	278.3			248.9			29.4			12	%		268.1			278.3			(10.2		)	(3.7	)%
Gross profit	127.5			110.9			16.6			15	%		125.8			127.5			(1.7		)	(1.3	)%
Gross profit margin	31.4		%	30.8		%				0.6		pts	31.9		%	31.4		%				0.5		pts
Selling, general and administrative expenses	101.8			94.2			7.6			8	%		95.9			101.8			(5.9		)	(5.8	)%
Amortization of intangibles	9.3			8.0			1.3			16	%		9.3			9.3			—			-
Restructuring charges	4.7			1.5			3.2			213	%		2.7			4.7			(2.0		)	(42.6	)%
Operating income	11.7			7.2			4.5			63	%		17.9			11.7			6.2			53.0	%
Operating income margin	2.9		%	2.0		%				0.9		pts	4.5		%	2.9		%				1.6		pts
Interest expense	9.4			9.8			(0.4		)	(4	)%		10.4			9.4			1.0			10.6	%
Interest income	(1.0		)	(1.3		)	(0.3		)	(23	)%		(0.9		)	(1.0		)	(0.1		)	(10.0	)%
Non-operating pension income	(2.2		)	(2.1		)	0.1			5	%		(1.4		)	(2.2		)	(0.8		)	(36.4	)%
Other (income) expense, net	(0.6		)	0.7			1.3			NM
Income tax benefit	(4.3		)	(3.5		)	0.8			23	%
Other income, net													(0.2		)	(0.6		)	0.4			(66.7	)%
Income tax expense (benefit)													10.6			(4.3		)	14.9			NM
Effective tax rate	NM			NM						NM		pts	106.0		%	(70.5		)%				NM		pts
Net income	10.4			3.6			6.8			189	%
Net income (loss)													(0.6		)	10.4			(11.0		)	NM
Weighted average number of diluted shares outstanding:	110.0			112.4			(2.4		)	(2	)%		102.3			110.0			(7.7		)	(7.0	)%
Diluted income per share	$	0.09		$	0.03		$	0.06		200	%
Diluted (loss) income per share													$	(0.01	)	$	0.09		$	(0.10	)	NM

Net Sales

Net sales of ~~$405.8~~$393.9 million, including ~~$44.2~~$11.8 million ~~from the additional month of sales of Esselte, were up $46.0~~attributable to GOBA, decreased $11.9 million, or ~~13%~~2.9%, from ~~$359.8~~$405.8 million in the prior-year ~~period. Foreign~~period due to foreign currency translation, ~~increased~~which reduced net sales by ~~$17.0~~$21.6 million, or 5.3%, in the current-year period. Comparable net sales, excluding the ~~one month of~~ sales from ~~Esselte~~GOBA and foreign currency translation, decreased ~~4% driven~~slightly, 0.5%, as lower volume was partially offset by ~~declines in the North America segment primarily due to customer inventory reductions and lost placement, mostly of low-margin commodity products.~~higher pricing.

Cost of Products Sold

Cost of products sold ~~includes all manufacturing, product sourcing and distribution costs,~~of $268.1 million, including ~~depreciation related~~$7.4 million attributable 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, and inventory valuation adjustments. Cost of products sold of $278.3 million was up $29.4GOBA, decreased $10.2 million, or ~~12%~~3.7%, from ~~$248.9~~$278.3 million in the prior-year period. Foreign currency translation ~~increased~~reduced cost of products sold by ~~$11.0~~$14.6 million, or 5.2%, in the current-year period. Underlying cost of products sold, excluding GOBA and foreign currency translation, ~~increased~~decreased due to ~~the inclusion of the results of Esselte for the month of January,~~lower comparable net sales and cost savings, partially offset by ~~lower comparable net sales.~~

higher input costs in the U.S. and Europe.

Gross Profit

We believe that gross profit and gross profit margin provide enhanced ~~shareholder~~stockholder understanding of our underlying operating profit drivers. Gross profit of ~~$127.5~~$125.8 million, ~~was up $16.6~~including $4.4 million attributable to GOBA, decreased $1.7 million, or ~~15%~~1.3%, from ~~$110.9~~$127.5 million in the prior-year period. Foreign currency translation ~~increased~~reduced gross profit by ~~$6.0~~$7.0 million, or 5.5%, in the current-year period. Underlying gross profit, excluding GOBA and foreign currency translation, increased primarily due to cost savings and higher pricing in the ~~inclusion of the results of Esselte for the month of January, partially offset by lower comparable net sales.~~North America segment.

