UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form			10-Q


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

For the Quarterly Period Ended ~~September 30, 2020~~March 31, 2021


☐			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 every Interactive Data File required to be submitted 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	☒	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

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. ☐

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

As of ~~October~~April 22, ~~2020,~~2021, the registrant had outstanding ~~94,496,837~~95,491,857 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, including without limitation, statements concerning the impacts of the COVID-19 pandemic on the ~~Company’s~~Company's business, operations, results of operations, liquidity and financial condition, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. 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.

Our outlook is based on certain assumptions, which we believe to be reasonable under the circumstances. These include, without limitation, assumptions regarding both the near-term and long-term impact of the COVID-19 pandemic on the economy and our business, our customers and the end-users of our products, and other changes in the macro environment; changes in the competitive landscape, including ongoing uncertainties in the traditional office products channels; as well as the impact of fluctuations in foreign currency and acquisitions and the other factors described below.

Among the factors that could cause our actual results to differ materially from our forward-looking statements are: the scope and duration of the COVID-19 pandemic, government actions and other third-party responses to it and the consequences for the global economy, as well as the regional and local economies in which we operate, uncertainties regarding when the risks of the pandemic will subside and how geographies, distribution channels and consumer behaviors will evolve over time in response to the pandemic, and its impact on our business, operations, results of operations and financial condition, including, among others, manufacturing, distribution and supply chain disruptions, reduced demand for our products and services, and the financial condition of our suppliers and customers, including their ability to fund their operations and pay their invoices. Additionally, many of the other risk factors affecting us are currently elevated by, and likely will continue to be elevated by, the COVID-19 pandemic.

Other 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, ~~2019, in "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30,~~ 2020, and the discussion under the heading "COVID-19 Impact" as well as 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~~)Loss			6
Condensed Consolidated Statements of Cash Flows			7
Consolidated Statement of Stockholders’ Equity			8
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3. Quantitative and Qualitative Disclosures About Market Risk			43
Item 4. Controls and Procedures			4443
PART II — OTHER INFORMATION			4544
Item 1. Legal Proceedings			4544
Item 1A. Risk Factors			4544
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4544
Item 3. Defaults Upon Senior Securities			4645
Item 4. Mine Safety Disclosures			4645
Item 5. Other Information			4645
Item 6. Exhibits			4745
SIGNATURES			4846

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

September 30,
2020 December 31,
2019
(in millions) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 85.8 $ 27.8
Accounts receivable, net 343.7 453.7
Inventories 300.5 283.3
Other current assets 35.0 41.2
Total current assets 765.0 806.0
Total property, plant and equipment 641.8 651.7
Less: accumulated depreciation (402.0) (384.6)
Property, plant and equipment, net 239.8 267.1
Right of use asset, leases 87.0 101.9
Deferred income taxes 117.3 119.0
Goodwill 723.4 718.6
Identifiable intangibles, net 726.8 758.6
Other non-current assets 36.5 17.4
Total assets $ 2,695.8 $ 2,788.6
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 5.8 $ 3.7
Current portion of long-term debt 30.0 29.5
Accounts payable 171.4 245.7
Accrued compensation 41.9 48.5
Accrued customer program liabilities 76.9 99.7
Lease liabilities 20.1 21.8
Other current liabilities 124.2 139.9
Total current liabilities 470.3 588.8
Long-term debt, net 876.3 777.2
Long-term lease liabilities 76.4 89.8
Deferred income taxes 170.7 177.5
Pension and post-retirement benefit obligations 268.7 283.2
Other non-current liabilities 108.2 98.4
Total liabilities 1,970.6 2,014.9
Stockholders' equity:
Common stock 1.0 1.0
Treasury stock (39.9) (38.2)
Paid-in capital 1,878.9 1,890.8
Accumulated other comprehensive loss (554.2) (505.7)
Accumulated deficit (560.6) (574.2)
Total stockholders' equity 725.2 773.7
Total liabilities and stockholders' equity $ 2,695.8 $ 2,788.6


	March 31, 2021		December 31, 2020
(in millions)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	75.1	$	36.6
Accounts receivable, net	307.8		356.0
Inventories	351.2		305.1
Other current assets	45.7		30.5
Total current assets	779.8		728.2
Total property, plant and equipment	648.1		657.8
Less: accumulated depreciation	(418.9)		(416.4)
Property, plant and equipment, net	229.2		241.4
Right of use asset, leases	84.1		89.2
Deferred income taxes	124.4		136.5
Goodwill	799.7		827.4
Identifiable intangibles, net	947.9		977.0
Other non-current assets	36.6		49.0
Total assets	$	3,001.7	$	3,048.7
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable	$	11.4	$	5.7
Current portion of long-term debt	36.8		70.8
Accounts payable	187.7		180.2
Accrued compensation	36.3		41.0
Accrued customer program liabilities	71.7		91.4
Lease liabilities	21.5		22.6
Current portion of contingent consideration	16.2		10.4
Other current liabilities	117.2		134.8
Total current liabilities	498.8		556.9
Long-term debt, net	1,155.9		1,054.6
Long-term lease liabilities	72.0		76.5
Deferred income taxes	153.1		170.6
Pension and post-retirement benefit obligations	297.6		317.1
Contingent consideration	8.7		7.8
Other non-current liabilities	106.8		122.5
Total liabilities	2,292.9		2,306.0
Stockholders' equity:
Common stock	1.0		1.0
Treasury stock	(40.8)		(39.9)
Paid-in capital	1,889.9		1,883.1
Accumulated other comprehensive loss	(577.2)		(564.2)
Accumulated deficit	(564.1)		(537.3)
Total stockholders' equity	708.8		742.7
Total liabilities and stockholders' equity	$	3,001.7	$	3,048.7

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of ~~Income~~Operations

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share data) 2020 2019 2020 2019
Net sales $ 444.1 $ 505.7 $ 1,195.1 $ 1,418.3
Cost of products sold 317.0 349.8 845.8 970.8
Gross profit 127.1 155.9 349.3 447.5
Operating costs and expenses:
Selling, general and administrative expenses 84.4 96.4 247.7 287.8
Amortization of intangibles 7.9 8.6 24.1 26.8
Restructuring charges 0.5 2.1 7.3 4.8
Total operating costs and expenses 92.8 107.1 279.1 319.4
Operating income 34.3 48.8 70.2 128.1
Non-operating expense (income):
Interest expense 10.2 11.5 28.7 33.6
Interest income (0.2) (0.7) (0.8) (2.9)
Non-operating pension income (1.4) (1.3) (4.4) (4.1)
Other expense (income), net 0.1 (0.9) 0.8 0.1
Income before income tax 25.6 40.2 45.9 101.4
Income tax expense 6.8 12.2 13.7 38.1
Net income $ 18.8 $ 28.0 $ 32.2 $ 63.3
Per share:
Basic income per share $ 0.20 $ 0.29 $ 0.34 $ 0.63
Diluted income per share $ 0.20 $ 0.28 $ 0.34 $ 0.62
Weighted average number of shares outstanding:
Basic 94.5 97.6 95.0 100.4
Diluted 95.6 98.9 96.2 101.9


	Three Months Ended March 31,
(in millions, except per share data)		2021		2020
Net sales		$	410.5	$	384.1
Cost of products sold		295.0		271.9
Gross profit		115.5		112.2
Operating costs and expenses:
Selling, general and administrative expenses		94.0		86.1
Amortization of intangibles		12.0		8.4
Restructuring charges		3.9		0.3
Change in fair value of contingent consideration		6.7		0
Total operating costs and expenses		116.6		94.8
Operating (loss) income		(1.1)		17.4
Non-operating expense (income):
Interest expense		13.2		8.6
Interest income		(0.1)		(0.3)

Non-operating pension income		(0.8)		(1.5)
Other expense (income), net		12.9		(0.5)
(Loss) income before income tax		(26.3)		11.1
Income tax (benefit) expense		(5.9)		3.1


Net (loss) income		$	(20.4)	$	8.0

Per share:



Basic (loss) income per share		$	(0.21)	$	0.08



Diluted (loss) income per share		$	(0.21)	$	0.08

Weighted average number of shares outstanding:
Basic		95.1		96.0
Diluted		95.1		97.5

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 2020 2019
Net income $ 18.8 $ 28.0 $ 32.2 $ 63.3
Other comprehensive (loss) income, net of tax:
Unrealized (loss) income on derivative instruments, net of tax benefit (expense) of $0.2 and $(0.6) and $0.3 and $0.4, respectively (0.6) 1.4 (0.6) (0.9)
Foreign currency translation adjustments, net of tax benefit of $0.1 and $0.9 and $1.1 and $0.5, respectively 3.6 (25.1) (53.7) (22.4)
Recognition of deferred pension and other post-retirement items, net of tax benefit (expense) of $1.2 and $(1.2) and $(1.7) and $(1.9), respectively (4.0) 4.2 5.8 6.6
Other comprehensive (loss) income, net of tax (1.0) (19.5) (48.5) (16.7)
Comprehensive income (loss) $ 17.8 $ 8.5 $ (16.3) $ 46.6


	Three Months Ended March 31,
(in millions)		2021		2020
Net (loss) income		$	(20.4)	$	8.0
Other comprehensive income (loss), net of tax:
Unrealized income on derivative instruments, net of tax expense of $(1.8) and $(0.9), respectively		4.1		2.4

Foreign currency translation adjustments, net of tax (expense) benefit of $(1.5) and $2.1, respectively		(20.7)		(49.7)

Recognition of deferred pension and other post-retirement items, net of tax expense of $(1.2) and $(2.4), respectively		3.6		7.9
Other comprehensive loss, net of tax		(13.0)		(39.4)

Comprehensive loss		$	(33.4)	$	(31.4)

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		(in millions)	2021		2020
Operating activities	Operating activities					Operating activities
Net income		$	32.2	$	63.3
Net (loss) income						Net (loss) income	$	(20.4)	$	8.0

Amortization of inventory step-up	Amortization of inventory step-up	0		0.2		Amortization of inventory step-up	2.4		0

Change in fair value of contingent liability						Change in fair value of contingent liability	6.7		0
Depreciation						Depreciation	9.6		8.6

Depreciation		28.2		26.3
Other non-cash items		0.5		0.2
Amortization of debt issuance costs	Amortization of debt issuance costs	1.7		1.7		Amortization of debt issuance costs	0.8		0.5
Amortization of intangibles	Amortization of intangibles	24.1		26.8		Amortization of intangibles	12.0		8.4
Stock-based compensation	Stock-based compensation	5.2		6.3		Stock-based compensation	4.8		0.9
Loss on debt extinguishment	Loss on debt extinguishment	0		0.3		Loss on debt extinguishment	3.7		0

Changes in balance sheet items:	Changes in balance sheet items:					Changes in balance sheet items:
Accounts receivable	Accounts receivable	78.7		54.0		Accounts receivable	34.4		112.0
Inventories	Inventories	(28.4)		34.8		Inventories	(54.4)		(26.2)
Other assets	Other assets	(1.0)		(2.6)		Other assets	(13.3)		(13.8)
Accounts payable	Accounts payable	(67.1)		(102.1)		Accounts payable	11.3		(45.2)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(47.3)		(40.8)		Accrued expenses and other liabilities	(27.9)		(72.1)
Accrued income taxes	Accrued income taxes	(5.0)		6.7		Accrued income taxes	(12.1)		(6.3)
Net cash provided by operating activities		21.8		75.1
Net cash used by operating activities						Net cash used by operating activities	(42.4)		(25.2)
Investing activities	Investing activities					Investing activities
Additions to property, plant and equipment	Additions to property, plant and equipment	(11.8)		(21.9)		Additions to property, plant and equipment	(3.8)		(6.9)

Proceeds from the disposition of assets		0		0.1

Cost of acquisitions, net of cash acquired	Cost of acquisitions, net of cash acquired	0.6		(42.1)		Cost of acquisitions, net of cash acquired	18.2		0.6
Other assets acquired		0		(5.2)
Net cash used by investing activities		(11.2)		(69.1)

Net cash provided (used) by investing activities						Net cash provided (used) by investing activities	14.4		(6.3)
Financing activities	Financing activities					Financing activities
Proceeds from long-term borrowings	Proceeds from long-term borrowings	231.5		325.9		Proceeds from long-term borrowings	595.8		117.4
Repayments of long-term debt	Repayments of long-term debt	(146.4)		(272.0)		Repayments of long-term debt	(509.0)		(5.3)
Proceeds/repayments of notes payable, net		2.5		(8.6)
Proceeds of notes payable, net						Proceeds of notes payable, net	6.2		12.4
Payment for debt premium						Payment for debt premium	(9.8)		0
Payments for debt issuance costs	Payments for debt issuance costs	(1.6)		(3.3)		Payments for debt issuance costs	(9.7)		0
Dividends paid	Dividends paid	(18.4)		(18.1)		Dividends paid	(6.2)		(6.2)
Repurchases of common stock	Repurchases of common stock	(18.9)		(56.8)		Repurchases of common stock	0		(18.9)
Payments related to tax withholding for stock-based compensation	Payments related to tax withholding for stock-based compensation	(1.8)		(4.3)		Payments related to tax withholding for stock-based compensation	(0.9)		(1.7)

Proceeds from the exercise of stock options	Proceeds from the exercise of stock options	1.7		3.1		Proceeds from the exercise of stock options	1.9		1.5
Net cash provided (used) by financing activities		48.6		(34.1)
Net cash provided by financing activities						Net cash provided by financing activities	68.3		99.2
Effect of foreign exchange rate changes on cash and cash equivalents	Effect of foreign exchange rate changes on cash and cash equivalents	(1.2)		(1.2)		Effect of foreign exchange rate changes on cash and cash equivalents	(1.8)		(2.1)
Net increase (decrease) in cash and cash equivalents		58.0		(29.3)
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	38.5		65.6
Cash and cash equivalents	Cash and cash equivalents					Cash and cash equivalents
Beginning of the period	Beginning of the period	27.8		67.0		Beginning of the period	36.6		27.8
End of the period	End of the period	$	85.8	$	37.7	End of the period	$	75.1	$	93.4
Cash paid during the year for:	Cash paid during the year for:					Cash paid during the year for:
Interest	Interest	$	21.4	$	27.6	Interest	$	12.7	$	2.9
Income taxes	Income taxes	$	20.1	$	38.6	Income taxes	$	7.2	$	10.1

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

(Unaudited)


(in millions)	(in millions)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total		(in millions)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total
Balance at December 31, 2019		$	1.0	$	1,890.8	$	(505.7)	$	(38.2)	$	(574.2)	$	773.7
Net income		—		—		—		—		8.0		8.0
Balance at December 31, 2020														Balance at December 31, 2020	$	1.0	$	1,883.1	$	(564.2)	$	(39.9)	$	(537.3)	$	742.7
Net loss														Net loss	—		—		—		—		(20.4)		(20.4)
Gain on derivative financial instruments, net of tax	Gain on derivative financial instruments, net of tax	—		—		2.4		—		—		2.4		Gain on derivative financial instruments, net of tax	—		—		4.1		—		—		4.1
Translation impact, net of tax	Translation impact, net of tax	—		—		(49.7)		—		—		(49.7)		Translation impact, net of tax	—		—		(20.7)		—		—		(20.7)
Pension and post-retirement adjustment, net of tax		—		—		7.9		—		—		7.9
Common stock repurchases		—		(18.9)		—		—		—		(18.9)
Stock-based compensation		—		0.9		—		—		—		0.9
Common stock issued, net of shares withheld for employee taxes		—		1.5		—		(1.7)		—		(0.2)
Dividends declared, $.065 per share		—		—		—		—		(6.2)		(6.2)

