Exhibit 99.1

 

		News Release

 

 

FOR IMMEDIATE RELEASE

ACCO BRANDS CORPORATION REPORTS

THIRD QUARTER 2010 RESULTS

Third Quarter 2010 Highlights

 

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Reported sales up 3%; sales volume increases 4%

 

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Reported operating income up 13%

 

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Earnings per share from continuing operations of $0.10, or $0.17 using a normalized effective tax rate of 30%, which compares to $0.15 in the prior year

 

•

Reiterates 2010 sales and earnings guidance

LINCOLNSHIRE, ILLINOIS, October 27, 2010 – ACCO Brands Corporation (NYSE: ABD), a world leader in select categories of branded office products, today reported its third quarter and nine month results for the period ended September 30, 2010.

“During the quarter we demonstrated continued progress in growing both our top and our bottom lines,” said Robert J. Keller, chairman and chief executive officer. “Despite the macroeconomic headwinds we’ve faced this year, we’re positioned to deliver on our full-year earnings commitment, driven by market-share gains and a disciplined approach to cost management.”

Third Quarter Results

Net sales increased 3% to $330.7 million, compared to $322.5 million in the prior-year quarter. Volume increased 4% with growth in all business segments. Third quarter income from continuing operations was $5.4 million, or $0.10 per diluted share, compared to $1.7 million, or $0.03 per diluted share, in the prior-year quarter. Current-year results are taxed at a 60.9% rate as a result of certain geographic losses for which the company is unable to record a deferred tax benefit. Prior-year results include restructuring and other charges totaling $2.8 million. Using a normalized effective tax rate of 30% for the current year and excluding charges in the prior-year quarter, adjusted earnings per share from continuing operations was $9.7 million, or $0.17, compared to $8.7 million, or $0.15 per share in the prior-year period.

Reported third quarter operating income increased to $31.2 million, from a reported $27.5 million or adjusted $30.3 million in the prior-year quarter. EBITDA increased 1% to $42.9 million, from adjusted EBITDA of $42.5 million in the prior year, and included a benefit from foreign currency translation of $1.5 million.

 

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Business Segment Highlights

ACCO Brands Americas

ACCO Brands Americas third quarter net sales increased 1% to $178.1 million, from $175.5 million in the prior-year quarter. Volume grew 2% driven by increased demand, improved customer penetration and new products. Volume gains were partially offset by lower pricing. Foreign currency translation added 1% to sales growth.

ACCO Brands Americas reported third quarter operating income of $16.5 million, compared to a reported $16.1 million or adjusted $16.4 million in the prior-year quarter. Operating income increased 1% compared to the prior-year adjusted results, and operating margin was consistent with the prior year at 9.3%. Compared to the prior-year adjusted results, operating margin benefited from lower SG&A costs, offset by higher commodity costs.

ACCO Brands International

ACCO Brands International net sales increased 4% to $108.3 million, compared to $104.4 million in the prior-year quarter. Volume grew 7% due to new products and share gains, partially offset by lower pricing.

ACCO Brands International reported operating income of $6.5 million, compared to a reported $5.8 million or adjusted $7.8 million in the prior-year quarter. Operating income decreased 17% compared to prior-year adjusted results, and operating margin declined to 6.0% from 7.5% primarily due to lower pricing, higher commodity costs, increased marketing expenditures as well as adverse product mix.

Computer Products Group

Computer Products net sales increased 4% to $44.3 million. Volume grew 7% as a result of higher demand for security products and growth in most markets. Foreign currency translation reduced sales growth by 2%.

Computer Products reported operating income of $12.6 million, compared to a reported $10.1 million or adjusted $10.6 million in the prior-year quarter. Operating income increased 19% compared to prior-year adjusted results, and margin expanded to 28.4% from 24.9%. The improvement in margin was primarily due to favorable product mix, partially offset by higher marketing expenditures.

Nine Month Results

Net sales increased 4% to $958.0 million, compared to $919.7 million in the prior-year period. Volume grew 3% with growth in all business segments. Foreign currency translation contributed 3% to sales growth. The company reported income from continuing operations of $6.1 million, or $0.11 per diluted share, for the nine months ended September 30, 2010, compared to a loss of $118.7 million, or $2.18 per diluted share, in the prior-year period. Prior-year results included net after-tax charges totaling $132.8 million. Using a normalized effective tax rate of 30% for the current year and excluding charges in the prior-year period, adjusted earnings per share from continuing operations was $0.29, compared to $0.25 in the prior-year period.

 

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The company reported operating income of $79.1 million for the nine months ended September 30, 2010, compared to a reported $51.9 million or adjusted $70.1 million in the prior-year period. EBITDA increased 10% to $114.0 million, from an adjusted EBITDA of $103.8 million in the prior year, and included the benefit from foreign exchange translation of $7.4 million. The current year results also include $20.0 million of additional salary, management incentive and employee benefits expense, whereas the prior year benefited from temporary salary, management incentive and benefit reductions in the U.S.