Gross profit as a percent of net sales increased to ~~31.4%~~31.9% from ~~30.8%. The increase was~~31.4%, primarily due to cost savings and higher ~~pricing in the EMEA segment.~~pricing.

Selling, General and Administrative Expenses

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, and information technology). SG&A of ~~$101.8~~$95.9 million, ~~was up $7.6~~including $1.6 million attributable to GOBA, decreased $5.9 million, or 8%5.8%, from ~~$94.2~~$101.8 million in the prior-year period. Foreign currency translation ~~increased~~reduced SG&A by ~~$3.8~~$4.3 million, or 4.2%, in the current-year period. The current-year period includes ~~$1.6~~$0.4 million of transaction and integration costs related to the ~~Esselte Acquisition.~~Cumberland asset and GOBA acquisitions. The prior-year period included ~~$4.4~~$1.6 million in integration ~~and transaction~~ costs related primarily to the Esselte ~~Acquisition.~~acquisition. Underlying SG&A, excluding GOBA, transaction and integration costs, and foreign currency translation, ~~increased~~decreased due to ~~the inclusion of the results of Esselte for the month of January, partially offset by~~ cost ~~and synergy~~ savings.

AsSG&A as a percentage of net sales ~~SG&A~~ decreased to ~~25.1%~~24.3% from ~~26.2%~~25.1% in the prior-year period, primarily due to ~~lower integration and transaction costs incurred in the current-year period and restructuring and synergy~~cost savings.

~~Amortization of Intangibles~~

Amortization of intangibles was $9.3 million, up $1.3 million, or 16%, from $8.0 million in the prior-year period. The increase was due to the inclusion of the results of Esselte for the month of January.

Restructuring Charges

Restructuring charges of $2.7 million decreased $2.0 million, or 42.6%, from $4.7 million in the prior-year period. The current-year period charges related to severance costs associated with additional changes in the operating structure of ~~$4.7 million,~~our North America and International segments. The prior-year period charges primarily related to ~~additional~~Esselte integration activities and changes toin the operating structure of the ~~ACCO Brands~~ North America ~~segment and the continued integration of Esselte within the ACCO Brands EMEA~~ segment. Restructuring charges in the prior-year period of $1.5 million related primarily to the realignment of the operating structure of our former Computer Products Group and other projects to enhance the future long-term performance of the North America business.

Operating Income

Operating income of ~~$11.7~~$17.9 million, ~~was up $4.5~~including $2.5 million attributable to GOBA, increased $6.2 million, or ~~63%~~53.0%, from ~~$7.2~~$11.7 million in the prior-year period. Foreign currency translation ~~increased~~reduced operating income by ~~$1.6~~$2.2 million, or ~~22%~~18.8%, in the current-year period. Underlying operating income, excluding GOBA, restructuring charges, transaction and integration costs, and foreign currency translation, increased primarily due to ~~the inclusion of the results of Esselte for the month of January.~~cost savings and higher pricing.

Interest Expense and ~~Other (Income) Expense, Net~~Non-Operating Pension Income

Interest expense of $10.4 million increased $1.0 million, or 10.6%, from $9.4 million in the prior-year period. The increase was ~~down $0.4~~primarily due to higher average debt outstanding and higher interest rates on our variable rate debt in the current-year period.

Non-operating pension income of $1.4 million decreased $0.8 million, or ~~4%,~~36.4% from ~~$9.8~~$2.2 million in the prior-year period. The decrease ~~was primarily~~is due to lower ~~average debt outstanding~~expected rates of return on plan assets in ~~the current-year period resulting from principal repayments primarily in the second half of 2017.~~

Other (income) expense, net was income of $0.6 million compared to an expense of $0.7 million in the prior-year period. The prior-year period included $0.3 million from the write-off of debt issuance costs and other costs associated with the Company's refinancing in connection with the Esselte Acquisition in the first quarter of 2017.

our foreign plans.