Balance at March 31, 2020		1.0		1,874.3		(545.1)		(39.9)		(572.4)		717.9
Net income		—		—		—		—		5.4		5.4
Loss on derivative financial instruments, net of tax		—		—		(2.4)		—		—		(2.4)
Translation impact, net of tax		—		—		(7.6)		—		—		(7.6)
Pension and post-retirement adjustment, net of tax		—		—		1.9		—		—		1.9

Stock-based compensation		—		2.6		—		—		(0.1)		2.5

Dividends declared, $.065 per share		—		—		—		—		(6.1)		(6.1)

Balance at June 30, 2020		1.0		1,876.9		(553.2)		(39.9)		(573.2)		711.6
Net income		—		—		—		—		18.8		18.8
Loss on derivative financial instruments, net of tax		—		—		(0.6)		—		—		(0.6)
Translation impact		—		—		3.6		—		—		3.6
Pension and post-retirement adjustment, net of tax	Pension and post-retirement adjustment, net of tax	—		—		(4.0)		—		—		(4.0)		Pension and post-retirement adjustment, net of tax	—		—		3.6		—		—		3.6

Stock-based compensation	Stock-based compensation	—		1.9		—		—		(0.1)		1.8		Stock-based compensation	—		5.0		—		—		(0.2)		4.8
Common stock issued, net of shares withheld for employee taxes	Common stock issued, net of shares withheld for employee taxes	—		0.1		—		—		—		0.1		Common stock issued, net of shares withheld for employee taxes	—		1.9		—		(0.9)		—		1.0
Dividends declared, $.065 per share	Dividends declared, $.065 per share	—		—		—		—		(6.1)		(6.1)		Dividends declared, $.065 per share	—		—		—		—		(6.2)		(6.2)
Other														Other	—		(0.1)		—		—		—		(0.1)
Balance at March 31, 2021														Balance at March 31, 2021	1.0		1,889.9		(577.2)		(40.8)		(564.1)		708.8

Balance at September 30, 2020		$	1.0	$	1,878.9	$	(554.2)	$	(39.9)	$	(560.6)	725.2

Shares of Capital Stock

Common
Stock Treasury
Stock Net
Shares
Shares at December 31, 2019 100,412,933 3,967,445 96,445,488
Common stock issued, net of shares withheld for employee taxes 898,664 206,243 692,421
Common stock repurchases (2,690,292) — (2,690,292)
Shares at March 31, 2020 98,621,305 4,173,688 94,447,617
Common stock issued, net of shares withheld for employee taxes 26,957 12,427 14,530
Shares at June 30, 2020 98,648,262 4,186,115 94,462,147
Common stock issued, net of shares withheld for employee taxes 35,465 775 34,690
Shares at September 30, 2020 98,683,727 4,186,890 94,496,837


	Common Stock	Treasury Stock	Net Shares
Shares at December 31, 2020	99,129,455	4,186,890	94,942,565
Common stock issued, net of shares withheld for employee taxes	652,755	109,599	543,156

Shares at March 31, 2021	99,782,210	4,296,489	95,485,721

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

Continued (Unaudited)


(in millions)	(in millions)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total		(in millions)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total
December 31, 2018		$	1.1	$	1,941.0	$	(461.7)	$	(33.9)	$	(656.8)	$	789.7
Net loss		—		—		—		—		(0.6)		(0.6)
Loss on derivative financial instruments, net of tax		—		—		(1.1)		—		—		(1.1)
Translation impact, net of tax		—		—		(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, $.06 per share		—		—		—		—		(6.2)		(6.2)
Other		—		(0.1)		—		—		0.1		0
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
Net income		—		—		—		—		35.9		35.9
Loss on derivative financial instruments, net of tax		—		—		(1.2)		—		—		(1.2)
Translation impact, net of tax		—		—		5.8		—		—		5.8
Pension and post-retirement adjustment, net of tax		—		—		3.5		—		—		3.5
Common stock repurchases		—		(28.3)		—		—		—		(28.3)
Stock-based compensation		—		3.6		—		—		(0.2)		3.4
Common stock issued, net of shares withheld for employee taxes		—		0.2		—		—		—		0.2
Dividends declared, $.06 per share		—		—		—		—		(6.0)		(6.0)
Other		(0.1)		0.1		—		—		(0.1)		(0.1)

Balance at June 30, 2019		1.0		1,907.5		(458.9)		(38.2)		(633.4)		778.0
December 31, 2019														December 31, 2019	$	1.0	$	1,890.8	$	(505.7)	$	(38.2)	$	(574.2)	$	773.7
Net income	Net income	—		—		—		—		28.0		28.0		Net income	—		—		—		—		8.0		8.0
Gain on derivative financial instruments, net of tax	Gain on derivative financial instruments, net of tax	—		—		1.4		—		—		1.4		Gain on derivative financial instruments, net of tax	—		—		2.4		—		—		2.4
Translation impact, net of tax	Translation impact, net of tax	—		—		(25.1)		—		—		(25.1)		Translation impact, net of tax	—		—		(49.7)		—		—		(49.7)
Pension and post-retirement adjustment, net of tax	Pension and post-retirement adjustment, net of tax	—		—		4.2		—		—		4.2		Pension and post-retirement adjustment, net of tax	—		—		7.9		—		—		7.9
Common stock repurchases	Common stock repurchases	(0.1)		(17.6)		—		—		—		(17.7)		Common stock repurchases	—		(18.9)		—		—		—		(18.9)
Stock-based compensation	Stock-based compensation	—		1.0		—		—		(0.1)		0.9		Stock-based compensation	—		0.9		—		—		—		0.9
Common stock issued, net of shares withheld for employee taxes	Common stock issued, net of shares withheld for employee taxes	—		2.9		—		—		—		2.9		Common stock issued, net of shares withheld for employee taxes	—		1.5		—		(1.7)		—		(0.2)
Dividends declared, $.06 per share		—		—		—		—		(5.9)		(5.9)
Other		0.1		—		—		—		0.1		0.2
Dividends declared, $.065 per share														Dividends declared, $.065 per share	—		—		—		—		(6.2)		(6.2)

Balance at September 30, 2019		$	1.0	$	1,893.8	$	(478.4)	$	(38.2)	$	(611.3)	$	766.9

Balance at March 31, 2020														Balance at March 31, 2020	1.0		1,874.3		(545.1)		(39.9)		(572.4)		717.9

Shares of Capital Stock


		Common Stock	Treasury Stock	Net Shares		Common Stock	Treasury Stock	Net Shares
Shares at December 31, 2018		106,249,322	3,500,622	102,748,700
Shares at December 31, 2019					Shares at December 31, 2019	100,412,933	3,967,445	96,445,488
Common stock issued, net of shares withheld for employee taxes	Common stock issued, net of shares withheld for employee taxes	1,437,021	458,987	978,034	Common stock issued, net of shares withheld for employee taxes	898,664	206,243	692,421
Common stock repurchases	Common stock repurchases	(1,260,163)	—	(1,260,163)	Common stock repurchases	(2,690,292)	—	(2,690,292)
Shares at March 31, 2019		106,426,180	3,959,609	102,466,571
Common stock issued, net of shares withheld for employee taxes		44,180	7,836	36,344
Common stock repurchases		(3,443,904)	—	(3,443,904)
Shares at June 30, 2019		103,026,456	3,967,445	99,059,011
Common stock issued, net of shares withheld for employee taxes		386,781	—	386,781
Common stock repurchases		(2,258,645)	—	(2,258,645)
Shares at September 30, 2019		101,154,592	3,967,445	97,187,147
Shares at March 31, 2020					Shares at March 31, 2020	98,621,305	4,173,688	94,447,617

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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 ~~September 30, 2020,~~March 31, 2021, 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, ~~2019.~~2020.

The Condensed Consolidated Balance Sheet as of ~~September 30, 2020,~~March 31, 2021, the related Consolidated Statements of ~~Income,~~Operations, the Consolidated Statements of Comprehensive ~~Income (Loss), and~~Loss, the Consolidated ~~Statement~~Statements of Stockholders' Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ and Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ are unaudited. The December 31, ~~2019~~2020 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 ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and the financial position of the Company as of ~~September 30, 2020.~~March 31, 2021. Interim results may not be indicative of results for a full year.

Effective ~~August 1, 2019,~~December 17, 2020, we completed the acquisition of PowerA (the ~~"Foroni~~"PowerA Acquisition"~~) of Indústria Gráfica Foroni Ltda. ("Foroni"~~), a leading provider of ~~Foroni~~® ~~branded notebooks and paper-based school and office products~~third-party video gaming console accessories primarily in ~~Brazil.~~North America. The results of PowerA are included in all three of the Company's operating business segments effective December 17, 2020. The preliminary purchase price was ~~$41.5~~$321.8 million, ~~inclusive~~plus an additional earnout of ~~working capital adjustments.~~up to $55.0 million in cash, which is contingent upon PowerA achieving one- and two- year sales and profit growth objectives and has a present value of $24.9 million as of March 31, 2021. The ~~Foroni~~PowerA Acquisition ~~advanced~~and related expenses were funded by cash on hand, as well as borrowings from our strategy to expand in faster growing geographies and product categories, add consumer-centric brands and diversify our customer base. The results of Foroni are included in the ACCO Brands International segment effective August 1, 2019.revolving credit facility. See "Note 3. Acquisitions" for details on the ~~Foroni~~PowerA Acquisition.

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 ~~December 2019,~~March 2020, the Financial Accounting Standards Board ("FASB") issued ASU ~~2019-12, Income Taxes~~2020-04, Reference Rate Reform (Topic ~~740): Simplifying the Accounting for Income Taxes,~~848), which ~~removes certain~~provides optional expedients and exceptions for ~~investments, intraperiod allocations~~applying current GAAP to contracts, hedging relationships, and ~~interim calculations, and adds guidance~~other transactions affected by the transition from the use of LIBOR to ~~reduce complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods, and interim periods within those years, beginning after December 15, 2020. The Company is~~an alternative reference rate. We are currently evaluating our contracts and hedging relationships that reference LIBOR and the potential effects ~~the standard will have~~of adopting this new guidance. The guidance can be adopted immediately and is applicable to contracts entered into on ~~its consolidated financial statements.~~or before December 31, 2022.

There are no other recently issued accounting standards that are expected to have an impact on the Company’s financial condition, results of operations or cash flow.

Recently Adopted Accounting Standards

In ~~June 2016,~~December 2019, the FASB issued ASU ~~2016-13, Financial Instruments-Credit Losses~~2019-12, Income Taxes (Topic ~~326)~~740): ~~Measurement of Credit Losses on Financial Instruments, an accounting standard that requires companies~~Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to utilize an impairment model (current expected credit loss, or "CECL") for most financial assets measured at amortized cost and certain other financial instruments, which include, but are not limited to, trade and other receivables. This accounting standard replaced the incurred loss model

ACCO Brands Corporation and Subsidiaries

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

~~with a model that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate those losses.~~reduce complexity in accounting for income taxes. Effective January 1, ~~2020,~~2021, the Company adopted this standard. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

There were no other accounting standards that were adopted in the first ~~nine~~three months of ~~2020~~2021 that had a material effect on the Company’s financial condition, results of operations or cash flow.

3. Acquisitions

Acquisition of ~~Foroni~~PowerA

Effective ~~August 1, 2019,~~December 17, 2020, we completed the acquisition of ~~Foroni,~~PowerA, a leading provider of ~~Foroni~~® ~~branded notebooks and paper-based school and office products~~third-party video gaming console accessories primarily in ~~Brazil. The Foroni Acquisition advanced our strategy to expand in faster growing geographies and product categories, add consumer-centric brands and diversify our customer base.~~North America. The results of ~~Foroni~~PowerA are included in all three of the ~~ACCO Brands International segment~~Company's reporting units effective ~~August 1, 2019.~~December 17, 2020.

The preliminary purchase price was ~~R$157.2~~$321.8 million, (US$41.5 million based on July 31, 2019, exchange rates) inclusive of working capital adjustments. We also assumed $7.6 million in debt. A portion of the purchase price (R$25.0 million or US$6.6 million based on July 31, 2019 exchange rates) is being held inplus an ~~escrow account for a period~~additional earnout of up to ~~6 years after closing~~$55.0 million in ~~the event~~cash, which is contingent upon PowerA achieving one- and two- year sales and profit growth objectives and has a fair value of ~~any claims against the sellers under the quota purchase agreement.~~$24.9 million as of March 31, 2021. The ~~Company may also make claims against the sellers directly, subject to limitations in the quota purchase agreement, if the escrow is depleted. The Foroni~~PowerA Acquisition and related expenses were funded by cash on ~~hand.~~hand, as well as borrowings from our revolving credit facility. During the first quarter of 2021, the Company received a working capital adjustment of $18.2 million recorded as a reduction to the preliminary purchase price recorded at December 31, 2020 of $340.0 million.

For accounting purposes, the Company was the acquiring enterprise. The ~~Foroni~~PowerA Acquisition is being accounted for as a purchase business combination and ~~Foroni's~~PowerA's results are included in the Company’s ~~condensed~~ consolidated financial statements as of ~~August 1, 2019~~.December 31, 2020. The additional net sales from ~~Foroni for~~PowerA during the ~~one and seven~~three months ended ~~July~~March 31, ~~2020 were $1.0 million and $16.7 million, respectively.~~2021 were $62.7 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 the PowerA Acquisition:


(in millions)	At December 17, 2020
Calculation of Goodwill:
Purchase price, net of working capital adjustment	$	321.8



Fair value of contingent consideration	$	18.2

Plus fair value of liabilities assumed:
Accrued liabilities	9.2

Fair value of liabilities assumed	$	9.2

Less fair value of assets acquired:


Inventory	28.7
Property and equipment	0.2
Identifiable intangibles	239.7
Other assets	13.2
Fair value of assets acquired	$	281.8

Goodwill	$	67.4

We are continuing our review of the 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. The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill. The preliminary goodwill of $67.4 million is primarily attributable to synergies expected to be realized from leveraging our geographic footprint and from the existence of an assembled workforce.

ACCO Brands Corporation and Subsidiaries

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

~~The following table presents~~

Our fair value estimate of assets acquired and liabilities assumed is pending the ~~allocation~~completion of several elements, including the final determination of the ~~consideration given to~~purchase price, pending final determination of the fair ~~values~~value of the assets acquired and liabilities assumed, atand the ~~date~~final review by our management. The primary areas that are not yet finalized relate to intangible assets and contingent consideration. In particular, the determination of ~~acquisition, which was finalized~~the preliminary fair value of the customer relationships and vendor relationships intangible assets required us to make significant estimates and assumptions regarding (1) future revenue growth rates, (2) future cost of sales and operating expenses, (3) attrition rate, (4) future cash flows without vendor relationships, and (5) discount rates. Accordingly, there could be material adjustments to our consolidated financial statements, including changes in our amortization expense related to the ~~third quarter~~valuation of ~~2020:~~intangible assets and their respective useful lives, among other adjustments.