Business Outlook

The company reiterated its 2010 outlook for sales and earnings, continuing to expect sales to be flat to up 2%, driven by share gains, which are expected to offset continued weak consumer and business spending. The company continues to expect to expand adjusted EBITDA margins by three-quarters to a full percentage point due to an improvement in gross profit margin, which will be partially offset by an increase in selling, general and administrative expenses. The business outlook does not take into consideration any impact of foreign currency fluctuations. Targeted free cash flow, after interest, taxes and capital expenditures, is now expected to be between $20-40 million, due to the expectation for higher working capital needs.

Webcast

At 8:30 a.m. Eastern Time today, ACCO Brands Corporation will host a conference call to discuss the company’s results. The call will be broadcast live via webcast. The webcast can be accessed through the Investor Relations section of www.accobrands.com. The webcast will be in listen-only mode and will be available for replay for one month following the event.

Non-GAAP Financial Measures

“Adjusted” results exclude all restructuring, goodwill and asset impairment charges and unusual tax items. In addition, “adjusted” results also exclude certain other charges recorded in the prior-year period that did not qualify as restructuring and include redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of the exited facilities and employee retention incentives. Adjusted supplemental EBITDA from continuing operations excludes restructuring, goodwill and asset impairment charges, and other non-operating items, including other income/expense and stock-based compensation expense. In addition, certain other charges recorded in the prior-year period that did not qualify as restructuring (as described above) are also excluded. The company does not anticipate incurring restructuring and integration charges in 2010. Adjusted results and supplemental EBITDA from continuing operations are non-GAAP measures. There could be limitations associated with the use of non-GAAP financial measures as compared to the use of the most directly comparable GAAP financial measure. Management uses the adjusted measures to determine the returns generated by its operating segments and to evaluate and identify cost-reduction initiatives. Management believes these measures provide investors with helpful supplemental information regarding the underlying performance of the company from year to year. These measures may be inconsistent with measures presented by other companies.

 

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About ACCO Brands Corporation

ACCO Brands Corporation is a world leader in select categories of branded office products. Its industry-leading brands include Day-Timer®, Swingline®, Kensington®, Quartet®, GBC®, Rexel, NOBO, and Wilson Jones®, among others. Under the GBC brand, the company is also a leader in the professional print finishing market.

Forward-Looking Statements

This press release contains statements which may constitute “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to certain risks and uncertainties, are made as of the date hereof and the company assumes no obligation to update them.

ACCO Brands’ ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from those predicted by such forward-looking statements, you should not place undue reliance on them when deciding to buy, sell or hold the company’s securities. Among the factors that could cause our plans, actions and results to differ materially from current expectations are: fluctuations in the cost and availability of raw materials; competition within the markets in which the company operates; the effects of both general and extraordinary economic, political and social conditions, including continued volatility and disruption in the capital and credit markets; the effect of consolidation in the office products industry; the liquidity and solvency of our major customers; our continued ability to access the capital and credit markets; the dependence of the company on certain suppliers of manufactured products; the risk that targeted cost savings and synergies from previous business combinations may not be fully realized or take longer to realize than expected; future goodwill and/or impairment charges; foreign exchange rate fluctuations; the development, introduction and acceptance of new products; the degree to which higher raw material costs, and freight and distribution costs, can be passed on to customers through selling price increases and the effect on sales volumes as a result thereof; increases in health care, pension and other employee welfare costs; as well as other risks and uncertainties detailed in the company’s Annual Report on Form 10-K for the year ended December 31, 2009, under Item 1A, “Risk Factors,” and in the company’s other SEC filings.

For further information:

 

Rich Nelson		Jennifer Rice
Media Relations		Investor Relations
(847) 484-3030		(847) 484-3020

 

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ACCO Brands Corporation

Consolidated Statements of Operations and

Reconciliation of Adjusted Results (Unaudited)

(In millions of dollars, except per share data)

 