Income Taxes

For the current-year period, income tax ~~benefit~~expense was ~~$4.3~~$10.6 million on income before taxes of ~~$6.1 million.~~$10.0 million, or an effective tax rate of 106.0%. The ~~current-year~~high effective tax rate for the quarter is primarily due to the Company recording additional reserves for uncertain tax positions in connection with the Brazil Tax Assessments ($5.6 million), the recording of deferred state taxes on unremitted non-U.S. earnings ($0.8 million) and the recording of other reserves related to various tax contingencies. The increase of $5.6 million in the reserve related to uncertain tax positions in connection with the Brazil Tax Assessments was recorded in March, 2019 though the increase should properly have been recorded in 2018 when the Company decided to appeal an administrative decision to the judicial level.

The lower effective tax rate in the prior-year period ~~includes~~was due to a $5.6 million benefit resulting from the partial release of the reserve for the ~~Brazilian~~Brazil Tax ~~Assessment~~Assessments due to the expiration of the statute of limitations for the 2011 tax year, and $2.5 million of excess tax benefits from stock-based compensation.

See "Note 11. Income Taxes ~~-Income~~-Brazil Tax ~~Assessment - Tilibra"~~Assessments" to the condensed consolidated financial statements contained in Item 1. of this report for additional details on the ~~Brazilian~~Brazil Tax ~~Assessment. For the prior-year period, income tax benefit was $3.5 million on income before taxes of $0.1 million and included $5.3 million of excess tax benefits from stock-based compensation.~~Assessments.

Net (Loss) Income/Diluted (Loss) Income per Share

~~Net income~~For the current-year period, the Company reported a net loss of $0.6 million compared to $10.4 million ~~was up $6.8 million, or 189%, from $3.6 million~~in net income in the prior-year period. Foreign currency translation reduced net income by $0.4 million, or 3.8%, in the current-year period. Diluted ~~income~~loss per share was $0.01, compared to $0.09 ~~up $0.06, or 200% from $0.03~~income per diluted share in the prior-year period. The ~~increase~~decrease in net income was primarily driven by ~~the inclusion of the results of Esselte for the month of January.~~higher income tax expense, partially offset by cost savings.

Segment Net Sales and Operating Income for the Three Months Ended March 31, ~~2018~~2019 and March 31, ~~2017:~~2018


	Three Months Ended March 31, 2018									Amount of Change Compared to the Three Months Ended March 31, 2017															Three Months Ended March 31, 2019										Amount of Change Compared to the Three Months Ended March 31, 2018
	Net Sales		Segment Operating Income (A)				Segment Operating Income Margin			Net Sales				Net Sales		Segment Operating Income				Segment Operating Income			Margin Points		Net Sales			Segment Operating Income (A)				Segment Operating Income Margin			Net Sales				Net Sales		Segment Operating Income (A)				Segment Operating Income			Margin Points

(in millions of dollars)						$							%			$				%
(in millions)																									Net Sales						Segment Operating Income (A)				Segment Operating Income Margin			$				%		$				%		Margin Points
ACCO Brands North America	$	165.6				$			2.9			1.8	%		$	(9.3	)		(5)%		$	(2.9	)				(50	)%		(150				)						$	(5.2	)		(3.1)%		$	3.9		134.5		%
ACCO Brands EMEA	154.5				14.1						9.1	%		58.0				60%		10.5				292			%		540								(8.0		)		(5.2)%		1.8				12.8	%
ACCO Brands International	85.7		5.8				6.8	%		(2.7		)		(3)%		(4.3		)		(43	)%		(460	)	87.0			5.6				6.4	%				1.3				1.5%		(0.2		)		(3.4	)%	(40	)
Total	$	405.8	$	22.8						$	46.0					$	3.3								$	393.9		$	28.3						$	(11.9	)				$	5.5

	Three Months Ended March 31, 2017																								Three Months Ended March 31, 2018
	Net Sales		Segment Operating Income (A)				Segment Operating Income Margin																		Net Sales			Segment Operating Income (A)				Segment Operating Income Margin

(in millions of dollars)
(in millions)																											Net Sales							Segment Operating Income (A)				Segment Operating Income Margin
ACCO Brands North America	$	174.9			$	5.8					3.3	%
ACCO Brands EMEA	96.5				3.6						3.7	%
ACCO Brands International	88.4		10.1				11.4	%																		85.7				5.8						6.8	%
Total	$	359.8	$	19.5																					$	405.8		$	22.8

(A) Segment operating income excludes corporate costs. See "Part I, Item 1. Note ~~16.~~17. Information on Business Segments,," for a reconciliation of total "Segment operating income" to "Income before income tax."