~~(in millions)~~	~~At August 1, 2019~~
~~Calculation of Goodwill:~~
~~Purchase price, net of working capital adjustment~~	$	~~41.5~~



~~Plus fair value of liabilities assumed:~~
~~Accounts payable and accrued liabilities~~	~~13.9~~
~~Deferred tax liabilities~~	~~5.4~~
~~Debt~~	~~7.6~~
~~Lease liabilities~~	~~5.3~~
~~Other non-current liabilities~~	~~1.5~~
~~Fair value of liabilities assumed~~	$	~~33.7~~

~~Less fair value of assets acquired:~~
~~Cash acquired~~	0
~~Accounts receivable~~	~~17.5~~
~~Inventory~~	~~12.5~~
~~Property and equipment~~	~~8.8~~
~~Identifiable intangibles~~	~~11.1~~
~~Deferred tax assets~~	~~2.7~~
~~Right of use asset, leases~~	~~5.3~~
~~Other assets~~	~~3.6~~
~~Fair value of assets acquired~~	$	~~61.5~~

~~Goodwill~~	$	~~13.7~~

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

During the year ended December 31, ~~2019,~~2020, transaction costs related to the ~~Foroni~~PowerA Acquisition were ~~$1.5~~$3.7 million, and for the ~~nine months ended September 30, 2020,~~quarter ending March 31, 2021, they ~~were $0.2~~were $0.1 million. These costs were reported as ~~selling, general and administrative ("~~SG~~&A")~~&A expenses in the Company's Consolidated Statements of ~~Income.~~Operations.

Unaudited Pro Forma Consolidated Results

The unaudited pro forma information presented below is not intended to represent, nor do we believe it is indicative of, the consolidated results of operations of the Company that would have been reported had the PowerA Acquisition been completed on January 1, 2019. Furthermore, the unaudited pro forma information does not give effect to the anticipated synergies or other anticipated benefits of the PowerA Acquisition.

Had the PowerA Acquisition occurred on January 1, 2019, unaudited pro forma consolidated results of the Company for the three months ended March 31, 2021 and 2020 would have been as follows:


(in millions)	2021		2020
Net sales	$	410.5	$	414.6
Net (loss) income	(20.4)		8.0
Net (loss) income per common share (diluted)	$	(0.21)	$	0.08

The pro forma amounts are based on the Company's historical results and the historical results for the acquired PowerA business. The pro forma results of operations have been adjusted to include amortization of finite-lived intangibles, and other charges related to the PowerA Acquisition accounting.

ACCO Brands Corporation and Subsidiaries

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

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


(in millions)	(in millions)	September 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Euro Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.00% at September 30, 2020 and 1.50% at December 31, 2019)		$	278.2	$	275.9

USD Senior Secured Term Loan A, due May 2024 (floating interest rate of 3.00% at September 30, 2020 and 3.44% at December 31, 2019)		93.8		97.5
Australian Dollar Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.14% at September 30, 2020 and 2.45% at December 31, 2019)		40.8		41.6

U.S. Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 3.18% at September 30, 2020 and 3.26% at December 31, 2019)		100.2		8.2

Australian Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 2.13% at September 30, 2020 and 2.44% at December 31, 2019)		23.5		14.0

Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.25% at March 31, 2021)						Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.25% at March 31, 2021)	$	273.9	$	0
Euro Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.50% at December 31, 2020)						Euro Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.50% at December 31, 2020)	0		287.4
USD Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.45% at March 31, 2021)						USD Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.45% at March 31, 2021)	92.5		0
USD Senior Secured Term Loan A, due May 2024 (floating interest rate of 3.50% at December 31, 2020)						USD Senior Secured Term Loan A, due May 2024 (floating interest rate of 3.50% at December 31, 2020)	0		92.5
Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.31% at March 31, 2021)						Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.31% at March 31, 2021)	42.8		0
Australian Dollar Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.57% at December 31, 2020)						Australian Dollar Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.57% at December 31, 2020)	0		43.4
U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 2.47% at March 31, 2021)						U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 2.47% at March 31, 2021)	173.3		0
U.S. Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 3.50% at December 31, 2020)						U.S. Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 3.50% at December 31, 2020)	0		307.2
Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 2.31% at March 31, 2021)						Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 2.31% at March 31, 2021)	45.6		0
Australian Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 2.57% at December 31, 2020)						Australian Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 2.57% at December 31, 2020)	0		25.4
Senior Unsecured Notes, due March 2029 (fixed interest rate of 4.25%)						Senior Unsecured Notes, due March 2029 (fixed interest rate of 4.25%)	575.0		0
Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)	Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)	375.0		375.0		Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)	0		375.0
Other borrowings	Other borrowings	5.8		3.8		Other borrowings	11.4		5.7
Total debt	Total debt	917.3		816.0		Total debt	1,214.5		1,136.6
Less:	Less:					Less:
Current portion	Current portion	35.8		33.2		Current portion	48.2		76.5
Debt issuance costs, unamortized	Debt issuance costs, unamortized	5.2		5.6		Debt issuance costs, unamortized	10.4		5.5
Long-term debt, net	Long-term debt, net	$	876.3	$	777.2	Long-term debt, net	$	1,155.9	$	1,054.6

The Company entered into a Third Amended and Restated Credit Agreement (the "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 Credit Agreement provided for a five-year senior secured credit facility, which consisted of a €300.0 million (US$320.8 million based on January 27, 2017, exchange rates) term loan facility (the "Euro Term Loan"), an A$80.0 million (US$60.4 million based on January 27, 2017, exchange rates) term loan facility (the "Australian Term Loan"), and a US$400.0 million multi-currency revolving credit facility (the "Revolving Facility").

Effective July 26, 2018, the Company entered into the First Amendment (the "First Amendment") to the Credit ~~Agreement among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto.~~Agreement. 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 Revolving Facility was $500.0 million. In addition, the First Amendment also affected certain technical amendments to the 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. The changes related to LIBOR successor rate procedures are not expected to have a material effect on the Company.

Effective May 23, 2019, the Company entered into a Second Amendment (the "Second Amendment") to the Credit Agreement. Pursuant to the Second Amendment, the Credit Agreement was amended to, among other things:

ACCO Brands Corporation and Subsidiaries

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

•extend the maturity date to May 23, 2024;

•further increase the aggregate revolving credit commitments under the Revolving Facility from $500.0 million to $600.0 million;

•establish a new term loan facility denominated in U.S. Dollars in an aggregate principal amount of $100.0 million (the "USD Term Loan");

•replace the minimum fixed coverage ratio of 1.25:1.00 with a minimum ~~interest coverage ratio, as calculated under~~Interest Coverage Ratio (as defined in the Credit ~~Agreement,~~Agreement) of 3.00:1.00; and

~~ACCO Brands Corporation and Subsidiaries~~

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

•reflect a more favorable restricted payment covenant, with the ~~consolidated leverage ratio~~Consolidated Leverage Ratio (as defined in the Credit Agreement) hurdle for unlimited restricted payments (including share repurchases and dividends) as calculated under the Credit Agreement increasing from 2.50:1.00 to 3.25:1.00;

•reflect, in certain cases, more favorable pricing with a 25-basis point reduction in the applicable rate on outstanding loans than was in effect prior to the Second Amendment based on the Company's current consolidated leverage ratio, along with lower fees on undrawn amounts;

•~~eliminate the requirement to make annual principal prepayments of excess cash flow;~~

•~~reduce amortization payments for the term loans; and~~

•~~increase the qualified receivables transaction basket with respect to sales or financings of certain receivables.~~

~~Effective upon the closing of the Second Amendment, the Company borrowed the entire principal amount committed under the~~The USD Term Loan, ~~which was used~~the Euro Term Loan and the Australian Term Loan are collectively referred to ~~repay revolver borrowings and, in combination with~~herein as the ~~increase in the Revolving Facility, resulted in $200.0 million of additional liquidity becoming available under the Revolving~~“Term Loan Facility.”

On May 1, 2020, the Company entered into a Third Amendment (the "Third Amendment") to ~~its~~the Credit Agreement ~~among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto. Pursuant~~pursuant to ~~the Third Amendment,~~which the Credit Agreement was amended to, among other things:

•increase the maximum ~~consolidated leverage ratio~~Consolidated Leverage Ratio from 3.75:1.00 to 4.75:1.00, stepping back down to 3.75:1.00 for the first fiscal quarter ending after June 30, 2021;

•amend the pricing based on the Company’s ~~consolidated leverage ratio,~~Consolidated Leverage Ratio, with a scaled increase in interest rates and fees, ~~as follows,~~ effective May 1, ~~2020:~~2020;

Leverage Ratio Applicable Rate Undrawn Fee
> 4.25 to 1.00 2.75% 0.500%
≤ 4.25 to 1.00 and > 4.00 to 1.00 2.50% 0.500%
≤ 4.00 to 1.00 and > 3.50 to 1.00 2.25% 0.375%
≤ 3.50 to 1.00 and > 3.25 to 1.00 2.00% 0.375%
≤ 3.25 to 1.00 and > 3.00 to 1.00 1.75% 0.300%
≤ 3.00 to 1.00 and > 2.00 to 1.00 1.50% 0.250%
≤ 2.00 to 1.00 1.25% 0.200%

~~Per the terms of the Third Amendment, pricing will be locked at LIBOR plus 2.00% until the Company publishes its financial results for the fiscal quarter ended June 30, 2020;~~

•~~Reduce~~reduce the Company’s capacity to incur certain other indebtedness, and impose additional limitations on certain restricted payments (other than dividends) and permitted acquisitions; and

•~~Require~~require that the Company pay down any amounts on the Revolving Facility when cash and cash equivalents of the loan parties exceed $100.0 million.

~~As of September 30,~~In connection with the PowerA Acquisition, effective November 10, 2020, ~~there were $123.7 million in borrowings outstanding under~~ the ~~Revolving Facility. The remaining amount available for borrowings~~Company entered into a Fourth Amendment (the "Fourth Amendment") to the Credit Agreement pursuant to which the Credit Agreement was ~~$465.5 million (allowing for $10.8 million of letters of credit outstanding on that date).~~amended to, among other things:

As•provide flexibility under the permitted acquisition provisions to accommodate the acquisition of ~~and for the periods ended September 30, 2020 and December 31, 2019, the Company was in compliance with all applicable loan covenants.~~PowerA;

•further amend the maximum Consolidated Leverage Ratio financial covenant by 0.50:1.00 from current levels for each of the six fiscal quarters beginning March 31, 2021 and ending June 30, 2022, as follows:


Quarter Ended						Maximum Consolidated Leverage Ratio
March 2021						5.25:1.00
June 2021						5.25:1.00
September 2021						4.75:1.00
December 2021						4.25:1.00
March 2022						4.25:1.00
June 2022						4.25:1.00
September 2022 and thereafter						3.75:1.00

•exempt the borrowings made under the Credit Agreement, as amended, to fund the PowerA Acquisition from the Credit Agreement’s anti-cash hoarding clause.

ACCO Brands Corporation and Subsidiaries

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

We incurred and capitalized approximately $3.2 million in bank, legal and other fees associated with the Third and Fourth Amendments.

Effective March 31, 2021, the Company entered into a Fifth Amendment (the “Fifth Amendment”) to the Credit Agreement. Pursuant to the Fifth Amendment, the Credit Agreement was amended to, among other things:

•further extend the maturity date from May 23, 2024 to March 31, 2026;

•further modify the maximum Consolidated Leverage Ratio financial covenant such that for the fiscal quarter ending September 30, 2022 and thereafter, the maximum leverage ratio is set at 4.00:1.00;

•reflect more favorable pricing at higher Consolidated Leverage Ratio levels along with lower fees on undrawn amounts, as follows;


Consolidated Leverage Ratio	Applicable Rate on Euro/AUD/CDN Dollar Loans	Applicable Rate on Base Rate Loans	Undrawn Fee
> 4.50 to 1.00	2.50%	1.50%	0.500%
≤ 4.50 to 1.00 and > 4.00 to 1.00	2.25%	1.25%	0.375%
≤ 4.00 to 1.00 and > 3.50 to 1.00	2.00%	1.00%	0.350%
≤ 3.50 to 1.00 and > 3.00 to 1.00	1.75%	0.75%	0.300%
≤ 3.00 to 1.00 and > 2.00 to 1.00	1.50%	0.50%	0.250%
≤ 2.00 to 1.00	1.25%	0.25%	0.200%

•eliminate the LIBOR rate floor for U.S. Dollar loans.

Under the Fifth Amendment, pricing will be locked at LIBOR plus 2.25 percent until the Company publishes its financial results for the fiscal quarter ending June 30, 2021, and is subject to the above leverage-based pricing grid thereafter.

Senior Unsecured Notes

On March 15, 2021, the Company completed a private offering of $575.0 million in aggregate principal amount of 4.25% Senior Notes due March 2029 (the "New Notes"), which were issued under an indenture, dated as of March 15, 2021 (the "New Indenture"), among the Company, as issuer, the guarantors named therein and Wells Fargo Bank, National Association, as trustee. The Company will pay interest on the New Notes semiannually on March 15 and September 15 of each year, beginning on September 15, 2021.

The New Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of the Company’s existing and future U.S. subsidiaries, other than certain excluded subsidiaries.

The New Indenture contains covenants that limit the ability of the Company and its restricted subsidiaries’ ability to, among other things: (i) incur additional indebtedness or issue disqualified stock or, in the case of the Company’s restricted subsidiaries, preferred stock; (ii) create liens; (iii) pay dividends, make certain investments or make other restricted payments; (iv) sell certain assets or merge with or into other companies; (v) enter into transactions with affiliates; and (vi) in the case of a restricted subsidiary, ability to pay dividends, loans, or assets to the Company or other restricted subsidiaries. These covenants are subject to a number of important limitations and exceptions. The New Indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and accrued but unpaid interest on all the then outstanding New Notes to be immediately due and payable.

In addition, effective March 15, 2021, the Company irrevocably deposited with the trustee of its 5.25% Senior Notes due 2024 (the "Prior Notes") an amount necessary to pay the aggregate redemption price for the Prior Notes, and satisfied and discharged all its obligations related to the Prior Notes indenture. Proceeds from the offering of the New Notes were applied toward the payment of the aggregate redemption price for the Prior Notes, the repayment of approximately $178.0 million of

ACCO Brands Corporation and Subsidiaries

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

the Company’s outstanding borrowings under its Revolving Facility and to pay fees and expenses related to the offering of the New Notes. The Prior Notes were redeemed on March 31, 2021 at an aggregate redemption price of $390.6 million, consisting of $375 million of the principal due and payable on the Prior Notes, a call premium of $9.8 million (included in "Other expense (income), net"), and accrued and unpaid interest of $5.8 million (included in "Interest expense").

Also included in "Other expense (income), net" is a $3.7 million charge for the write-off of debt issuance costs. Additionally, we incurred and capitalized approximately $8.2 million in bank, legal and other fees associated with the issuance of the New Notes.

As of March 31, 2021, there were $218.9 million in borrowings outstanding under the Revolving Facility. The remaining amount available for borrowings was $367.1 million (allowing for $14.0 million of letters of credit outstanding on that date).

As of March 31, 2021, our Consolidated Leverage Ratio was approximately 4.50 to 1.00 versus our maximum covenant of 5.25 to 1.00.