		Three Months Ended September 30,
		2010				2009
		Reported				Reported				Excluded Charges(A)				Adjusted				% Change Reported				% Change Adjusted
Net sales		$	330.7			$	322.5			$	—			$	322.5				3	%			3	%
Cost of products sold			228.5				222.6				(0.8	)			221.8				3	%			3	%
Gross profit			102.2				99.9				0.8				100.7				2	%			1	%
Operating costs and expenses:
Advertising, selling, general and administrative expenses			69.3				68.9				(0.3	)			68.6				1	%			1	%
Amortization of intangibles			1.7				1.8				—				1.8				(6	)%			(6	)%
Restructuring charges			—				1.7				(1.7	)			—				(100	)%			NM
Total operating costs and expenses			71.0				72.4				(2.0	)			70.4				(2	)%			1	%
Operating income			31.2				27.5				2.8				30.3				13	%			3	%
Non-operating expense (income):
Interest expense			19.6				15.7				—				15.7				25	%			25	%
Equity in earnings of joint ventures			(2.3	)			(1.3	)			—				(1.3	)			(77	)%			(77	)%
Other expense, net (B)			0.1				4.3				—				4.3				(98	)%			(98	)%
Income from continuing operations before income taxes			13.8				8.8				2.8				11.6				57	%			19	%
Income tax expense			8.4				7.1				(4.2	)			2.9				18	%
Income from continuing operations			5.4				1.7				7.0				8.7				218	%
Loss from discontinued operations, net of income taxes			—				(0.4	)			0.4				—				100	%
Net income		$	5.4			$	1.3			$	7.4			$	8.7				NM
Per Share:
Basic earnings per share:
Earnings from continuing operations		$	0.10			$	0.03							$	0.16				233	%
Loss from discontinued operations			—				(0.01	)							(0.00	)			100	%
Basic earnings per share		$	0.10			$	0.02							$	0.16				NM
Diluted earnings per share:
Earnings from continuing operations		$	0.10			$	0.03							$	0.15				233	%
Loss from discontinued operations			—				(0.01	)							(0.00	)			100	%
Diluted earnings per share		$	0.10			$	0.02							$	0.15				NM
Weighted average number of shares outstanding:
Basic			54.9				54.6								54.6
Diluted			56.6				56.2								56.2

Reconciliation of Reported Consolidated Results to Adjusted Results

 

		Three Months Ended September 30, 2010
(in millions, except per share data)		Reported				Tax Adjustment (C)				Adjusted
Income from continuing operations before income taxes		$	13.8			$	—			$	13.8
Income tax expense (benefit)			8.4				(4.3	)			4.1
Income from continuing operations		$	5.4			$	4.3			$	9.7
Diluted earnings per share:
Income from continuing operations		$	0.10							$	0.17
Weighted average number of diluted shares outstanding			56.6								56.6

Note – “Adjusted” results are non-GAAP measures. There could be limitations associated with the use of non-GAAP financial measures as compared to the most directly comparable GAAP financial measure. Management believes these measures provide investors with helpful supplemental information regarding the underlying performance of the Company from year to year. These measures may be inconsistent with measures presented by other companies.

Statistics (as a % of Net sales, except Income tax rate)

 

		Three Months Ended September 30,
		2010								2009
		Reported				Adjusted				Reported				Adjusted
Gross profit (Net sales, less Cost of products sold)			30.9	%							31.0	%			31.2	%
Advertising, selling, general and administrative			21.0	%							21.4	%			21.3	%
Operating income			9.4	%							8.5	%			9.4	%
Income from continuing operations before income taxes			4.2	%							2.7	%			3.6	%
Net income			1.6	%			2.9	%			0.4	%			2.7	%
Income tax rate			60.9	%			30.0	%			NM				25.0	%

 

(A)

Certain charges are excluded in order to provide a comparison of underlying results of operations, including restructuring charges, and certain non-recurring income tax items related to adjustments impacting the Company’s effective tax rate. In addition, certain other charges that have been recorded within cost of products sold and advertising, selling, general and administrative expenses in the prior-year period did not qualify as restructuring. These charges included redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of exited facilities and employee retention incentives. The Company does not anticipate incurring restructuring and integration charges in 2010.

(B)	During the third quarter of 2009, the Company recorded a net loss on the early extinguishment of debt of $4.2 million, or $0.07 per diluted share.

(C)

The Company has incurred significant operating losses in several jurisdictions in prior periods. In accordance with GAAP, tax valuation allowances have been recorded on certain of the Company’s deferred tax assets. As a result, the operating results in these locations have recorded no tax benefit or expense, which results in a high effective tax rate for the current period. Assuming all the locations become profitable in the future and valuation allowances were reversed, the Company’s ongoing effective tax rate would approximate 30%. This estimated long-term rate will be subject to variations from the mix of earnings in the Company’s operating jurisdictions.