ACCO Brands North America

ACCO Brands North America net sales of ~~$165.6~~$160.4 million ~~including $0.9 million from the additional month of sales of Esselte, were down $9.3~~decreased $5.2 million, or 5%3.1%, from ~~$174.9~~$165.6 million in the prior-year ~~period. Foreign~~period with foreign currency translation ~~increased~~reducing net sales by ~~$0.9~~$1.0 million, or 1%0.6%, in the current-year period. Comparable net sales, excluding ~~Esselte and~~ foreign currency translation, decreased 6%2.5%. Net sales and comparable net sales declined primarily due to ~~customer inventory reductions~~the timing of orders and some lost ~~placement, mostly of low-margin commodity products.~~placements, which were partially offset by price increases.

ACCO Brands North America operating income of $6.8 million increased $3.9 million, or 134.5%, from $2.9 million ~~was down $2.9~~in the prior-year period, and operating income margin increased to 4.2% from 1.8%. Operating income and margin increased, despite lower sales volume and inflationary increases in input costs, primarily due to cost savings and price increases.

ACCO Brands EMEA

ACCO Brands EMEA net sales of $146.5 million decreased $8.0 million, or ~~50%~~5.2%, from $154.5 million in the prior-year period due to foreign currency translation, which reduced net sales by $13.5 million, or 8.7%, in the current-year period. Comparable net sales, excluding foreign currency translation, increased 3.5% due to strong growth in sales of computer products and shredders.

ACCO Brands EMEA operating income of $15.9 million increased $1.8 million, or 12.8%, from $14.1 million in the prior-year period, and operating income margin increased to 10.9% from 9.1%. Foreign currency translation reduced operating income by $1.6 million, or 11%, in the current-year period. Underlying operating income, excluding foreign currency translation, increased primarily due to $3.1 million in lower restructuring charges and integration costs.

ACCO Brands International

ACCO Brands International net sales of $87.0 million increased $1.3 million, or 1.5%, from $85.7 million in the prior-year period due to $11.8 million in net sales attributable to GOBA, which was partially offset by foreign currency translation, which reduced net sales by $7.1 million, or 8.3%, in the current-year period. Comparable net sales, excluding GOBA and foreign currency translation, decreased 4.0% primarily due to lower net sales in Australia, which offset growth in Brazil.

ACCO Brands International operating income of $5.6 million, including $2.5 million attributable to GOBA, decreased $0.2 million, or 3.4%, from $5.8 million in the prior-year period and operating income margin decreased to ~~1.8%~~6.4% from ~~3.3%~~6.8%. Operating income decreased due to lower sales and gross margins and higher restructuring charges ($1.8 million in the current-year period compared to $1.3 million in the prior-year period), partially offset by cost savings.

During the first quarter we began to see rising commodity costs, in part from increased tariffs in the U.S., which impact our purchase costs for paper, wire, steel and aluminum, together with increases in fuel and carrier rates. While these cost increases have not affected current reported performance, we plan to raise our prices to help offset the potential future impact.Foreign

~~ACCO Brands EMEA~~

~~ACCO Brands EMEA net sales of $154.5 million, including $42.7 million from the additional month of sales of Esselte, were up $58.0 million, or 60%, from $96.5 million in the prior-year period. Foreign~~ currency translation increased sales by $13.7 million, or 14%, in the current-year period. Comparable net sales, excluding Esselte and foreign currency translation, increased 2% due to higher customer purchases as customers built inventory, growth in computer products and sales synergies from the Esselte Acquisition. Negatively impacting comparable net sales was the earlier timing of the Easter holiday, which occurred at the end of the first quarter of 2018 versus in the second quarter of 2017. The underlying Esselte business was flat for the quarter as growth in January was offset by declines in March that were largely driven by the Easter holiday.

ACCO Brands EMEA operating income of $14.1 million was up $10.5 million, or 292%, from $3.6 million in the prior-year period, and operating income margin increased to 9.1% from 3.7%. Foreign currency translation increasedreduced operating income by ~~$1.3~~$0.5 million, or ~~36%~~8.6%, in the current-year period. Underlying operating income, excluding ~~foreign currency translation, increased due to the inclusion of the results of Esselte for the month of January~~GOBA and higher gross margins and synergy savings, partially offset by increased restructuring charges and integration costs in the current-year period ($3.3 million in the current-year period compared to $1.1 million in the prior-year period).