5. Leases

The Company leases its corporate headquarters, various other facilities for distribution, manufacturing, and offices, as well as vehicles, forklifts and other equipment. The Company determines if an arrangement is a lease at inception. Leases are included in "Right of use asset, leases" ("ROU Assets"), and the current portion of the lease liability is included in "Lease liabilities" and the non-current portion is included in "Long-term lease liabilities" in the Condensed Consolidated Balance ~~Sheet.~~Sheets. The Company currently has an immaterial amount of financing leases and leases with terms of more than one month and less than 12 months. ROU Assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because most of the Company’s leases do not provide an implicit rate of return, the Company uses its incremental collateralized borrowing rate, on a regional basis, in determining the present value of lease payments. The incremental borrowing rate is dependent upon the duration of the lease and has been segmented into three groups of time. All leases within the same region and the same group of time share the same incremental borrowing rate. The Company has lease agreements with lease and non-lease components, which are combined for accounting purposes for all classes of assets except information technology equipment.

The components of lease expense were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 2020 2019
Operating lease cost $ 6.7 $ 7.3 $ 21.0 $ 21.7
Sublease income (0.2) (0.5) (0.9) (1.3)
Total lease cost $ 6.5 $ 6.8 $ 20.1 $ 20.4

~~Other information related to leases was as follows:~~

Nine Months Ended September 30,
(in millions, except lease term and discount rate) 2020 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 21.5 $ 22.4
Right-of-use assets obtained in exchange for lease obligations:
Operating leases 3.3 25.6
As of
September 30, 2020
Weighted average remaining lease term:
Operating leases 6.7 years
Weighted average discount rate:
Operating leases 5.3 %


	Three Months Ended March 31,
(in millions)		2021		2020
Operating lease cost		$	7.2	$	7.3
Sublease income		(0.3)		(0.4)






Total lease cost		$	6.9	$	6.9

1516

ACCO Brands Corporation and Subsidiaries

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

Other information related to leases was as follows:


	Three Months Ended March 31,
(in millions, except lease term and discount rate)	2021			2020

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7.2		$	7.3


Right-of-use assets obtained in exchange for lease obligations:
Operating leases	4.2			1.0


	As of
	March 31, 2021
Weighted average remaining lease term:
Operating leases	6.3 years


Weighted average discount rate:
Operating leases	5.3		%

Future minimum lease payments, net of sub-lease income, for all non-cancelable leases as of ~~September 30, 2020,~~March 31, 2021, were as follows:


(in millions)	(in millions)			(in millions)
2020		$	6.1
2021	2021	23.8		2021	$	20.1
2022	2022	19.3		2022	20.7
2023	2023	14.7		2023	16.1
2024	2024	12.6		2024	13.3
2025	2025	9.4		2025	9.9
2026				2026	8.3
Thereafter	Thereafter	31.6		Thereafter	24.2
Total minimum lease payments	Total minimum lease payments	117.5		Total minimum lease payments	112.6

Less imputed interest	Less imputed interest	21.1		Less imputed interest	19.1
Future minimum payments for leases, net of sublease rental income and imputed interest	Future minimum payments for leases, net of sublease rental income and imputed interest	$	96.4	Future minimum payments for leases, net of sublease rental income and imputed interest	$	93.5

6. Pension and Other Retiree Benefits

The components of net periodic benefit (income) cost for pension and post-retirement plans for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows:

Three Months Ended September 30,
Pension Post-retirement
U.S. International
(in millions) 2020 2019 2020 2019 2020 2019
Service cost $ 0.4 $ 0.3 $ 0.4 $ 0.3 $ 0 $ 0
Interest cost 1.5 1.8 2.4 3.3 0 0.1
Expected return on plan assets (2.8) (2.9) (4.7) (5.1) 0 0
Amortization of net loss (gain) 0.8 0.6 1.3 0.9 (0.1) (0.1)
Amortization of prior service cost 0.1 0.1 0.1 0.1 0 0
Net periodic benefit income(1)
$ 0 $ (0.1) $ (0.5) $ (0.5) $ (0.1) $ 0
Nine Months Ended September 30,
Pension Post-retirement
U.S. International
(in millions) 2020 2019 2020 2019 2020 2019
Service cost $ 1.2 $ 1.0 $ 1.1 $ 0.9 $ 0 $ 0
Interest cost 4.4 5.5 7.2 10.1 0.1 0.2
Expected return on plan assets (8.5) (8.7) (13.8) (15.4) 0 0
Amortization of net loss (gain) 2.4 1.6 3.7 2.6 (0.4) (0.3)
Amortization of prior service cost 0.3 0.3 0.2 0.1 0 0
Net periodic benefit income(1)
$ (0.2) $ (0.3) $ (1.6) $ (1.7) $ (0.3) $ (0.1)

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

~~We expect to contribute approximately $19.4 million to our defined benefit plans in 2020. For the nine months ended September 30, 2020, we have contributed $13.4 million to these plans.~~















	Three Months Ended March 31,
	Pension								Post-retirement
	U.S.				International
(in millions)	2021		2020		2021		2020		2021		2020
Service cost	$	0.4	$	0.4	$	0.4	$	0.4	$	0	$	0
Interest cost	1.0		1.5		1.6		2.4		0		0
Expected return on plan assets	(2.8)		(2.9)		(4.8)		(4.7)		0		0
Amortization of net loss (gain)	1.0		0.8		1.8		1.2		(0.1)		(0.1)
Amortization of prior service cost	0.1		0.1		0.1		0.1		0		0
Curtailment loss(1)	1.4		0		0		0		0		0

Net periodic benefit cost (income) (2)	$	1.1	$	(0.1)	$	(0.9)	$	(0.6)	$	(0.1)	$	(0.1)

1617

ACCO Brands Corporation and Subsidiaries

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

(1)Curtailment loss of $1.4 million due to the pension benefit freeze for the Sidney group under the ACCO Brands Corporation Pension Plan.

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

We expect to contribute approximately $24.5 million to our defined benefit plans in 2021. For the three months ended March 31, 2021, we have contributed $6.6 million to these plans.

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 ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)		2021		2020
Stock option compensation expense	Stock option compensation expense	$	0.5	$	0.7	$	2.1	$	2.0	Stock option compensation expense		$	1.7	$	0.8

RSU compensation expense	RSU compensation expense	1.3		1.2		4.3		4.1		RSU compensation expense		2.5		1.0
PSU compensation expense	PSU compensation expense	0		(1.0)		(1.2)		0.2		PSU compensation expense		0.6		(0.9)
Total stock-based compensation expense	Total stock-based compensation expense	$	1.8	$	0.9	$	5.2	$	6.3	Total stock-based compensation expense		$	4.8	$	0.9

We generally recognize compensation expense for stock-based awards ratably over the vesting period. Stock-based compensation expense for each of the nine months ended September 30, 2020 and 2019 includes $1.0 million of expense related to stock awards granted to eligible non-employee directors, which were fully vested on the grant date. During the ~~third~~first quarter of ~~2020,~~2021, the Compensation Committee of the Company's Board of Directors approved stock compensation grants which consisted of ~~34,359~~1,526,654 stock options, ~~10,311~~254,460 RSUs and ~~20,618~~1,652,526 PSUs.

The following table summarizes our unrecognized compensation expense and the weighted-average period over which the expense will be recognized as of ~~September 30, 2020:~~March 31, 2021:

September 30, 2020

March 31, 2021

Unrecognized

Weighted Average

Unrecognized

Weighted Average

Compensation

Years Expense To Be

Compensation

Years Expense To Be

(in millions, except weighted average years)

Expense

Recognized Over

(in millions, except weighted average years)

Expense

Recognized Over

Stock options

$4.1

1.9

Stock options

$5.2

2.4

RSUs

$6.9

1.9

RSUs

$5.2

2.1

PSUs

$0.6

2.3

PSUs

$15.0

2.4

8. Inventories

The components of inventories were as follows:


(in millions)	(in millions)	September 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Raw materials	Raw materials	$	42.8	$	44.4	Raw materials	$	40.2	$	36.8
Work in process	Work in process	3.8		3.5		Work in process	3.9		3.5
Finished goods	Finished goods	253.9		235.4		Finished goods	307.1		264.8
Total inventories	Total inventories	$	300.5	$	283.3	Total inventories	$	351.2	$	305.1

9. Goodwill and Identifiable Intangible Assets

Goodwill

We test goodwill for impairment at least annually, during the second quarter, and on an interim basis if an event or circumstance indicates that there is a triggering event that would make it more likely than not that an impairment loss had been incurred.

ACCO Brands Corporation and Subsidiaries

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

During the second quarter ended June 30, 2020, we performed a qualitative assessment of impairment for goodwill for each of our three reporting units. We considered events and circumstances that may affect the fair value of each reporting unit to determine whether it is necessary to perform the quantitative impairment test. We focused on events or circumstances that could affect the significant inputs, including, but not limited to, financial performance, such as negative or declining cash flows, a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods, competitive, economic, industry and market considerations, and other factors that have or could impact each of our reporting

~~ACCO Brands Corporation and Subsidiaries~~

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

units. If we determine that it is more likely than not that the goodwill is impaired, then we would perform a quantitative impairment test.

The ~~results~~result of our qualitative assessment performed during the second quarter ended June 30, 2020, was that there were no triggering events that would make it more likely than not that an impairment loss to our goodwill has been incurred for any of our three reporting units.

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

(in millions) ACCO
Brands
North America ACCO
Brands
EMEA ACCO
Brands
International Total
Balance at December 31, 2019 $ 375.6 $ 165.7 $ 177.3 $ 718.6
Acquisitions 0 0 3.9 3.9
Foreign currency translation 0 5.2 (4.3) 0.9
Balance at September 30, 2020 $ 375.6 $ 170.9 $ 176.9 $ 723.4


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

Balance at December 31, 2020	$	461.2	$	188.2	$	178.0	$	827.4
PowerA working capital adjustment	(18.2)		0		0		(18.2)
Foreign currency translation	0		(8.4)		(1.1)		(9.5)
Balance at March 31, 2021	$	443.0	$	179.8	$	176.9	$	799.7

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

Identifiable Intangible Assets

~~Foroni~~PowerA Acquisition

The preliminary valuation of identifiable intangible assets of ~~$11.1~~$239.7 million acquired in the ~~Foroni~~PowerA Acquisition includes an amortizable customer relationships, vendor relationships, trade ~~name, "Foroni~~®,"names and developed technology, which ~~has~~have been recorded at ~~its~~their estimated fair ~~value.~~values. 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 fair value of the vendor relationships was determined using the lost income method. The fair value of the trade name and the developed technology was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The ~~Foroni~~determination of the acquisition date fair value of the intangible assets required the Company to make significant estimates and assumptions regarding future revenue growth rates, future cost of sales, operating expenses and earnings before income tax, attrition rate, future cash flows without vendor relationships and discount rates.

The amortizable trade name, ~~is expected to~~customer and vendor relationships will be amortized over 2315 years while the developed technology will be amortized over 5 years on a straight-line basis. The allocation of the identifiable intangibles acquired in the PowerA Acquisition was as follows:

ACCO Brands Corporation and Subsidiaries

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


(in millions)	Fair Value		Remaining Useful Life
Trade name	$	21.6	15 years
Customer relationships	127.6		15 years
Vendor relationships	87.7		15 years
Developed technology	2.8		5 years
Total identifiable intangibles acquired	$	239.7

Intangible Assets

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, was~~2020, were as follows:


		September 30, 2020							December 31, 2019								March 31, 2021							December 31, 2020
(in millions)	(in millions)	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:	Indefinite-lived intangible assets:															Indefinite-lived intangible assets:
Trade names	Trade names	$	458.5	$	(44.5)	(1)	$	414.0	$	467.3	$	(44.5)	(1)	$	422.8	Trade names	$	457.3	$	(44.5)	(1)	$	412.8	$	467.5	$	(44.5)	(1)	$	423.0
Amortizable intangible assets:	Amortizable intangible assets:															Amortizable intangible assets:
Trade names	Trade names	315.2		(93.3)			221.9		316.7		(83.7)			233.0		Trade names	339.3		(100.5)			238.8		343.5		(97.7)			245.8
Customer and contractual relationships	Customer and contractual relationships	245.2		(158.3)			86.9		241.0		(142.3)			98.7		Customer and contractual relationships	370.8		(167.0)			203.8		376.8		(162.9)			213.9
Vendor relationships																Vendor relationships	87.7		(1.7)			86.0		87.7		(0.2)			87.5
Patents	Patents	5.8		(1.8)			4.0		5.5		(1.4)			4.1		Patents	8.7		(2.2)			6.5		8.9		(2.1)			6.8
Subtotal	Subtotal	566.2		(253.4)			312.8		563.2		(227.4)			335.8		Subtotal	806.5		(271.4)			535.1		816.9		(262.9)			554.0
Total identifiable intangibles	Total identifiable intangibles	$	1,024.7	$	(297.9)		$	726.8	$	1,030.5	$	(271.9)		$	758.6	Total identifiable intangibles	$	1,263.8	$	(315.9)		$	947.9	$	1,284.4	$	(307.4)		$	977.0

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

The Company's intangible amortization expense was ~~$7.9~~$12.0 million and ~~$8.6~~$8.4 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $24.1 million and $26.8 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

~~ACCO Brands Corporation and Subsidiaries~~

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

Estimated amortization expense for amortizable intangible assets, as of ~~September 30, 2020,~~March 31, 2021, for the current year and the next five years is as follows:


(in millions)	(in millions)	2020		2021		2022		2023		2024		2025		(in millions)	2021		2022		2023		2024		2025		2026
Estimated amortization expense(2)	Estimated amortization expense(2)	$	32.0	$	28.4	$	24.9	$	22.6	$	21.0	$	19.4	Estimated amortization expense(2)	$	46.3	$	42.6	$	40.2	$	38.5	$	36.8	$	34.5

(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 our indefinite-lived trade names in the second quarter of 2020 and concluded that no impairment existed.

COVID-19 Impact

ACCO Brands Corporation and Subsidiaries

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

We continue to monitor the significant global impact and uncertainty as a result of COVID-19 to assess the outlook for demand for our products and the effect on our business and our overall financial performance. This includes our risk of impairment of our goodwill and indefinite-lived intangible assets. Although the full impact of COVID-19 on demand remains uncertain, with impact varying significantly by geographic region, we remain committed to taking the actions necessary to protect our long-term financial performance expectations and position the Company for long-term growth. We have seen improving sales trends in our North America and EMEA segments during the first quarter, but the situation in Brazil, Mexico and the rest of Latin America remains extremely challenging. We expect the macroeconomic environment will recover in the medium to ~~long-term.~~long-term, but progress may be uneven and sporadic. As a result of our analysis, and consideration of events and circumstances, we concluded based on the previously conducted annual assessment, on a qualitative basis, no impairment of our goodwill or indefinite-lived intangible assets was triggered as of June 30, 2020.

The implied fair values of all three of our reporting units, more likely than not, exceed their carrying values at ~~September 30, 2020. In addition, we~~March 31, 2021. We have not identified a triggering event that would cause us to perform a quantitative goodwill impairment analysis. In management’s opinion, the goodwill balance for our ACCO Brands International reporting unit could be at risk for impairment if operating performance does not recover as expected from the current impacts of COVID-19, if we experience negative changes to the long-term outlook for the business, or if there are changes in factors and assumptions which impact the fair value of our reporting units, such as low or declining revenue growth rates, depressed operating margins or adverse changes to the discount rates impacting this ~~report~~reporting unit.