 

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Reconciliation of Net Income to Adjusted Supplemental EBITDA from Continuing Operations

(Unaudited)

(In millions of dollars)

 

		Three Months Ended September 30,
		2010				2009				% Change
Net income		$	5.4			$	1.3				NM
Discontinued operations			—				0.4				(100	)%
Restructuring charges			—				1.7				(100	)%
Other charges included in Cost of products sold (D)			—				0.8				(100	)%
Other charges included in Advertising, selling, general and administrative expenses (D)			—				0.3				(100	)%
Income taxes, impact of adjustments (D)			4.3				4.2				2	%
Adjusted income from continuing operations			9.7				8.7				11	%
Interest expense, net			19.6				15.7				25	%
Adjusted income tax expense			4.1				2.9				41	%
Depreciation			7.6				8.3				(8	)%
Amortization of intangibles			1.7				1.8				(6	)%
Other expense, net (E)			0.1				4.3				(98	)%
Stock-based compensation expense			0.1				0.8				(88	)%
Adjusted supplemental EBITDA from continuing operations		$	42.9			$	42.5				1	%
Adjusted supplemental EBITDA from continuing operations as a % of Net Sales			13.0	%			13.2	%

 

(D)

Certain charges are excluded in order to provide a comparison of underlying results of operations, including restructuring charges and certain non-recurring income tax items related to adjustments impacting the Company’s effective tax rate. In addition, certain other charges that have been recorded in the prior-year period did not qualify as restructuring. These charges included redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of exited facilities and employee retention incentives. The Company does not anticipate incurring restructuring and integration charges in 2010.

(E)	Other expense for 2009 includes a net loss on the early extinguishment of debt of $4.2 million.

 

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ACCO Brands Corporation

Consolidated Statements of Operations and

Reconciliation of Adjusted Results (Unaudited)

(In millions of dollars, except per share data)

 

		Nine Months Ended September 30,
		2010				2009
		Reported				Reported				Excluded Charges(A)				Adjusted				% Change Reported				% Change Adjusted
Net sales		$	958.0			$	919.7			$	—			$	919.7				4	%			4	%
Cost of products sold			661.6				648.9				(2.5	)			646.4				2	%			2	%
Gross profit			296.4				270.8				2.5				273.3				9	%			8	%
Operating costs and expenses:
Advertising, selling, general and administrative expenses			212.9				197.9				(0.1	)			197.8				8	%			8	%
Amortization of intangibles			5.2				5.4				—				5.4				(4	)%			(4	)%
Restructuring charges (income)			(0.8	)			13.8				(13.8	)			—				(106	)%			NM
Asset impairment charges			—				1.8				(1.8	)			—				(100	)%			NM
Total operating costs and expenses			217.3				218.9				(15.7	)			203.2				(1	)%			7	%
Operating income			79.1				51.9				18.2				70.1				52	%			13	%
Non-operating expense (income):
Interest expense			58.8				47.6				—				47.6				24	%			24	%
Equity in earnings of joint ventures			(4.6	)			(2.0	)			—				(2.0	)			(130	)%			(130	)%
Other expense, net (B)			1.4				5.8				—				5.8				(76	)%			(76	)%
Income from continuing operations before income taxes			23.5				0.5				18.2				18.7				NM				26	%
Income tax expense (benefit) (C)			17.4				119.2				(114.6	)			4.6				(85	)%
Income (loss) from continuing operations			6.1				(118.7	)			132.8				14.1				105	%
Loss from discontinued operations, net of income taxes			(0.5	)			(8.4	)			1.4				(7.0	)			94	%
Net income (loss)		$	5.6			$	(127.1	)		$	134.2			$	7.1				104	%
Per Share:
Basic earnings (loss) per share:
Income (loss) from continuing operations		$	0.11			$	(2.18	)						$	0.26				105	%
Loss from discontinued operations			(0.01	)			(0.15	)							(0.13	)			93	%
Basic earnings (loss) per share		$	0.10			$	(2.33	)						$	0.13				104	%
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations		$	0.11			$	(2.18	)						$	0.25				105	%
Loss from discontinued operations			(0.01	)			(0.15	)							(0.13	)			93	%
Diluted earnings (loss) per share		$	0.10			$	(2.33	)						$	0.13				104	%
Weighted average number of shares outstanding:
Basic			54.8				54.5								54.5
Diluted			56.6				54.5								56.0

Reconciliation of Reported Consolidated Results to Adjusted Results

 

		Nine Months Ended September 30, 2010
(in millions, except per share data)		Reported				Tax Adjustment (D)				Adjusted
Income from continuing operations before income taxes		$	23.5			$	—			$	23.5
Income tax expense (benefit)			17.4				(10.4	)			7.0
Income from continuing operations		$	6.1			$	10.4			$	16.5
Diluted earnings per share:
Income from continuing operations		$	0.11							$	0.29
Weighted average number of diluted shares outstanding			56.6								56.6

Note – “Adjusted” results are non-GAAP measures. There could be limitations associated with the use of non-GAAP financial measures as compared to the most directly comparable GAAP financial measure. Management believes these measures provide investors with helpful supplemental information regarding the underlying performance of the Company from year to year. These measures may be inconsistent with measures presented by other companies.