~~ACCO Brands International~~

ACCO Brands International net sales of $85.7 million, including $0.6 million from the additional month of sales of Esselte, were down $2.7 million, or 3%, from $88.4 million in the prior-year period. Foreign currency translation increased sales by $2.4 million, or 3%, in the current-year period. Comparable net sales, excluding Esselte and foreign currency translation, decreased 7% as growth in Brazil was offset by declines in Australia/N.Z., due to lost listings and the effect of the merger of two large customers during the quarter, as well as declines in Mexico and Asia-Pacific.

ACCO Brands International operating income of $5.8 million was down $4.3 million, or 43%, from $10.1 million in the prior-year period and operating income margin decreased to 6.8% from 11.4%. Foreign currency translation increased operating income by $0.3 million in the current-year period. Underlying operating income, excluding foreign currency translation, decreased due to lower comparable net sales and lower gross ~~margins resulting from higher distribution costs associated with warehouse and IT system consolidation in Australia/N.Z. These factors were partially offset by synergy savings.~~profit.

SUPPLEMENTAL NON-GAAP FINANCIAL MEASURE

To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide investors with the non-GAAP financial measure ~~"Comparable Net Sales Change at Constant Currency."~~

~~Comparable Net Sales Change at Constant Currency~~comparable net sales.

We provide comparable net sales change ~~at constant currency~~ in order to facilitate comparisons of our historical sales results as well as to highlight the underlying sales trends in our business. We use this non-GAAP financial measure in the internal evaluation and management of our business. We believe this measure provides management and investors with a more complete understanding of our underlying sales results and trends, and enhances the overall understanding of our past sales performance and our future prospects.

We calculate comparable net sales by excluding the effect of acquisitions and by translating the current-period foreign operation net sales at prior-year currency rates.

The following ~~table provides~~tables provide a reconciliation of GAAP net sales change as reported to non-GAAP comparable net sales ~~at constant currency:~~change:


	Amount of Change - Three Months Ended March 31, 2018 compared to the Three Months Ended March 31, 2017					Amount of Change - Three Months Ended March 31, 2019 compared to the Three Months Ended 31, 2018
	$ Change - Sales					$ Change - Net Sales
		Non-GAAP					Non-GAAP
	GAAP				Comparable	GAAP				Comparable
	Net Sales		Currency		Net Sales	Net Sales		Currency		Net Sales
	Change		Translation	Acquisition	Change
(in millions)						Change		Translation	Acquisition	Change
ACCO Brands North America	$(9.3)		$0.9	$0.9	$(11.1)	$(5.2)		$(1.0)	$—	$(4.2)
ACCO Brands EMEA	58.0		13.7	42.7	1.6	(8.0)		(13.5)	—	5.5
ACCO Brands International	(2.7)		2.4	0.6	(5.7)	1.3		(7.1)	11.8	(3.4)
Total	$46.0		$17.0	$44.2	$(15.2)	$(11.9)		$(21.6)	$11.8	$(2.1)

	% Change - Sales					% Change - Net Sales
		Non-GAAP					Non-GAAP
	GAAP				Comparable	GAAP				Comparable
	Net Sales		Currency		Net Sales	Net Sales		Currency		Net Sales
	Change		Translation	Acquisition	Change	Change		Translation	Acquisition	Change
ACCO Brands North America	(5)%		1%	1%	(6)%	(3.1)%		(0.6)%	—%	(2.5)%
ACCO Brands EMEA	60%		14%	44%	2%	(5.2)%		(8.7)%	—%	3.5%
ACCO Brands International	(3)%		3%	1%	(7)%	1.5%		(8.3)%	13.8%	(4.0)%
Total	13%		5%	12%	(4)%	(2.9)%		(5.3)%	2.9%	(0.5)%

Liquidity and Capital Resources

Our primary liquidity needs are to service indebtedness, 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 ~~2017~~$500 million multi-currency revolving credit facility (the "2017 Revolving ~~Facility.~~Facility"). As of March 31, ~~2018,~~2019, there were ~~$147.9~~$300.0 million in borrowings under our ~~$400.0 million~~ 2017 Revolving Facility and the amount available for borrowings was ~~$239.5~~$183.6 million (allowing for ~~$12.6~~$16.4 million of letters of credit outstanding on that date).