10. Restructuring

The Company recorded ~~$7.3~~$3.9 million and ~~$4.8 million of restructuring expense for the nine months ended September 30, 2020 and 2019, respectively, and recorded $0.5 million and $2.1~~$0.3 million of restructuring expense for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~Restructuring charges in 2020 were primarily related to severance costs in North America. Additional severance charges were also taken in Mexico, Brazil, EMEA and Australia.~~ The restructuring expenses ~~in 2019~~ were primarily for severance costs and termination of lease agreements related to cost reduction initiatives in our North America and International segments.

The summary of the activity in the restructuring liability for the three months ended March 31, 2021, was as follows:


(in millions)	Balance at December 31, 2020		Provision		Cash Expenditures		Non-cash Items/ Currency Change		Balance at March 31, 2021
Employee termination costs(1)	$	8.1	$	3.1	$	(2.7)	$	(0.1)	$	8.4
Termination of lease agreements(2)	1.0		0.8		(0.1)		0		1.7

Other(3)	0.2		0		0		0		0.2
Total restructuring liability	$	9.3	$	3.9	$	(2.8)	$	(0.1)	$	10.3

(1) We expect the remaining $8.4 million employee termination costs to be substantially paid in the next twelve months.

(2) We expect the remaining $1.7 million lease termination costs to be substantially paid in the next twelve months.

(3) We expect the remaining $0.2 million of other costs to be substantially paid in the next nine months.

The summary of the activity in the restructuring liability for the three months ended March 31, 2020, was as follows:


(in millions)	Balance at December 31, 2019		Provision		Cash Expenditures		Non-cash Items/ Currency Change		Balance at March 31, 2020
Employee termination costs	$	10.7	$	0.3	$	(2.0)	$	(0.4)	$	8.6
Termination of lease agreements	0.6		0		(0.5)		0		0.1
Other	0.5		0		(0.1)		0		0.4

Total restructuring liability	$	11.8	$	0.3	$	(2.6)	$	(0.4)	$	9.1

11. Income Taxes

For the three months ended March 31, 2021, we recorded an income tax benefit of $5.9 million on a loss before taxes of $26.3 million, for an effective rate of 22.4 percent. The decrease in the effective rate versus the three months ended March 31, 2020 was primarily driven by the loss of $26.3 million in the current quarter versus income of $11.1 million in the prior year.

ACCO Brands Corporation and Subsidiaries

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

~~The summary of the activity in the restructuring liability for the nine months ended September 30, 2020, was as follows:~~

(in millions) Balance at December 31, 2019 Provision Cash
Expenditures Non-cash
Items/
Currency Change Balance at September 30, 2020
Employee termination costs(1)
$ 10.7 $ 6.7 $ (8.4) $ (0.1) $ 8.9
Termination of lease agreements(2)
0.6 0.1 (0.5) 0 0.2
Other(3)
0.5 0.5 (0.5) (0.4) 0.1
Total restructuring liability $ 11.8 $ 7.3 $ (9.4) $ (0.5) $ 9.2

~~(1) We expect the remaining $8.9 million employee termination costs to be substantially paid in the next twelve months.~~

~~(2) We expect the remaining $0.2 million lease termination costs to be substantially paid in the next three months.~~

~~(3) We expect the remaining $0.1 million of other costs to be substantially paid in the next three months.~~

~~The summary of the activity in the restructuring liability for the nine months ended September 30, 2019, was as follows:~~

(in millions) Balance at December 31, 2018 Provision Cash
Expenditures Non-cash
Items/
Currency Change Balance at September 30, 2019
Employee termination costs $ 7.9 $ 4.1 $ (7.2) $ (0.2) $ 4.6
Termination of lease agreements 1.8 0.1 (1.6) 0 0.3
Other 0 0.6 (0.1) 0 0.5
Total restructuring liability $ 9.7 $ 4.8 $ (8.9) $ (0.2) $ 5.4

~~11. Income Taxes~~

For the three months ended ~~September 30,~~March 31, 2020, we recorded an income tax expense of ~~$6.8~~$3.1 million on income before taxes of $~~25.6 million,~~ ~~for an effective rate of~~ ~~26.6 percent. The decrease in the effective rate versus the three months ended September 30, 2019 was primarily driven by an accrual made in the prior year of~~ ~~$1.6 million~~ ~~of Brazilian income taxes on a contingent gain.~~

~~For the three months ended September 30, 2019, we recorded an income tax expense of $12.2 million on income before taxes of~~ ~~$40.2~~11.1 million, for an effective rate of ~~30.3~~27.9 percent.

For the nine months ended September 30, 2020, we recorded an income tax expense of $13.7 million on income before taxes of $45.9 million, for an effective rate of 29.8 percent. The decrease in the effective rate versus the nine months ended September 30, 2019 was primarily due to an increase in reserves for uncertain tax positions in the prior year, Brazilian income taxes accrued on a contingent gain and a decrease in non-deductible interest in the current year.

For the nine months ended September 30, 2019, we recorded an income tax expense of $38.1 million on income before taxes of $101.4 million, for an effective rate of 37.6 percent. The high effective tax rate for the period was primarily due to the Company increasing its reserves for uncertain tax positions in connection with the Brazil Tax Assessments (see Brazil Tax Assessments below) in the amount of $5.6 million, the accrual of ~~$1.6 million~~ ~~of Brazilian income taxes on a contingent gain, and the recording of deferred state taxes on unremitted non-U.S. earnings in the amount of~~ ~~$0.8 million~~ ~~and other reserves related to various tax contingencies.~~

The U.S. federal statute of limitations remains open for the years ~~2016~~2017 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 (2016 forward), Brazil (2015 forward), Canada (2016 forward), Germany (2015 forward), Sweden (2015 forward) and the U.K. (2018 forward). We are currently under examination in certain foreign jurisdictions.

~~Final Section 951A Tax Regulations~~

On July 20, 2020, the U.S. Department of the Treasury and the Internal Revenue Service issued final section 951A regulations ("Final Regulations") on an election to exclude high-tax global intangible low-taxed income ("GILTI") from a U.S.

~~ACCO Brands Corporation and Subsidiaries~~

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

~~shareholder’s gross income. As of the end of the third quarter, we are not expecting that application of the Final Regulations will have a material impact on the Company’s effective tax rate.~~

Brazil Tax Assessments

In connection with our May 1, 2012, acquisition of the Mead Consumer and Office Products 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 against Tilibra, 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 Brazil Tax Assessments.

The final administrative appeal of the Second Assessment was decided against the Company in 2017. In 2018, we ~~decided to appeal~~appealed this decision to the judicial level. In the event we do not prevail at the judicial level, we will be required to pay an additional penalty representing attorneys' costs and fees; accordingly, in the first quarter of 2019, the Company recorded an additional reserve in the amount of $5.6 million. In connection with the judicial challenge, we were required to provide security to guarantee payment of the Second Assessment should we not prevail.

In the third quarter of 2020, the final administrative appeal of the First Assessment was decided against the Company. We ~~have decided to appeal~~appealed this decision to the judicial level. We recorded an additional expense in the third quarter of 2020 of $1.2 million representing additional attorneys' costs and fees, which we will be required to pay if we do not prevail at the judicial level.

We believe we have meritorious defenses and intend to vigorously contest both of the Brazil Tax 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. 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 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 percent, which is the standard penalty. While there is a possibility that a penalty of 150 percent 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 percent penalty is not more likely than not as of ~~September 30, 2020.~~March 31, 2021. 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 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 and 2012 expired in January 2018 and January 2019, respectively. Since we did not receive an ~~assessments~~assessment for either of these periods, we reversed the amounts previously accrued, including $5.6 million related to 2011, which was reversed in the first quarter of 2018. During the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, we accrued additional interest as a charge to income tax expense of~~ ~~$0.1 million~~ ~~and~~ ~~$0.3 million, respectively, and for the nine months ended September 30, 2020 and 2019,~~ we accrued additional interest as a charge to current income tax expense of ~~$0.3~~$0.1 million ~~and $0.9 million, respectively.~~in each period. At current exchange rates, our accrual through ~~September 30, 2020,~~March 31, 2021, including tax, penalties and interest is ~~$26.1~~$25.7 million (reported in "Other non-current liabilities").

2122

ACCO Brands Corporation and Subsidiaries

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

12. Earnings per Share

Total outstanding shares as of ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ were ~~94.5~~95.5 million and ~~97.2~~94.4 million, respectively. Under our stock repurchase program, for the three months ended ~~September 30, 2020 no~~March 31, 2021 0 shares were repurchased and for the ~~nine~~three months ended ~~September 30,~~March 31, 2020, we repurchased and retired 2.7 million shares. ~~Under our stock repurchase program, for~~For the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2021 and 2020, we ~~repurchased and retired 2.3~~acquired 0.1 million and ~~7.0 million shares, respectively. For the nine months ended September 30, 2020 and 2019, we acquired~~ 0.2 ~~million and 0.5~~ 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 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~~The number of our weighted-average shares outstanding for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
(in millions)	(in millions)	2020	2019	2020	2019	(in millions)		2021	2020
Weighted-average number of shares of common stock outstanding - basic	Weighted-average number of shares of common stock outstanding - basic	94.5	97.6	95.0	100.4	Weighted-average number of shares of common stock outstanding - basic		95.1	96.0
Stock options	Stock options	0	0.4	0.1	0.4	Stock options		0	0.2

Restricted stock units	Restricted stock units	1.1	0.9	1.1	1.1	Restricted stock units		0	1.3
Weighted-average shares and assumed conversions - diluted(1)	Weighted-average shares and assumed conversions - diluted(1)	95.6	98.9	96.2	101.9	Weighted-average shares and assumed conversions - diluted(1)		95.1	97.5

(1) Due to the net loss during the three months ended March 31, 2021, 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, 2021 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. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the number of anti-dilutive shares was approximately ~~8.0~~8.4 million and ~~7.5 million, respectively. For the three and nine months ended September 30, 2019, the number of anti-dilutive shares was approximately 5.0 million and 4.7~~5.2 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 against the U.S. dollar include the 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), Brazil, Australia, Canada, and Mexico.~~

2223

ACCO Brands Corporation and Subsidiaries

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

local currency movements is in Europe (the Euro, the Swedish krona and the British pound), Brazil, Australia, Canada, and Mexico.

Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada, Japan and New Zealand, and are designated as cash flow hedges. Unrealized gains and losses on these contracts are deferred in 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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had cash flow foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of ~~$108.4~~$153.2 million and ~~$96.7~~$134.3 million, respectively, which were designated as hedges.

Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within "Other expense (income), net" in the "Consolidated 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~~with some relating to intercompany loans which extend beyond ~~May 2024.~~March 2022. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we had foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of ~~$171.0~~$130.7 million and ~~$182.6~~$164.7 million, respectively, which were not designated as hedges.

The following table summarizes the fair value of our derivative financial instruments as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


		Fair Value of Derivative Instruments											Fair Value of Derivative Instruments
		Derivative Assets					Derivative Liabilities						Derivative Assets					Derivative Liabilities
(in millions)	(in millions)	Balance Sheet Location	September 30, 2020		December 31, 2019		Balance Sheet Location	September 30, 2020		December 31, 2019		(in millions)	Balance Sheet Location	March 31, 2021		December 31, 2020		Balance Sheet Location	March 31, 2021		December 31, 2020
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:											Derivatives designated as hedging instruments:
Foreign exchange contracts	Foreign exchange contracts	Other current assets	$	1.0	$	0.4	Other current liabilities	$	2.1	$	0.9	Foreign exchange contracts	Other current assets	$	2.7	$	0.1	Other current liabilities	$	1.4	$	5.0
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:											Derivatives not designated as hedging instruments:
Foreign exchange contracts	Foreign exchange contracts	Other current assets	1.3		7.6		Other current liabilities	1.1		8.6		Foreign exchange contracts	Other current assets	0.7		1.6		Other current liabilities	2.1		1.2
Foreign exchange contracts	Foreign exchange contracts	Other non-current assets	19.6		0		Other non-current liabilities	19.6		0		Foreign exchange contracts	Other non-current assets	19.0		32.1		Other non-current liabilities	19.0		32.1
Total derivatives	Total derivatives		$	21.9	$	8.0		$	22.8	$	9.5	Total derivatives		$	22.4	$	33.8		$	22.5	$	38.3

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, 2021 and 2020:


	The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the 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)
	Three Months Ended March 31,					Three Months Ended March 31,
(in millions)	2021		2020			2021		2020
Cash flow hedges:
Foreign exchange contracts	$	4.4	$	4.5	Cost of products sold	$	1.5	$	(1.2)

2324

ACCO Brands Corporation and Subsidiaries

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

The following tables summarize the pre-tax effect of our derivative financial instruments on the condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019:

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)
Three Months Ended September 30, Three Months Ended September 30,
(in millions) 2020 2019 2020 2019
Cash flow hedges:
Foreign exchange contracts $ (2.1) $ 2.7 Cost of products sold $ 1.3 $ (0.7)
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)
Nine Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 2020 2019
Cash flow hedges:
Foreign exchange contracts $ 0.3 $ 2.3 Cost of products sold $ (1.2) $ (3.6)


		The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income										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				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 September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
(in millions)	(in millions)		2020		2019		2020		2019		(in millions)			2021		2020
Foreign exchange contracts	Foreign exchange contracts	Other expense (income), net	$	2.8	$	(0.2)	$	(2.4)	$	(0.7)	Foreign exchange contracts	Other expense (income), net		$	1.2	$	(9.3)

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:


(in millions)	(in millions)	September 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Assets:	Assets:					Assets:
Forward currency contracts	Forward currency contracts	$	21.9	$	8.0	Forward currency contracts	$	22.4	$	33.8
Liabilities:	Liabilities:					Liabilities:
Forward currency contracts	Forward currency contracts	$	22.8	$	9.5	Forward currency contracts	$	22.5	$	38.3

Our forward currency contracts are included in "Other current assets," "Other current liabilities," "Other non-current assets," or "Other non-current 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 ~~$917.3~~$1,214.5 million and ~~$816.0~~$1,136.6 million and the estimated fair value of total debt was ~~$926.7~~$1,180.0 million and ~~$831.4~~$1,146.9 million at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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.

Contingent consideration: The PowerA Acquisition included an additional earnout of up to $55.0 million in cash, contingent upon PowerA achieving one- and two- year sales and profit growth objectives. Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred in the related business combination and subsequent changes in fair value recorded in operating income on the condensed consolidated statements of income.

We use a Monte Carlo simulation model for contingent earnout payments, which are then discounted to present value. We classify the contingent consideration liabilities as Level 3 due to the lack of relevant observable market data over fair value

ACCO Brands Corporation and Subsidiaries

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

inputs such as probability-weighting of payment outcomes. There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.