Statistics (as a % of Net sales, except Income tax rate)

 

		Nine Months Ended September 30,
		2010								2009
		Reported				Adjusted				Reported				Adjusted
Gross profit (Net sales, less Cost of products sold)			30.9	%							29.4	%			29.7	%
Advertising, selling, general and administrative			22.2	%							21.5	%			21.5	%
Operating income			8.3	%							5.6	%			7.6	%
Income (loss) from continuing operations before income taxes			2.5	%							0.1	%			2.0	%
Net income (loss)			0.6	%			1.7	%			(13.8	)%			0.8	%
Income tax rate			74.0	%			30.0	%			NM				24.6	%

 

(A)

Certain charges are excluded in order to provide a comparison of underlying results of operations, including restructuring charges, and certain non-recurring income tax items related to adjustments impacting the Company’s effective tax rate. In addition, certain other charges that have been recorded within cost of products sold and advertising, selling, general and administrative expenses in the prior-year period did not qualify as restructuring. These charges included redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of exited facilities and employee retention incentives. The Company does not anticipate incurring restructuring and integration charges in 2010.

(B)	During the third quarter of 2009, the Company recorded a net loss on the early extinguishment of debt of $4.2 million, $0.08 per diluted share.

(C)	During the second quarter of 2009, the Company recorded a non-cash charge of $108.1 million to establish a valuation allowance against its U.S. deferred tax assets.

(D)

The Company has incurred significant operating losses in several jurisdictions in prior periods. In accordance with GAAP, tax valuation allowances have been recorded on certain of the Company’s deferred tax assets. As a result, the operating results in these locations have recorded no tax benefit or expense, which results in a high effective tax rate for the current period. Assuming all the locations become profitable in the future and valuation allowances were reversed, the Company’s ongoing effective tax rate would approximate 30%. This estimated long-term rate will be subject to variations from the mix of earnings in the Company’s operating jurisdictions.

 

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Reconciliation of Net Income (Loss) to Adjusted Supplemental EBITDA from Continuing Operations

(Unaudited)

(In millions of dollars)

 

		Nine Months Ended September 30,
		2010				2009				% Change
Net income (loss)		$	5.6			$	(127.1	)			104	%
Discontinued operations			0.5				8.4				(94	)%
Restructuring charges			—				13.8				(100	)%
Other charges included in Cost of products sold (E)			—				2.5				(100	)%
Other charges included in Advertising, selling, general and administrative expenses (E)			—				0.1				(100	)%
Asset impairment charges			—				1.8				(100	)%
Income taxes, impact of adjustments (E, F)			10.4				114.6				(91	)%
Adjusted income from continuing operations			16.5				14.1				17	%
Interest expense, net			58.8				47.6				24	%
Adjusted income tax expense			7.0				4.6				52	%
Depreciation			22.6				24.0				(6	)%
Amortization of intangibles			5.2				5.4				(4	)%
Other expense, net (G)			1.4				5.8				(76	)%
Stock-based compensation expense (H)			2.5				2.3				9	%
Adjusted supplemental EBITDA from continuing operations		$	114.0			$	103.8				10	%
Adjusted supplemental EBITDA from continuing operations as a % of Net Sales			11.9	%			11.3	%

 

(E)

Certain charges are excluded in order to provide a comparison of underlying results of operations, including restructuring charges and certain non-recurring income tax items related to adjustments impacting the Company’s effective tax rate. In addition, certain other charges that have been recorded in the prior-year period did not qualify as restructuring. These charges included redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of exited facilities and employee retention incentives. The Company does not anticipate incurring restructuring and integration charges in 2010.

(F)	During the second quarter of 2009, the Company recorded a non-cash charge of $108.1 million to establish a valuation allowance against its U.S. deferred tax assets.

(G)	Other expense for 2009 includes a net loss on the early extinguishment of debt of $4.2 million.

(H)	Stock-based compensation expense for the nine months ended September 30, 2009, excludes $0.2 million that have been included in restructuring charges, which are excluded from adjusted income from continuing operations.

 

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ACCO Brands Corporation

Supplemental Business Segment Information

(Unaudited)

(In millions of dollars)

 