We maintain adequate financing arrangements at market rates. Because of the seasonality of our business, we typically generate much of our cash flow in the ~~first,~~ third and fourth quarters, as accounts receivables are collected, and use cash in the second quarter to fund working capital in order to support the North America back-to-school season. We anticipate a different cash flow pattern in 2019, with a cash outflow in the first quarter and a much lower outflow in the second quarter when compared to 2018. Our Brazilian business is also highly seasonal due to the timing of the back-to-school season, which coincides 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; therefore, our normal practice is to hold seasonal cash requirements in Brazil, and invest it in short-term Brazilian government

securities. Consolidated cash and cash equivalents was ~~$122.7~~$100.5 million as of March 31, ~~2018,~~2019, approximately ~~$84~~$76 million of which was held in Brazil.

On February 12, 2018, the Company's Board of Directors approved the initiation of a cash dividend program under which the Company will pay a regular quarterly cash dividend of $0.06 per share on its common stock ($0.24 per share on an annualized basis). The first dividend was payable on March 21, 2018 to stockholders of record as of the close of business on March 1, 2018. The declaration and payment of future dividends will be at the discretion of the Board of Directors and will be dependent upon, among other things, the Company's financial position, results of operations, cash flows and other factors.

In addition, on February 14, 2018, the Company announced that its Board of Directors had approved an authorization to repurchase up to an additional $100 million in shares of its common stock. As of March 31, 2018, the Company had $174.7 million remaining of its authorizations.

Our priorities for cash flow use over the near term, after funding business operations, including restructuring ~~expenditures,~~expenses, are funding strategic acquisitions, debt reduction, dividends ~~stock repurchases~~ and to fund strategic acquisitions. Additionally, income tax payments are anticipated to increase to $52 million for the 2018 year, versus $35 million paid in the 2017 year, largely as the U.S. has exhausted the benefit of net operating loss generated tax assets.

share repurchases.

The current senior secured credit facilities have a weighted average interest rate of ~~2.23%~~2.85% as of March 31, ~~2018~~2019 and our senior unsecured notes have a fixed interest rate of 5.25%.

Restructuring and Integration Activities

From time to time the Company may implement restructuring, realignment or cost-reduction plans and activities, including those related to integrating acquired businesses.

During the three months ended March 31, ~~2018,~~2019, the Company recorded an aggregate ~~$4.7~~$2.7 million in restructuring expenses, primarily for severance costs related to additional changes toin the operating structure of ~~the ACCO Brands~~our North America ~~segment~~ and ~~the continued integration of Esselte within the ACCO Brands EMEA segment.~~International segments. For additional details, see "Note 10. Restructuring" to the condensed consolidated financial statements contained in Item 1. of this report.

In addition, during the three months ended March 31, ~~2018,~~2019, the Company recorded an aggregate ~~$1.6~~$0.3 million, in non-restructuring integration expenses related to the integration of the ~~ACCO Brands~~Cumberland Asset Acquisition and ~~Esselte~~GOBA operations.

Consistent with our previous communications about the Esselte Acquisition, the Company currently expects it will record approximately $4 million for integration activities and $2.5 million in additional restructuring expenses over the balance of 2018 that were not recorded yet, pursuant to GAAP rules. As integration plans are still being finalized, it is not possible to reasonably estimate the nature or timing of these restructuring and integration charges or the timing of their associated cash outflows.

Cash Flow for the Three Months Ended March 31, ~~2018~~2019 and March 31, ~~2017~~2018