The following table provides a reconciliation of the beginning and ending balance of the contingent consideration for the three months ended March 31, 2021:


(in millions)	Contingent Consideration
Balance at December 31, 2020	$	18.2
Change in fair value	6.7
Balance at March 31, 2021	$	24.9

15. Accumulated Other Comprehensive Income (Loss)

AOCI is defined as net income (loss) and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. The components of, and changes in, AOCI were as follows:

(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, 2019 $ (0.2) $ (299.5) $ (206.0) $ (505.7)
Other comprehensive income (loss) before reclassifications, net of tax 0.3 (53.7) 0.9 (52.5)
Amounts reclassified from accumulated other comprehensive (loss) income, net of tax (0.9) 0 4.9 4.0
Balance at September 30, 2020 $ (0.8) $ (353.2) $ (200.2) $ (554.2)


(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, 2020	$	(3.1)	$	(318.8)	$	(242.3)	$	(564.2)
Other comprehensive income (loss) before reclassifications, net of tax	3.0		(20.7)		0.3		(17.4)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax	1.1		0		3.3		4.4
Balance at March 31, 2021	$	1.0	$	(339.5)	$	(238.7)	$	(577.2)

The reclassifications out of AOCI for the three months ended March 31, 2021 and 2020 were as follows:


	Three Months Ended March 31,
		2021			2020
(in millions)	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Location on Income Statement
Details about Accumulated Other Comprehensive Income (Loss) Components
Gain (loss) on cash flow hedges:
Foreign exchange contracts		$	(1.5)		$	1.2	Cost of products sold
Tax benefit (expense)		0.4			(0.3)		Income tax (benefit) expense
Net of tax		$	(1.1)		$	0.9
Defined benefit plan items:
Amortization of actuarial loss		$	(2.7)		$	(1.9)	(1)
Amortization of prior service cost		(1.6)			(0.2)		(1)
Total before tax		(4.3)			(2.1)
Tax benefit		1.0			0.5		Income tax (benefit) expense
Net of tax		$	(3.3)		$	(1.6)

Total reclassifications for the period, net of tax		$	(4.4)		$	(0.7)

2526

ACCO Brands Corporation and Subsidiaries

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

~~The reclassifications out of AOCI for the three and nine months ended September 30, 2020 and 2019 were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(in millions) Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Location on Income Statement
Details about Accumulated Other Comprehensive Income (Loss) Components
Gain (loss) on cash flow hedges:
Foreign exchange contracts $ (1.3) $ 0.7 $ 1.2 $ 3.6 Cost of products sold
Tax expense 0.5 (0.4) (0.3) (1.3) Income tax expense
Net of tax $ (0.8) $ 0.3 $ 0.9 $ 2.3
Defined benefit plan items:
Amortization of actuarial loss $ (2.0) $ (1.4) $ (5.7) $ (3.9) (1)
Amortization of prior service cost (0.2) (0.2) (0.5) (0.4) (1)
Total before tax (2.2) (1.6) (6.2) (4.3)
Tax benefit 0.6 0.5 1.3 0.9 Income tax expense
Net of tax $ (1.6) $ (1.1) $ (4.9) $ (3.4)
Total reclassifications for the period, net of tax $ (2.4) $ (0.8) $ (4.0) $ (1.1)

(1) These AOCI components are included in the computation of net periodic benefit cost for pension and post-retirement plans. See "Note 6. Pension and Other Retiree Benefits" for additional 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 receive in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue. Incidental items incurred that are immaterial in the context of the contract are expensed.

At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. 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, ~~2019,~~2020, there was ~~$5.5~~$3.0 million of unearned revenue associated with outstanding EMAs, primarily reported in "Other current liabilities." During the three ~~and nine~~ months ended ~~September 30, 2020, $0.7 million and $4.8~~March 31, 2021, $1.1 million of the unearned revenue was earned and ~~recognized, respectively.~~recognized. As of ~~September 30, 2020,~~March 31, 2021, the amount of unearned revenue from EMAs was ~~$3.3~~$2.8 million. We expect to earn and recognize approximately ~~$2.6~~$2.1 million of the unearned amount in the next 12 months and $0.7 million in periods beyond the next 12 months.

~~ACCO Brands Corporation and Subsidiaries~~

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

The following tables present 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 ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)		2021		2020
United States	United States	$	203.5	$	235.8	$	562.5	$	646.4	United States		$	170.3	$	147.4
Canada	Canada	35.0		36.6		75.5		94.3		Canada		18.5		20.4
ACCO Brands North America	ACCO Brands North America	238.5		272.4		638.0		740.7		ACCO Brands North America		188.8		167.8

ACCO Brands EMEA(2)	ACCO Brands EMEA(2)	136.4		133.1		352.2		407.9		ACCO Brands EMEA(2)		156.9		127.5

Australia/N.Z.	Australia/N.Z.	31.7		37.1		83.6		100.7		Australia/N.Z.		32.1		28.9
Latin America	Latin America	27.5		52.1		90.8		134.8		Latin America		19.5		49.0
Asia-Pacific	Asia-Pacific	10.0		11.0		30.5		34.2		Asia-Pacific		13.2		10.9
ACCO Brands International	ACCO Brands International	69.2		100.2		204.9		269.7		ACCO Brands International		64.8		88.8
Net sales	Net sales	$	444.1	$	505.7	$	1,195.1	$	1,418.3	Net sales		$	410.5	$	384.1

(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 September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)		2021		2020
Product and services transferred at a point in time	Product and services transferred at a point in time	$	431.1	$	489.8	$	1,150.3	$	1,370.4	Product and services transferred at a point in time		$	395.7	$	363.6
Product and services transferred over time	Product and services transferred over time	13.0		15.9		44.8		47.9		Product and services transferred over time		14.8		20.5
Net sales	Net sales	$	444.1	$	505.7	$	1,195.1	$	1,418.3	Net sales		$	410.5	$	384.1

ACCO Brands Corporation and Subsidiaries

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

17. Information on Business Segments

The Company has 3 operating business segments, each of which is comprised of different geographic regions. The Company's 3 segments are as follows:

Operating Segment

Geography

Primary Brands

Primary Products

ACCO Brands North America

United States and Canada

PowerA®, Five Star®, Kensington®, AT-A-GLANCE®, Quartet®, ~~AT-A-GLANCE~~Swingline®, GBC®, ~~Swingline~~®~~, Kensington~~®, Mead®, ~~and~~ Hilroy®

~~School notebooks,~~Gaming and computer accessories, school products, planners, storage and organization (3-ring binders), dry erase boards, ~~storage and organization products (3-ring binders), stapling, punching,~~ laminating, binding, ~~products,~~stapling and ~~computer accessories~~punching products

ACCO Brands EMEA

Europe, Middle East and Africa

Leitz®, Rapid®, Esselte®, Kensington®, Rexel® GBC®, PowerA®, NOBO®, ~~and~~ Derwent®

Storage and organization products (lever-arch binders, sheet protectors, indexes), computer and gaming accessories, laminating, shredding, stapling, punching, ~~laminating, shredding,~~ do-it-yourself tools, dry erase boards and writing instruments ~~and computer accessories~~

ACCO Brands International

Australia/N.Z., Latin America and Asia-Pacific

Tilibra®, Foroni®, GBC®, Barrilito®~~, Foroni~~®, Marbig®, Kensington®, Artline®**, ~~Wilson Jones~~®,~~Quartet~~PowerA®, Spirax®, ~~and~~Quartet®, Wilson Jones®, Rexel®

*Australia/N.Z. only

School notebooks, ~~planners, dry erase boards,~~laminating, shredding, storage and organization products (binders, sheet protectors and indexes), ~~stapling, punching, laminating, shredding,~~ writing ~~instruments,~~and arts products, janitorial supplies, dry erase boards, and ~~computer accessories~~stapling and punching products

Each business segment designs, markets, sources, manufactures, and sells recognized consumer, technology and other end-user ~~demanded branded~~ products used in businesses, schools, and homes. Product designs are tailored to end-user preferences in each geographic region, and where possible, leverage common engineering, design, and sourcing.

Our product categories include gaming and computer accessories; storage and organization; ~~stapling; punching;~~notebooks; laminating, shredding, and binding machines; calendars; stapling; punching; dry erase boards; ~~notebooks; calendars; computer accessories;~~ and do-it-yourself tools, among others. Our portfolio includes both globally and regionally recognized brands. The revenue in North America and International segments includes significant sales of consumer products that have very important, seasonal selling periods related to back-to-school and calendar year-end. For North America and Mexico, back-to-school straddles the second and third quarters, and for the Southern Hemisphere it takes place in the fourth and first quarter. We expect sales of consumer products to become a greater percentage of our revenue because demand for consumer back-to-school products is growing faster than demand for most business-related and calendar products.

Customers

We distribute our products through a wide variety of retail and commercial channels to ensure that ~~they~~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;~~retailers, e-tailers, discount, drug/grocery and variety ~~chains;~~chains, warehouse ~~clubs;~~clubs, hardware and specialty ~~stores;~~stores, independent office product ~~dealers;~~dealers, office ~~superstores; wholesalers;~~superstores, wholesalers, contract stationers, and ~~contract stationers.~~specialist technology businesses. We also sell directly to commercial and consumer end-users through ~~our~~ e-commerce sites and our direct sales organization.

Net sales by reportable business segment for the three months ended March 31, 2021 and 2020 were as follows:


	Three Months Ended March 31,
(in millions)		2021		2020
ACCO Brands North America		$	188.8	$	167.8
ACCO Brands EMEA		156.9		127.5
ACCO Brands International		64.8		88.8
Net sales		$	410.5	$	384.1

ACCO Brands Corporation and Subsidiaries

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

~~Net sales~~Operating income (loss) by business segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019 were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020 2019 2020 2019
ACCO Brands North America $ 238.5 $ 272.4 $ 638.0 $ 740.7
ACCO Brands EMEA 136.4 133.1 352.2 407.9
ACCO Brands International 69.2 100.2 204.9 269.7
Net sales $ 444.1 $ 505.7 $ 1,195.1 $ 1,418.3

~~Operating income by business segment for the three and nine months ended September 30, 2020 and 2019~~ was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)		2021		2020
ACCO Brands North America	ACCO Brands North America	$	22.9	$	33.7	$	67.9	$	101.1	ACCO Brands North America		$	(0.7)	$	7.6
ACCO Brands EMEA	ACCO Brands EMEA	16.7		13.8		26.9		37.1		ACCO Brands EMEA		16.8		12.0
ACCO Brands International	ACCO Brands International	3.7		10.8		5.2		20.5		ACCO Brands International		0.6		5.9
Segment operating income	Segment operating income	43.3		58.3		100.0		158.7		Segment operating income		16.7		25.5
Change in fair value of contingent consideration										Change in fair value of contingent consideration		(6.7)		0
Corporate	Corporate	(9.0)		(9.5)		(29.8)		(30.6)		Corporate		(11.1)		(8.1)
Operating income(1)		34.3		48.8		70.2		128.1
Operating (loss) income(1)										Operating (loss) income(1)		(1.1)		17.4
Interest expense	Interest expense	10.2		11.5		28.7		33.6		Interest expense		13.2		8.6
Interest income	Interest income	(0.2)		(0.7)		(0.8)		(2.9)		Interest income		(0.1)		(0.3)

Non-operating pension income	Non-operating pension income	(1.4)		(1.3)		(4.4)		(4.1)		Non-operating pension income		(0.8)		(1.5)
Other expense (income), net	Other expense (income), net	0.1		(0.9)		0.8		0.1		Other expense (income), net		12.9		(0.5)
Income before income tax		$	25.6	$	40.2	$	45.9	$	101.4
(Loss) income before income tax										(Loss) income before income tax		$	(26.3)	$	11.1

(1)Operating income (loss) as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less selling, general and administrative expenses; iv) less amortization of intangibles; ~~and~~ v) less restructuring ~~charges.~~charges; and vi) less change in the fair value of contingent consideration.

18. Commitments and Contingencies

Pending Litigation - Brazil Tax 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. For further information, see "Note 11. Income Taxes - Brazil Tax Assessments" for details on tax assessments issued by the FRD against Tilibra 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.

Brazil Tax Credits

In March 2017, the Supreme Court of Brazil ruled against the Brazilian tax authority in a leading case related to the computation of certain indirect taxes. The Supreme Court ruled that the indirect tax base should not include a value-added tax known as "ICMS." The Supreme Court decision, in principle, affects all applicable judicial proceedings in progress, and reduces future indirect taxes on our Brazilian subsidiary, Tilibra. However, the Brazilian tax authority has filed an appeal seeking clarification of certain matters, including the amount by which taxpayers would be entitled to reduce their indirect tax base (i.e. the gross ICMS collected or the net ICMS paid). The appeal also requests a modulation of the decision’s effects, which may limit its retrospective impact on taxpayers, including Tilibra.

Tilibra has paid and continues to pay these indirect taxes on a tax base which includes the gross ICMS collected. It has also filed legal actions in Brazil to request reimbursement of these excess tax payments by way of future credits ("Tax Credits") and for permission to exclude the gross ICMS collected from the tax base in future periods. Tilibra’s legal actions cover various

~~ACCO Brands Corporation and Subsidiaries~~

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

time periods and some have been finally decided in a court of law in favor of Tilibra, while others are still pending a final decision.

Due to the uncertainties associated with the scope of the application of the Brazilian Supreme Court’s ruling, taking into account the Brazilian tax authority’s appeal and request for modulation, the Company has and will recognize income only for the amount of Tax Credits actually monetized, which will occur when Tilibra receives a cash flow benefit from applying the Tax Credits against various taxes payable in Brazil. The benefit of the Tax Credits realized by the Company has and will be recorded in the Consolidated Statements of ~~Income~~Operations in the line item "Other expense (income), net."

ACCO Brands Corporation and Subsidiaries

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

Tilibra received final decisions for Tax Credits in the amount of $4.3 million, of which $3.3 million was offset against Brazilian taxes in the fourth quarter of 2019, with the balance used during the first quarter of 2020. This amount of Tax Credits assumes that only the net amount of ICMS paid can be excluded from the tax base. The total value of these Tax Credits was recorded as a gain in Tilibra’s local statutory accounts during the third quarter of 2019, resulting in Brazilian federal taxes payable of approximately $1.6 million.

Final decisions in the remaining legal actions Tilibra has filed may result in additional Tax Credits that could be monetized in future periods. Further, a favorable decision in the leading case by the Brazilian Supreme Court on the methodology to compute the Tax Credits (i.e. gross ICMS collected) would result in additional Tax Credits being available to Tilibra. The amount of these additional Tax Credits may be material.

Foroni, in years prior to the acquisition, also filed legal actions in Brazil to recover these excess indirect tax payments; however, all of Foroni's claims are still pending a final decision. In the event any Tax Credits are recovered on behalf of Foroni, we are required under the quota purchase agreement to remit such recovery to the former owners of Foroni on a net income tax paid basis, and therefore will not recognize any benefit in the Consolidated Statements of ~~Income.~~Operations.

Other Pending Litigation

We are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement, 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 Brazil Tax 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~~19. Subsequent Events

The Company completed the acquisition of Franken Planungs- und Organisationsmittel GmbH (“Franken”) on April 1, 2021, for approximately $4.0 million. Franken is a provider of visual communication products, boards, planning, creative and regulations concerning the discharge of materials into the environment and the handling, disposal and clean-up of waste materials and other items relating to the protection of the environment. This includes environmental laws and regulationstraining products. Franken is a German company 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 undertakewill be included 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.

Company’s EMEA reporting unit.