		2010												2009																				Changes
		Net Sales				Reported OI				Reported OI Margin				Net Sales				Reported OI				Excluded Charges				Adjusted OI (A)				Adjusted OI Margin (A)				Net Sales $				Net Sales %				Reported vs. Adjusted OI $				Reported vs. Adjusted OI %				Reported vs. Adjusted Margin Points
Q1:
ACCO Brands Americas		$	158.6			$	8.3				5.2	%		$	157.7			$	6.2			$	0.3			$	6.5				4.1	%		$	0.9				1	%		$	1.8				28	%			110
ACCO Brands International			112.5				10.2				9.1	%			100.3				5.6				2.6				8.2				8.2	%			12.2				12	%			2.0				24	%			90
Computer Products			39.7				8.1				20.4	%			35.4				4.8				0.5				5.3				15.0	%			4.3				12	%			2.8				53	%			540
Corporate			—				(5.0	)							—				(3.2	)			—				(3.2	)							—								(1.8	)
Total		$	310.8			$	21.6				6.9	%		$	293.4			$	13.4			$	3.4			$	16.8				5.7	%		$	17.4				6	%		$	4.8				29	%			120
Q2:
ACCO Brands Americas		$	169.9			$	14.4				8.5	%		$	162.0			$	5.6			$	4.1			$	9.7				6.0	%		$	7.9				5	%		$	4.7				48	%			250
ACCO Brands International			104.5				6.2				5.9	%			102.7				1.2				6.6				7.8				7.6	%			1.8				2	%			(1.6	)			(21	)%			(170	)
Computer Products			42.1				10.7				25.4	%			39.1				7.9				1.3				9.2				23.5	%			3.0				8	%			1.5				16	%			190
Corporate			—				(5.0	)							—				(3.7	)			—				(3.7	)							—								(1.3	)
Total		$	316.5			$	26.3				8.3	%		$	303.8			$	11.0			$	12.0			$	23.0				7.6	%		$	12.7				4	%		$	3.3				14	%			70
Q3:
ACCO Brands Americas		$	178.1			$	16.5				9.3	%		$	175.5			$	16.1			$	0.3			$	16.4				9.3	%		$	2.6				1	%		$	0.1				1	%			—
ACCO Brands International			108.3				6.5				6.0	%			104.4				5.8				2.0				7.8				7.5	%			3.9				4	%			(1.3	)			(17	)%			(150	)
Computer Products			44.3				12.6				28.4	%			42.6				10.1				0.5				10.6				24.9	%			1.7				4	%			2.0				19	%			350
Corporate			—				(4.4	)							—				(4.5	)			—				(4.5	)							—								0.1
Total		$	330.7			$	31.2				9.4	%		$	322.5			$	27.5			$	2.8			$	30.3				9.4	%		$	8.2				3	%		$	0.9				3	%			—
YTD:
ACCO Brands Americas		$	506.6			$	39.2				7.7	%		$	495.2			$	27.9			$	4.7			$	32.6				6.6	%		$	11.4				2	%		$	6.6				20	%			110
ACCO Brands International			325.3				22.9				7.0	%			307.4				12.6				11.2				23.8				7.7	%			17.9				6	%			(0.9	)			(4	)%			(70	)
Computer Products			126.1				31.4				24.9	%			117.1				22.8				2.3				25.1				21.4	%			9.0				8	%			6.3				25	%			350
Corporate			—				(14.4	)							—				(11.4	)			—				(11.4	)							—								(3.0	)
Total		$	958.0			$	79.1				8.3	%		$	919.7			$	51.9			$	18.2			$	70.1				7.6	%		$	38.3				4	%		$	9.0				13	%			70

 

(A)	Adjusted results exclude asset impairment charges, restructuring, as well as certain other charges recorded in the prior-year period that did not qualify as restructuring.

 

9

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ACCO Brands Corporation

Supplemental Net Sales Growth Analysis

(Unaudited)

 

		Percent Change – Sales
		Net Sales Growth				Currency Translation				Comparable Sales Growth				Price				Volume
Q1 2010:
ACCO Brands Americas			0.6	%			3.2	%			(2.6	)%			(1.5	)%			(1.1	)%
ACCO Brands International			12.2	%			15.5	%			(3.3	)%			(1.4	)%			(1.9	)%
Computer Products			12.1	%			5.4	%			6.7	%			(0.3	)%			7.0	%
Total			5.9	%			7.7	%			(1.8	)%			(1.3	)%			(0.5	)%
Q2 2010:
ACCO Brands Americas			4.9	%			2.0	%			2.9	%			(2.4	)%			5.3	%
ACCO Brands International			1.8	%			2.3	%			(0.5	)%			(3.1	)%			2.6	%
Computer Products			7.7	%			(0.3	)%			8.0	%			1.5	%			6.5	%
Total			4.2	%			1.8	%			2.4	%			(2.1	)%			4.5	%
Q3 2010:
ACCO Brands Americas			1.5	%			1.0	%			0.5	%			(1.4	)%			1.9	%
ACCO Brands International			3.7	%			0.1	%			3.6	%			(3.4	)%			7.0	%
Computer Products			4.0	%			(2.3	)%			6.3	%			(0.5	)%			6.8	%
Total			2.5	%			0.3	%			2.2	%			(1.9	)%			4.1	%
2010 YTD:
ACCO Brands Americas			2.3	%			2.1	%			0.2	%			(1.8	)%			2.0	%
ACCO Brands International			5.8	%			5.9	%			(0.1	)%			(2.7	)%			2.6	%
Computer Products			7.7	%			0.7	%			7.0	%			0.3	%			6.7	%
Total			4.2	%			3.2	%			1.0	%			(1.8	)%			2.8	%

 