Cash Flow from Operating Activities

Cash ~~provided~~used by operating activities during the three months ended March 31, ~~2018~~2019 of $61.3 million was $121.7 million lower than the $60.4 million provided in the 2018 period. The significant change was ~~generated principally from~~the result of a use of cash for net working capital (accounts receivable, inventories, and accounts payable) ~~which was only slightly less than the prior year. The overall decrease of $5.0 million from the $65.4 million provided~~ in ~~the comparable 2017 period, was partly driven by pension contributions in 2018 of $11.3 million which were higher than the $6.8 million contributed in 2017 primarily due~~2019 compared to a ~~decision to accelerate payments~~significant source of contributions for the 2018 year to maximize tax deductibility. Regarding working capital, accounts receivable contributed $162.0 million, which reflects our seasonally strong fourth quarter sales, and was slightly less than was collectedcash in the prior-year period. ~~The use of cash for inventory of $43.5~~Accounts receivable contributed $108.1 million ~~was higher than the prior-year period of $31.2 million due to the timing of seasonal inventory builds for certain commodity materials and the timing of customer purchases~~ in the ~~prior year. The source of cash provided by accounts payable of $8.8 million in 2018, which compared to a use of $4.3~~2019 period versus $162.0 million in the prior-year period, and was adversely affected by lower sales in the prior quarter, a higher mix of sales in slower-paying geographies (e.g. Latin America) and by the timing of collections. Inventory purchases were higher than the prior year due to ~~higher inventory levels in 2018~~advanced purchases of materials to secure supply, support new product launches and ~~a higher than normal level~~to mitigate the risk of ~~post-acquisition payments in 2017 following the acquisition of Esselte.~~anticipated inflation, including tariffs. In addition, ~~significant employee annual incentive payments made~~we anticipate an earlier start to the back-to-school season in North America, which has resulted in an earlier-than-usual increase in inventory. Accounts payable used cash of $79.9 million during the first quarter of 2019, which ~~along with~~compares unfavorably to $8.8 million contributed in the prior-year period, due to the earlier inventory purchases which occurred in both the fourth quarter of 2018 and the first quarter of 2019, which advanced the timing of payments.

Partially offsetting the adverse change in cash flow from working capital were payments of customer incentives which were $15.0 million below the prior-year period primarily due to the settlement of disputed amounts which occurred in the prior year, and lower annual and long-term employee incentive payments which were approximately $12 million less than prior year. Cash used for pension contributions, tax, interest and ~~tax~~restructuring payments ~~were broadly in line~~was collectively in-line with ~~those~~payments made during the ~~prior year.~~prior-year period.

The table below shows our cash flow from accounts receivable, inventories and accounts payable for the three months ended March 31, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended						Three Months Ended
(in millions of dollars)	March 31, 2018			March 31, 2017
(in millions)							March 31, 2019			March 31, 2018
Accounts receivable	$	162.0		$	165.3		$	108.1		$	162.0
Inventories	(43.5		)	(31.2		)	(57.3		)	(43.5		)
Accounts payable	8.8			(4.3		)	(79.9		)	8.8
Cash flow provided by net working capital	$	127.3		$	129.8		$	(29.1	)	$	127.3

Cash Flow from Investing Activities

Cash used by investing activities was ~~$8.0~~$12.5 million and ~~$297.7~~$8.0 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~2017~~2019 cash outflow ~~reflects $292.6~~includes $5.4 million of purchase price ~~net~~paid to date for the acquisition of ~~cash acquired,~~certain assets of the

Cumberland brand in ~~connection with the Esselte Acquisition.~~Australia. For further details, see "Note 3. ~~Acquisition"~~Acquisitions" to the condensed consolidated financial statements contained in Item 1. of this report. Capital expenditures were ~~$8.0~~$7.2 million and ~~$5.2~~$8.0 million for the three months ended March 31, 2019 and 2018, ~~and 2017, respectively, with the increase versus the prior-year period driven by information technology systems-related investments.~~

respectively.

Cash Flow from Financing Activities

Cash ~~used~~provided by financing activities was ~~$7.0~~$107.6 million for the three months ended March 31, ~~2018,~~2019, compared to ~~$306.4~~a use of $7.0 million ~~provided~~ for the same period of ~~2017.~~ 2018. Cash sourced in 2019 includes incremental net borrowings of $123.7 million, partially offset by $14.7 million for repurchases of our common stock and payments related to tax withholding for stock-based compensation, and $6.2 million for the payment of dividends to stockholders.

Cash used in 2018 ~~includes~~reflects $11.2 million used for repurchases of our common stock and payments related to tax withholding for stock-based compensation, net of proceeds received from the exercise of stock options, and $6.4 million for payment of dividends, partially offset by incremental net borrowings of $9.9 million.

Cash provided in 2017 reflects proceeds from net long-term borrowings of $317.6 million largely in connection with the Esselte Acquisition. Additionally, we used cash of $7.8 million for payments related to tax withholding for stock-based compensation, net of proceeds received from the exercise of stock options, and $3.4 million of debt issuance costs associated with the first quarter 2017 debt refinancing in connection with the Esselte Acquisition.

Credit Facilities and Notes Covenants

As of and for the periods ended March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company was in compliance with all applicable loan covenants.

Guarantees and Security

Generally, obligations under the 2017 Credit Agreement are guaranteed by certain of the Company’s existing and future subsidiaries, and are secured by substantially all of the Company’s and certain guarantor subsidiaries’ assets, subject to certain exclusions and limitations.