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 ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ 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 designs, markets, and manufactures well-recognized consumer, school, technology and office products. Our widely known brands include AT-A-GLANCE®, Barrilito®, Derwent®, Esselte®, Five Star®, Foroni®, GBC®, Hilroy®, Kensington®, Leitz®, Marbig®, Mead®, NOBO®, PowerA®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra®, TruSens® and Wilson Jones®. Approximately 75 percent of our ~~net~~ sales come from brands that occupy the No. 1 or No. 2 position in the product categories in which we compete. Our top 12 brands represented $1.3 billion of our 2020 net sales. 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;~~retailers, e-tailers, discount, drug/grocery and variety chains; warehouse clubs; hardware and specialty stores; independent office product dealers; office superstores; wholesalers; contract stationers, technology specialty businesses, and ~~contract stationers.~~our direct-to-consumer channel. Our products are sold primarily in the U.S., Europe, Brazil, Australia, Canada, and Mexico. For the year ended December 31, ~~2019,~~2020, approximately 4344 percent of our net sales were in the U.S.

ACCO Brands is in the midst of a substantial transformation of its business. Today we are a global enterprise focused on developing innovative branded consumer and technology products for use in businesses, schools, and homes. Sales in the commercial channels have been declining for several years, and customers within the channel have been consolidating. Therefore, we have refocused our business to sell more in the mass merchant, e-commerce and technology channels to increase growth and profitability and to reduce reliance on declining customers and commoditized product categories. The commercial channel was also significantly impacted by COVID-19 in 2020. As a result of both of these factors, our top five customers represented 34 percent of our sales in 2020, compared with 43 percent in 2016.

We have been strategically transforming our business to be more consumer- and brand-centric, product differentiated, and geographically diverse. We are successfully achieving this transformation through both organic initiatives and acquisitions. Organically, we have grown our Kensington® computer accessories offerings and entered the wellness category with TruSens® branded air purifiers, which we plan to expand over the next few years. ACCO remains a leading supplier of school products, including our top-selling Five Star® line of school notebooks, laminating machines, and stapling and punching products, among others. We have refreshed most of our line of shredders in EMEA over the past three years, improving consumer designs. This refresh includes a new line of personal shredders to capitalize on the work-from-home environment. Shredder sales have remained strong, and we plan to leverage our platforms globally. During 2020, EMEA also launched organization and storage products for home offices under the Leitz® WOW and Leitz® Cosy brands.

Our approach to acquisitions has been focused on consolidation, geographic expansion, and adjacency opportunities that meet our strategic and financial criteria. Strategically, we are focusing on categories or geographies that provide opportunities for growth, leading brands, and channel diversity. We have made five acquisitions over the past five years. These acquisitions have meaningfully expanded our portfolio of well-known brands, enhanced our competitive position from both a product and channel perspective, and added scale to our operations. As a result, our foreign businesses contributed over half of our sales in 2020, up from 43 percent in 2016.

Our most recent acquisition of PowerA (the "PowerA Acquisition") in late 2020 is about accelerating growth and entering into an attractive consumer product adjacency of third-party video game controllers, power charging stations, and headsets. The addition of PowerA will meaningfully improve our organic sales growth and profitability and increase our presence in faster growing mass and e-commerce channels. PowerA is expected to provide strong double-digit sales growth in the U.S., as well as opportunities for expansion internationally, particularly in Europe. It greatly advances our strategic shift toward consumer, school and technology products as more than half of our sales will now come from these product categories, which offer faster growing demand. On a pro forma basis, including full year PowerA sales of $210 million for 2020, gaming and computer products would represent approximately 22 percent of our sales.

Our leading product category positions provide the scale to invest in marketing and product innovation to drive profitable growth. ~~Over the long term, we~~We now expect to ~~derive much of our growth from~~grow in mature markets in consumer, technology, and adjacent categories driven by new product development. We will also continue to grow in emerging markets ~~such as~~once the impact of COVID-19 subsides in Latin America and parts of Asia, the Middle East, and Eastern Europe. In all of our markets, we see opportunities for sales growth through share gains, channel and geographic expansion, and product enhancements.

Our strategy is to grow our global portfolio of consumer brands, offer more innovative products, increase our presence in faster growing geographies and channels, and diversify our customer base. We plan to supplement organic growth with strategic acquisitions in both existing and adjacent product categories. We generate strong operating cash flow, and will continue to leverage our cost structure through acquisitions, synergies and productivity savings to drive long-term profit ~~improvement.~~

~~In support of these strategic imperatives, we have been transforming our business by acquiring companies with consumer~~ and other end-user demanded brands, diversifying our distribution channels and increasing our global presence. These acquisitions have meaningfully expanded our portfolio of well-known brands, enhanced our competitive position from both a product and channel perspective, and added scale to our operations. Today ACCO Brands is a global enterprise focused on developing innovative, branded consumer products for use in businesses, schools, and homes.operating cash flow improvement.

Overview of Performance

Our first quarter results were significantly impacted by our acquisition of PowerA that occurred in December 2020. PowerA added $62.7 million to sales and contributed an operating loss of $0.1 million, primarily due to a charge of $6.7 million related to the change in fair value of the contingent consideration that was part of the purchase price for PowerA ("PowerA Earnout"), $4.1 million of additional amortization, and $2.4 million of inventory step-up charges also resulting from the acquisition. In addition, the purchase of PowerA significantly increased our interest expense as we borrowed the majority of the purchase price.

During the quarter we also refinanced both our bonds and our bank debt. The benefits achieved by the refinancing are to substantially extend the term of our debt, reduced interest rates, and improved liquidity by structuring our purchase of PowerA with appropriate levels of short- and long-term debt. "Other expense (income), net" in the "Consolidated Statements of Operations" includes charges associated with both the call premium for refinancing our bonds and to write off debt issuance costs associated with amending our bank debt.

Higher logistics expenses increasingly impacted 2020 results and are continuing to affect 2021 performance. Costs of our raw materials and those used by our suppliers are also rising. We have already received and anticipate that we will experience additional cost increases from our suppliers of raw materials and finished goods, necessitating an increase in our selling prices as the year progresses.

The business continues to be impacted by lower demand for our products primarily due to lower occupancy of offices and schools worldwide. The first quarter of 2021 is also the last quarter in which COVID-19-impacted results were compared against a prior period that was not as significantly impacted by COVID-19.

The COVID-19 impacts on our business have varied and continue to vary significantly by geographic region and country depending upon a range of factors, including how seriously the pandemic is affecting public health in the country, the progress of mass vaccinations, whether and to what degree businesses and schools are open, the general seasonality and channel structure of our business in that country, and the nature and level of government support. While all segments have been impacted by COVID-19, EMEA, which experienced the earliest significant adverse impacts at the end of March 2020, is now seeing lower impacts. Our International segment experienced and continues to experience the highest impacts, largely in Latin America due to the seriousness of the pandemic and the dependence of our Brazilian and Mexican businesses on the sale of school products. Many schools and offices in Latin America have been closed since the onset of the pandemic and access to online learning is limited. In North America, as the quarter progressed, we saw demand for back-to-school items increase at retail as many more schools are now fully open for in-person education. That demand increase bodes well for reducing the inventory overhang that retailers hold because of school closures in 2020.

As used in this Quarterly Report on Form 10-Q, "COVID-19 impacts" include the operational, financial, and other effects on ACCO Brands, its customers and end users of its products, of school and business closures, work from home, remote and hybrid learning, government orders and manufacturing, distribution and supply chain and other disruptions resulting from COVID-19 and the actions ACCO Brands, its customers and end users have taken in response to the pandemic, including actions we have taken to manage our inventory and credit risk under the circumstances.

The COVID-19 impacts on our business have varied and continue to vary significantly by geographic region and country depending upon a range of factors, including how seriously the pandemic is affecting public health in the country and whether and to what degree businesses and schools are open, the general seasonality of our business in that country, the nature and level of government support, and the channel structure. During the third quarter, all segments were impacted by COVID-19, but EMEA experienced lower impacts and our International segment experienced, and continues to experience, the highest impacts, largely in Latin America due to the seriousness of the pandemic and the dependence of our Brazilian and Mexican businesses on the sale of school products. In North America, following good sell-in of back-to-school products in the second quarter, our third quarter sales were adversely affected by weaker sell through as many school districts chose to delay or not issue school purchase lists that normally drive back-to-school consumer demand.

Our third quarter net sales declined $61.6 million, or 12.2 percent primarily from COVID-19 impacts. Operating income declined 29.7 percent, primarily due to the lower sales, partially offset by company-wide cost reductions and government assistance in certain countries, generally in return for maintaining employment, pay and benefits. Foreign exchange had a

3132

~~minimal~~Our first quarter net sales increased by 6.9 percent to $410.5 million, primarily from the acquisition of PowerA. Excluding PowerA, sales decreased 9.5 percent as a result of reduced demand related to COVID-19 impacts, which varied by channel as depicted in the table below.


Channel	Change vs. Q1 2020
Commercial/B2B	(18)	%
Retail/Mass	(7)	%
E-tail/D2C	28	%
Tech specialist	6	%
Total sales (excluding PowerA)*	(10)	%
*Numbers may not add due to rounding

The Company recorded an operating loss of $1.1 million, which includes the impact of a $6.7 million charge related to the PowerA Earnout and amortization and restructuring charges, which rose $7.2 million ($3.6 million each). Foreign exchange had a favorable impact on sales ~~as the Euro, British pound,~~ and ~~Australian dollar moved favorably, while Latin American currencies deteriorated.~~operating profit. From a ~~profit~~net income perspective, foreign exchange ~~provided a $1 million benefit.~~was favorable by $1.3 million.

Operating cash ~~inflow~~outflow for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, was ~~$21.8~~$42.4 million, compared with ~~last year's~~ operating cash ~~inflow~~outflow of ~~$75.1 million.~~$25.2 million for the three months ended March 31, 2020. The ~~$53.3~~$17.2 million year-over-year ~~difference~~increase was to rebuild PowerA's working capital since we did not purchase accounts receivable and accounts payable in the transaction at closing. During the quarter, we received $18.2 million from the seller due to ~~lower net income~~having delivered less working capital than required in the acquisition agreement, which was accounted for as a reduction in purchase price.

In March 2021, we issued $575.0 million in 4.25% Senior Notes due March 2029 (the "New Notes") and ~~more cash used~~redeemed $375.0 million in 5.25% Senior Notes due May 2024 (the "Prior Notes"). The proceeds from the New Notes were applied towards the redemption of the Prior Notes and to reduce the level of our revolver borrowing by approximately $178.0 million. We had temporarily increased our revolver as part of the financing for ~~working capital.~~the PowerA Acquisition. We also paid a $9.8 million call premium for early redemption of the Prior Notes and took a total $3.7 million charge to write off debt issuance costs for the bank debt and bond refinancing. As a result of refinancing our bank debt, we extended the maturities from 2024 to 2026. In addition, these refinancing actions reduced the interest rate on our bonds and our bank borrowings. For the remainder of 2021, we estimate the interest savings will be $5.2 million (assuming the current rates for LIBOR continue), compared with the expected interest expense for 2021 prior to refinancing the bond and bank debt.

COVID-19 Impact

COVID-19 and the actions being taken by national, state and local governments, businesses, schools and others to address it (including work from home, quarantines, travel restrictions, business and school closure, remote learning, and cancellations of, and limitations on, public gatherings) have caused and continue to cause significant disruptions to normal business operations and have had, and are expected to continue to have, significant adverse impacts on our customers and end-users worldwide. Similarly, our business, sales, earnings, and results of operations have been and will continue to be materially adversely affected by these events, as well as the current and expected continued negative impact on the global economy and uncertainties regarding when the risks of the pandemic will subside and how geographies, distribution channels and consumer behaviors will evolve over time in response to the pandemic.

Health and Safety of Our People

Our top priority is the health and safety of our employees and we continue to follow ~~all of~~ the modified operating procedures we implemented ~~earlier this year~~in 2020 to address their safety. We will continue to modify our operations based on local conditions and consistent with government mandates regarding employee health and ~~safety and make changes as appropriate.~~safety.

~~During~~Since the ~~third quarter,~~onset of the pandemic, most of our office and administrative employees continued to work from home, but many employees outside North America, particularly in EMEA and Australia, began returning to work in our offices. We have implemented modifications to our normal office procedures similar to those used at our plants and distribution facilities to protect the health and safety of our employees returning to our office locations.

~~Facilities and Supply Chain~~

During the first quarter, COVID-19 impacted our Chinese supply chain and we experienced some out-of-stocks and lost sales, but we began to see improvement early in the second quarter and we had no significant supply chain issues in meeting our back-to-school orders in North America during the second or third quarter. During the third quarter, we continued manufacturing and shipping at reduced levels based on lower demand in our North America and International segments.

We currently believe the most significant facilities and supply chain issues are behind us, but there can be no assurance that there will not be future disruptions (including closures) or a reemergence of facilities and supply chain impacts as a result of COVID-19.

Cost Reductions

To begin to address the financial impact of the pandemic on our results of operations, we ~~initially implemented~~effected a series of cost reductions, both temporary ~~cost-cutting initiatives~~and then more long term, that will continue to ~~better align~~impact our ~~cost structure with~~results and prior-period comparisons through 2021. Full salaries were restored in late 2020. In the ~~expected decline in 2020 sales. Effective July 1, 2020,~~first quarter of 2021, we ~~reinstated employee salaries, which had been reduced as one of~~restored management incentive programs and the ~~temporary measures taken in April and most employees have returned from temporary furloughs; however, we continued the postponement of most 2020 merit increases and suspension of~~ matching ~~contributions~~contribution for the U.S. ~~40l(k) plan~~401(k) plan. In addition, during the ~~third quarter. Likewise, actions~~first quarter of 2021, we took $3.9 million in restructuring charges to further reduce ~~discretionary spending and delay hiring and non-essential capital spending remain in effect and we continue to manage the number of employees working in~~long-term expenses. At March 31, 2021, our manufacturing and distribution facilities based upon demand. Finally, we have turned our attention to more permanent structural changes that are necessary in light of the anticipated longer-term impacts of COVID-19 on our business. Our worldwide headcount ~~is down~~decreased by approximately ~~700~~840 people, or 1012 percent, compared with ~~year end 2019. These cost reduction actions, when combined with our normal productivity savings, reduced costs approximately $20 million for the third quarter.~~March 31, 2020. We continue to evaluate the impact of COVID-19 on our business and expect to make additional structural changes and take associated restructuring ~~charges in future quarters.~~charges.

Where we qualify, we have taken full advantage of government assistance available to employers in the countries outside the U.S. ~~where we operate.~~ Most of this assistance is designed to encourage and enable companies to sustain employment, including pay and working conditions of employees, by providing cash benefits to employers. InDuring the ~~third~~ quarter, we received ~~$3.5 million~~$0.9 million in government assistance to offset the payroll and other costs of retaining our employees. This assistance was

~~accounted for~~ recorded on a cash-received ~~basis and, therefore, our third quarter includes government assistance we qualified for based on our second quarter results.~~basis. As the pandemic appears to be abating in some regions, these government assistance programs are being reduced or eliminated and there can be no assurance that government assistance programs will continue or that we will continue to meet the performance criteria to obtain benefits.