10

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ACCO Brands Corporation

Key Stats and Ratios

(Unaudited)

(In millions of dollars)

 

Net Debt Calculation		September 30, 2010				December 31, 2009
Current debt obligations, including current portion of long-term debt		$	0.3			$	0.7
Long-term debt obligations			725.8				725.1
Total outstanding debt			726.1				725.8
Less: cash and cash equivalents			14.3				43.6
Net debt		$	711.8			$	682.2
Leverage Ratio (Debt to EBITDA from Continuing Operations)		Twelve Months Ended September 30, 2010				Twelve Months Ended September 30, 2009
Trailing twelve months (TTM) adjusted supplemental EBITDA from Continuing Operations (A)		$	160.2			$	139.1
Net debt (see above)		$	711.8			$	717.8
Gross debt (see above)		$	726.1			$	741.7
Total Leverage (net debt divided by TTM adjusted supplemental EBITDA from Continuing Operations)			4.4				5.3
Senior-Secured Leverage (senior-secured debt [$454.8 million as of September 30, 2010 and $470.4 million as of September 30, 2009] divided by TTM adjusted supplemental EBITDA from Continuing Operations)			2.8				3.4
Working Capital per Dollar Sales Ratio (Working Capital to Sales)		Twelve Months Ended September 30, 2010				Twelve Months Ended September 30, 2009
Current assets, excluding cash and cash equivalents (B)		$	531.1			$	504.2
Current liabilities, excluding current debt obligations (C)			283.2				294.1
Net working capital		$	247.9			$	210.1
Trailing twelve months (TTM) adjusted net sales (A)		$	1,310.8			$	1,273.1
Working capital ratio (net working capital divided by TTM adjusted net sales) (A)			18.9	%			16.5	%

 

(A)

Management believes these measures provide investors with helpful supplemental information regarding the underlying performance of the Company from year to year. These measures may be inconsistent with similar measures presented by other companies. See page 13 for a reconciliation of trailing twelve months supplemental EBITDA from Continuing Operations to reported quarterly net income and trailing twelve months interest expense to reported quarterly interest expense.

(B)	Balance is comprised of receivables, inventories, current deferred income taxes and other current assets.

(C)	Balance is comprised of accounts payable, accrued compensation, accrued customer programs and other current liabilities.

 

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ACCO Brands Corporation

Selected Financial Information

(Unaudited)

(In millions of dollars)

 

		Three Months Ended September 30,
		2010				2009
Selected Non-Cash Items Included in Net Income (Pre-tax):
Depreciation expense		$	7.6			$	8.3
Intangible amortization expense		$	1.7			$	1.8
Stock-based compensation expense		$	0.1			$	0.8
Selected Cash Investing and Restructuring Activities (Pre-tax):
Capital expenditures		$	3.8			$	3.3
Restructuring and integration activities		$	1.2			$	11.4
		Nine Months Ended September 30,
		2010				2009
Selected Non-Cash Items Included in Net Income (Pre-tax):
Depreciation expense		$	22.6			$	24.0
Intangible amortization expense		$	5.2			$	5.4
Stock-based compensation expense		$	2.5			$	2.5
Selected Cash Investing and Restructuring Activities (Pre-tax):
Capital expenditures		$	8.7			$	7.7
Restructuring and integration activities (A)		$	6.7			$	32.1

 

(A)	Includes stock-based compensation expense of $0.2 million that has been reported as a component of restructuring charges for the nine months ended September 30, 2009.

 

12

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ACCO Brands Corporation

Reconciliation of Net Income (Loss) to Adjusted Supplemental EBITDA from Continuing Operations

(Unaudited)

(In millions of dollars)

 

		Three Months Ended
		December 31, 2009				March 31, 2010				June 30, 2010				September 30, 2010				Trailing Twelve Months
Net sales		$	352.8			$	310.8			$	316.5			$	330.7			$	1,310.8
Net income (loss)		$	1.0			$	(4.7	)		$	4.9			$	5.4			$	6.6
Discontinued operations			1.9				0.2				0.3				—				2.4
Restructuring charges			3.6				—				—				—				3.6
Other charges included in COS (A)			0.9				—				—				—				0.9
Other charges included in SG&A (A)			1.1				—				—				—				1.1
Income taxes, impact of adjustments			3.5				6.1				—				4.3				13.9
Adjusted income from continuing operations		$	12.0			$	1.6			$	5.2			$	9.7			$	28.5
Interest expense, net			19.4				19.5				19.7				19.6				78.2
Adjusted income tax expense			5.2				0.7				2.2				4.1				12.2
Depreciation expense (B)			8.0				7.7				7.3				7.6				30.6
Amortization of intangibles			1.8				1.8				1.7				1.7				7.0
Other (income) expense, net			(0.7	)			1.0				0.3				0.1				0.7
Stock-based compensation expense			0.5				0.8				1.6				0.1				3.0
Adjusted supplemental EBITDA from continuing operations		$	46.2			$	33.1			$	38.0			$	42.9			$	160.2