Adequacy of Liquidity Sources

We believe that cash flow from operations, our current cash balance and other sources of liquidity, including borrowings available under ~~the~~our 2017 Revolving Facility, will be adequate to support our requirements for working capital, capital and restructuring expenditures and to service indebtedness for the foreseeable future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management in the quarter ended March 31, ~~2018~~2019 or through the date of this report.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision ~~and with the participation~~ of ~~our Disclosure Committee, including~~ the Chief Executive Officer and the Chief Financial Officer, and with the participation of our Disclosure Committee, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were ~~effective.~~effective as of March 31, 2019.

(b) Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are various claims, lawsuits and pending actions against us incidental to our operations, including the income tax ~~assessment~~assessments against our Brazilian subsidiary, Tilibra Produtos de Papelaria Ltda (the ~~"Brazilian~~"Brazil Tax ~~Assessment"~~Assessments"), which is more fully described in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 and in "Part I, Item 1. Note 11. Income Taxes - ~~Income~~Brazil Tax ~~Assessment - Tilibra"~~Assessments" to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. It is the opinion of management that (other than the ~~Brazilian~~Brazil Tax ~~Assessment)~~Assessments) the ultimate resolution of these matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

The following table provides information about our purchases of equity securities during the quarter ended March 31, ~~2018:~~2019:

Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program⁽¹⁾

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program⁽¹⁾
January 1, 2018 to January 31, 2018 184,282
$ 12.27
184,282
$ 81,703,514
February 1, 2018 to February 28, 2018 465,756
11.62
465,756
176,290,730
March 1, 2018 to March 31, 2018 122,414
12.85
122,414
174,718,137
Total 772,452
$ 11.97
772,452
$ 174,718,137



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program⁽¹⁾
January 1, 2019 to January 31, 2019	541,449	$	7.61	541,449	$	104,843,854
February 1, 2019 to February 28, 2019	173,957	9.30		173,957	103,226,863
March 1, 2019 to March 31, 2019	603,009	8.79		603,009	97,926,171
Total	1,318,415	$	8.37	1,318,415	$	97,926,171

(1) On October 28, 2015, the Company announced that its Board of Directors had approved the repurchase of up to $100 million in shares of its common stock. On February 14, 2018, the Company announced that its Board of Directors had approved an authorization to repurchase up to an additional $100 million in shares of its common stock.

The number of shares to be purchased, if any, and the timing of purchases will be based on the Company's stock price, leverage ratios, cash balances, general business and market conditions, and other factors, including alternative investment opportunities and working capital needs. The Company may repurchase its shares, from time to time, through a variety of methods, including open-market purchases, privately negotiated transactions and block trades or pursuant to repurchase plans designed to comply with the Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Any stock repurchases will be subject to market conditions, SEC regulations and other considerations and may be commenced or suspended at any time or from time to time, without prior notice. Accordingly, there is no guarantee as to the number of shares that will be repurchased or the timing of such repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit

Number Description of Exhibit


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


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


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


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



*	Filed herewith.



**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the 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/ Boris Elisman
Boris Elisman
Chairman, President 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/ Kathleen D. ~~Schnaedter~~Hood
Kathleen D. ~~Schnaedter~~Hood
Senior Vice President and Chief Accounting Officer (principal accounting officer)

Date: May ~~1, 2018~~2, 2019



(in millions of dollars)	Balance at December 31, 2017			Adjustments due to ASU 2014-09			Balance at January 1, 2018
Assets:
Inventories	$	254.2		$	(3.5	)	$	250.7
Other current assets	29.2			6.9			36.1

Liabilities and stockholders' equity:
Accrued customer program liabilities	141.1			1.1			142.2
Other current liabilities	113.8			0.1			113.9
Deferred income taxes	177.1			0.6			177.7
Accumulated deficit	(739.2		)	1.6			(737.6		)



(in millions of dollars)	Balance at December 31, 2016		Esselte Acquisition (4)		Provision		Cash Expenditures			Balance at March 31, 2017
Employee termination costs	$	1.4	$	1.4	$	1.3	$	(0.4	)	$	3.7
Termination of lease agreements	0.1		2.0		0.2		(0.1		)	2.2
Other	—		0.1		—		(0.1		)	—
Total restructuring liability	$	1.5	$	3.5	$	1.5	$	(0.6	)	$	5.9