 

(A)

Certain charges are excluded in order to provide a comparison of underlying results of operations, including restructuring charges, goodwill and asset impairment charges and certain non-recurring income tax items related to adjustments impacting the Company’s effective tax rate. In addition, certain other charges that have been recorded in the prior-year period did not qualify as restructuring. These charges included redundant warehousing or storage costs during the transition to a new distribution center, equipment and other asset move costs, facility overhead and maintenance costs after exit, gains on the sale of exited facilities, certain costs associated with the Company’s debt refinancing and employee retention incentives. The Company does not anticipate incurring restructuring and integration charges in 2010.

(B)	Represents total depreciation less depreciation of $0.1 million for the three months ended December 31, 2009 that have been included in other charges, which are excluded from adjusted income from continuing operations.

 

13

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ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

 

		September 30, 2010				December 31, 2009
(in millions of dollars)		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	14.3			$	43.6
Accounts receivable, net			262.6				259.9
Inventories			233.3				202.4
Deferred income taxes			7.8				9.8
Other current assets			27.4				21.4
Total current assets			545.4				537.1
Property, plant and equipment, net			167.4				181.1
Deferred income taxes			30.9				31.5
Goodwill			144.0				143.4
Identifiable intangibles, net			140.3				145.8
Other assets			69.3				67.9
Total assets		$	1,097.3			$	1,106.8
Liabilities and Stockholders’ Deficit
Current liabilities:
Notes payable to banks		$	0.2			$	0.5
Current portion of long-term debt			0.1				0.2
Accounts payable			108.6				101.0
Accrued compensation			21.2				18.9
Accrued customer program liabilities			67.9				74.6
Accrued interest			4.6				20.0
Other current liabilities			79.2				78.1
Liabilities of discontinued operations			1.7				5.6
Total current liabilities			283.5				298.9
Long-term debt			725.8				725.1
Deferred income taxes			87.1				86.6
Pension and post-retirement benefit obligations			82.3				94.6
Other non-current liabilities			15.9				18.8
Total liabilities			1,194.6				1,224.0
Commitments and Contingencies
Stockholders’ deficit:
Common stock			0.6				0.5
Treasury stock			(1.5	)			(1.4	)
Paid-in capital			1,399.5				1,397.0
Accumulated other comprehensive loss			(95.2	)			(107.0	)
Accumulated deficit			(1,400.7	)			(1,406.3	)
Total stockholders’ deficit			(97.3	)			(117.2	)
Total liabilities and stockholders’ deficit		$	1,097.3			$	1,106.8

 

14

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ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		Nine Months  Ended September 30,
(in millions of dollars)		2010				2009
Operating activities
Net income (loss) from continuing operations		$	6.1			$	(118.7	)
Net loss from discontinued operations			(0.5	)			(8.4	)
Asset impairment and other non-cash charges			0.4				5.4
Gain on sale of assets			(0.1	)			(0.7	)
Depreciation			22.6				24.0
Amortization of debt issuance costs and bond discount			4.7				4.9
Amortization of intangibles			5.2				5.4
Stock-based compensation			2.5				2.5
Loss on retirement of bank debt			—				4.0
Changes in balance sheet items:
Accounts receivable			0.8				46.1
Inventories			(28.4	)			66.3
Other assets			(7.2	)			1.7
Accounts payable			9.0				(60.0	)
Accrued expenses and other liabilities			(38.0	)			(45.8	)
Accrued income taxes			8.2				105.9
Equity in earnings of joint ventures, net of dividends received			(0.2	)			(1.8	)
Net cash (used) provided by operating activities			(14.9	)			30.8
Investing activities
Additions to property, plant and equipment			(8.7	)			(7.7	)
Assets acquired			(1.1	)			(3.4	)
(Payments) proceeds from the sale of discontinued operations			(3.8	)			10.3
Proceeds from the disposition of assets			0.7				0.3
Net cash used by investing activities			(12.9	)			(0.5	)
Financing activities
Proceeds from long-term borrowings			0.4				469.3
Repayments of long-term debt			—				(397.8	)
Repayments of short-term debt, net			(0.8	)			(38.0	)
Payment of Euro debt hedge			—				(40.8	)
Cost of debt issuance			(0.8	)			(19.1	)
Other			(0.1	)			(0.3	)
Net cash used by financing activities			(1.3	)			(26.7	)
Effect of foreign exchange rate changes on cash			(0.2	)			2.2
Net increase (decrease) in cash and cash equivalents			(29.3	)			5.8
Cash and cash equivalents
Beginning of period			43.6				18.1
End of period		$	14.3			$	23.9

 

15