There can be no assurance that these cost-savings measures, and any additional cost-savings measures we may implement in the future, will be sufficient to offset the current and future adverse financial impacts of COVID-19 on our business, results of operation or financial condition.Working Capital

~~Liquidity, Capital Resources and Other Assets~~

We are in a strong financial position with $85.8 million cash on hand and $465.5 million available for borrowings under our $600 million committed revolving credit facility as of the end of the third quarter. During the second quarter of 2020, we amended our bank debt maintenance covenant increasing the ~~maximum consolidated leverage ratio from~~ 3.75x to 4.75x, stepping back down to 3.75x for the first quarter ending after June 30, 2021. This provides us with additional financial flexibility to cover the anticipated financial impact of COVID-19 should we need it. As of September 30, 2020, our ~~consolidated leverage ratio~~ ~~was~~ ~~3.45x.~~ ~~We have no debt maturities before May 2024.~~

Early in 2020, we announced that we do not intend to repurchase additional shares of our common stock during 2020. Our long-term strategy remains to deploy cash to fund dividends, reduce debt, make acquisitions and repurchase stock.

We are monitoring our working capital, including accounts receivable and inventory. We have and are continuing to experience an increased level of late payments and potential bad debts in ~~certain~~various geographies, but particularly Latin America, as our customers deal with the COVID-19 impacts on their businesses. ~~Our bad debt expense was $2.6 million higher in~~ In the ~~current~~first quarter, ~~than in the third quarter of 2019 and $6.3 million higher on a year-to-date basis~~inventory reserve charges were lower than the prior ~~year.~~year and bad debt reserves were only slightly higher than those recorded at December 31, 2020. We are actively managing our receivables and have restricted and will continue to restrict our own sales if necessary to mitigate our risk. ~~In addition, the drop in demand has increased the need to make additional provisions for slow moving inventory. In the third quarter, we had a $5.7 million charge for~~ inventory provisions, $0.5 million higher than the third quarter of 2019 and $4.8 million higher on a year-to-date basis than the prior year. We anticipate that these trends for increased bad debt and inventory provisions will continue.

We continue to monitor the significant global impact and uncertainty as a result of COVID-19 to assess the outlook for demand for our products and the effect on our business and our overall financial performance. Although the full impact of COVID-19 on demand remains uncertain, with impact varying significantly by geographic region, we remain committed to taking the actions necessary to protect our long-term financial performance expectations and position the Company for long-term growth. We expect the macroeconomic environment will recover in the medium to long-term. Gi~~ven our financial strength, we currently expect to be able to maintain adequate liquidity as we manage through the current environment.~~

Outlook

~~For~~There is great uncertainty as to how COVID-19 will impact our results for the ~~fourth~~second half of 2021. We are hopeful that as mass vaccinations continue to roll out, we will continue to see reduced impacts from COVID-19. Excluding PowerA, which will benefit each future quarter, we expect overall demand to improve relative to 2020 in all markets except for Latin America. For North America, we expect a softer sell-in of back-to-school products in the second quarter as the channel inventory at the end of last year was higher than normal. However, we anticipate that the sell-out of back-to-school products by our customers will increase as the year progresses and more children continue to return to in-person education. The pace and number of students returning to in-person education will determine how much of a stronger sell-out will occur in the second half. We also anticipate additional increases in our sales of commercial products as more employees return to some level of in-person office use, which we anticipate will steadily increase over time. For Latin America, while we anticipate some additional return to schools and offices in 2021, we believe that this will happen more gradually. We anticipate a continued improvement in comparable year-over-year seasonal demand that will vary by channel and geography, from the second quarter of 2021 into 2022.

Overall, we expect the Company to be in a stronger competitive position after the pandemic because of the return to in-person use of offices and schools, our strong brands, more diversified and healthier channels, investments in innovative products, solid financial position, and disciplined execution.

We are assessing likely changes to consumer behavior post pandemic and will continue to adjust our business ~~impacts~~and product strategy to align with evolving consumer preferences. These consumer changes will likely include: more purchases through online and convenience channels and less through specialty channels; more working, education, and playing at home; more awareness of physical and mental health issues and searching for ways to improve both; and more emphasis on local products and services.

These consumer behavior modifications are likely to lead us to: continue to develop and improve our direct to consumer capabilities; make additional investments in such product categories as video gaming, computer accessories, wellness, school, arts and crafts, and other products for working, education and playing from home; change colorways from office to home colors; and implement smaller pack sizes to facilitate efficient shipments of consumer-sized product quantities.

We expect that the pandemic will continue to materially and adversely affect our business, sales, and results of operations for some time and there is still great uncertainty regarding when the risks of the pandemic will subside and how geographies, distribution channels, and consumer behavior will evolve over time. We also expect COVID-19 impacts will continue to vary significantly by geographic region and country depending upon a range of factors, including how seriously the pandemic is affecting public health in the country, ~~and~~the progress of mass vaccinations, whether and to what degree businesses and schools are open, the general seasonality and channel structure of our business in that country, and the nature and level of government ~~support, and the channel structure. By way of example, our New Zealand~~ and Asia businesses are currently experiencing a lower impact from the pandemic. However, many parts of Europe are currently experiencing a second wave. Likewise, we expect our Latin American businesses to continue to be significantly and adversely impacted by COVID-19 during the fourth quarter and the early part of 2021.support.

While the level of overall orders improved across all of our segments during the third quarter versus the second quarter, there can be no assurance that this will continue, or that orders will not decline in the future. We have limited visibility for the fourth quarter and even less into 2021, but we expect overall demand to continue to be down relative to 2019, especially for commercial products and for back-to-school products in Brazil. For North America, commercial products represent a larger share of sales mix, and EMEA has historically also seen very strong commercial sales in the fourth quarter. There is great uncertainty as to how the recent increases in COVID-19 cases will impact potential sales outcomes for the balance of 2020 and beyond.

We expect that the pandemic will continue to materially and adversely affect our business, sales, and results of operations for some time, but we cannot reasonably estimate its financial impact beyond the fourth quarter at this time. We are also uncertain as to the magnitude of the longer-term impact on our results of operations, financial condition, liquidity, customers, consumers, suppliers, industry and employees. Even after the pandemic has subsided, we may experience materially adverse

3334

~~impacts on our business due to any resulting economic recession or depression, a change in the competitive landscape or changes in the behavior of customers, consumers and other end users.~~

Acquisitions

~~Indústria Gráfica Foroni Ltda.~~PowerA Acquisition

Effective ~~August 1, 2019,~~December 17, 2020, we completed the acquisition ~~(the "Foroni Acquisition")~~ of ~~Indústria Gráfica Foroni Ltda. ("Foroni"),~~PowerA, a leading provider of ~~Foroni® branded notebooks and paper-based school and office products~~third-party video gaming console accessories primarily in ~~Brazil.~~North America. The results of PowerA are included in all three of the Company's business segments effective December 17, 2020. The preliminary purchase price was ~~$41.5~~$321.8 million, ~~inclusive~~plus an additional earnout of ~~working capital adjustments. We also assumed $7.6~~up to $55.0 million in cash, contingent upon PowerA achieving one- and two- year sales and profit growth objectives, which has a fair value of ~~debt.~~$24.9 million as of March 31, 2021. The ~~Foroni~~PowerA Acquisition ~~advanced~~and related expenses were funded by cash on hand, as well as borrowings from our strategy to expand in faster growing geographies and product categories, add consumer-centric brands and diversify our customer base. The results of Foroni are included in the ACCO Brands International segment effective August 1, 2019.revolving credit facility.

For further information on the ~~Foroni~~PowerA Acquisition, see "Note 3. ~~Acquisitions"~~Acquisition" to the condensed consolidated financial statements contained in Item 1. of this Quarterly Report on Form 10-Q.

Operating Segments

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

Operating Segment

Geography

Primary Brands

Primary Products

ACCO Brands North America

United States and Canada

PowerA®, Five Star®, Kensington®, AT-A-GLANCE®, Quartet®, Swingline®, GBC®, Mead®, Hilroy®

Gaming and computer accessories, school products, planners, storage and organization (3-ring binders), dry erase boards, laminating, binding, stapling and punching products

ACCO Brands EMEA

Europe, Middle East and Africa

Leitz®, Rapid®, Esselte®, Kensington®, Rexel® GBC®, PowerA®, NOBO®, Derwent®

Storage and organization products (lever-arch binders, sheet protectors, indexes), computer and gaming accessories, laminating, shredding, stapling, punching, do-it-yourself tools, dry erase boards and writing instruments

ACCO Brands International

Australia/N.Z., Latin America and Asia-Pacific

Tilibra®, Foroni®, GBC®, Barrilito®, Marbig®, Kensington®, Artline®*, PowerA®, Spirax®, Quartet®, Wilson Jones®, Rexel®

*Australia/N.Z. only

School notebooks, laminating, shredding, storage and organization products (binders, sheet protectors and indexes), writing and arts products, janitorial supplies, dry erase boards, and stapling and punching products

Each business segment designs, markets, sources, manufactures, and sells recognized consumer, technology and other end-user products used in businesses, schools, and homes. Product designs are tailored to end-user preferences in each geographic region, and where possible, leverage common engineering, design, and sourcing.

Our product categories include gaming and computer accessories; storage and organization; notebooks; laminating, shredding, and binding machines; calendars; stapling; punching; dry erase boards; and do-it-yourself tools, among others. Our portfolio includes both globally and regionally recognized brands.

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 customers, 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, contract stationers, and specialist technology businesses. We also sell directly to commercial and consumer end-users through e-commerce sites and our direct sales organization.

Foreign Exchange Rates

Approximately 58.5 percent of our net sales for the three months ended March 31, 2021 were transacted in a currency other than the U.S. dollar. Additionally, we source approximately 60 percent of our products mainly from China, Vietnam and other Far Eastern countries using U.S. dollars. As a result, the sales, profitability and cash flow of our foreign operations which transact business in their local currency are affected by the fluctuation in foreign currency rates relative to the U.S. dollar.

The quarterly ~~and year-to-date~~ average foreign exchange rates for the currencies in most of our ~~major~~mature markets have ~~declined~~increased relative to the U.S. dollar from the ~~prior-year-to-date period, although~~prior period. In Latin America they are still significantly reduced versus the prior period. On balance, with many currencies ~~strengthened~~strengthening versus the U.S. dollar during the ~~third~~first quarter, as detailed ~~below:~~below, we experienced a benefit to the translation of both our foreign sales and profits.

2020 3rd QTR Average Versus 2019 3rd QTR Average
2020 YTD Average Versus 2019 YTD Average
Currency Increase/(Decline) Increase/(Decline)
Euro 5% —%
Brazilian real (26)% (23)%
Australian dollar 4% (3)%
Canadian dollar (1)% (2)%
Mexican peso (12)% (11)%
Swedish krona 8% —%
British pound 5% —%
Japanese yen 1% 1%


						2021 1st QTR Average Versus 2020 1st QTR Average
Currency						Increase/(Decline)
Euro						9%
Brazilian real						(19)%
Australian dollar						17%
Canadian dollar						6%
Mexican peso						(2)%
Swedish krona						15%
British pound						8%
Japanese yen						2%

Consolidated Results of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~


		Three Months Ended September 30,						Amount of Change					Nine Months Ended September 30,						Amount of Change						Three Months Ended March 31,	Amount of Change
(in millions, except per share data)	(in millions, except per share data)	2020			2019			$		%/pts			2020			2019			$		%/pts			(in millions, except per share data)		2021			2020(1)			$		%/pts
Net sales	Net sales	$	444.1		$	505.7		$	(61.6)	(12.2)	%		$	1,195.1		$	1,418.3		$	(223.2)	(15.7)	%		Net sales		$	410.5		$	384.1		$	26.4	6.9	%
Cost of products sold	Cost of products sold	317.0			349.8			(32.8)		(9.4)	%		845.8			970.8			(125.0)		(12.9)	%		Cost of products sold		295.0			271.9			23.1		8.5	%
Gross profit	Gross profit	127.1			155.9			(28.8)		(18.5)	%		349.3			447.5			(98.2)		(21.9)	%		Gross profit		115.5			112.2			3.3		2.9	%
Gross profit margin	Gross profit margin	28.6		%	30.8		%			(2.2)		pts	29.2		%	31.6		%			(2.4)		pts	Gross profit margin		28.1		%	29.2		%			(1.1)		pts
Selling, general and administrative expenses	Selling, general and administrative expenses	84.4			96.4			(12.0)		(12.4)	%		247.7			287.8			(40.1)		(13.9)	%		Selling, general and administrative expenses		94.0			86.1			7.9		9.2	%
SG&A % to net sales	SG&A % to net sales	19.0		%	19.1		%			(0.1)		pts	20.7		%	20.3		%			0.4		pts	SG&A % to net sales		22.9		%	22.4		%			0.5		pts
Amortization of intangibles	Amortization of intangibles	7.9			8.6			(0.7)		(8.1)	%		24.1			26.8			(2.7)		(10.1)	%		Amortization of intangibles		12.0			8.4			3.6		42.9	%
Restructuring charges	Restructuring charges	0.5			2.1			(1.6)		(76.2)	%		7.3			4.8			2.5		52.1	%		Restructuring charges		3.9			0.3			3.6		NM
Operating income		34.3			48.8			(14.5)		(29.7)	%		70.2			128.1			(57.9)		(45.2)	%
Operating income margin		7.7		%	9.6		%			(1.9)		pts	5.9		%	9.0		%			(3.1)		pts
Change in fair value of contingent consideration																								Change in fair value of contingent consideration		6.7			—			6.7		NM
Operating (loss) income																								Operating (loss) income		(1.1)			17.4			(18.5)		NM
Operating income (loss) margin																								Operating income (loss) margin		(0.3)		%	4.5		%			(4.8)		pts
Interest expense	Interest expense	10.2			11.5			(1.3)		(11.3)	%		28.7			33.6			(4.9)		(14.6)	%		Interest expense		13.2			8.6			4.6		53.5	%
Interest income	Interest income	(0.2)			(0.7)			(0.5)		(71.4)	%		(0.8)			(2.9)			(2.1)		(72.4)	%		Interest income		(0.1)			(0.3)			(0.2)		(66.7)	%

Non-operating pension income	Non-operating pension income	(1.4)			(1.3)			0.1		7.7	%		(4.4)			(4.1)			0.3		7.3	%		Non-operating pension income		(0.8)			(1.5)			(0.7)		(46.7)	%
Other expense (income), net	Other expense (income), net	0.1			(0.9)			1.0		NM			0.8			0.1			0.7		NM			Other expense (income), net		12.9			(0.5)			13.4		NM
Income before income tax		25.6			40.2			(14.6)		(36.3)	%		45.9			101.4			(55.5)		(54.7)	%
Income tax expense		6.8			12.2			(5.4)		(44.3)	%		13.7			38.1			(24.4)		(64.0)	%
(Loss) income before income tax																								(Loss) income before income tax		(26.3)			11.1			(37.4)		NM
Income tax (benefit) expense																								Income tax (benefit) expense		(5.9)			3.1			(9.0)		NM
Effective tax rate	Effective tax rate	26.6		%	30.3		%			(3.7)		pts	29.8		%	37.6		%			(7.8)		pts	Effective tax rate		22.4		%	27.9		%			(5.5)		pts
Net income		18.8			28.0			(9.2)		(32.9)	%		32.2			63.3			(31.1)		(49.1)	%
Net (loss) income																								Net (loss) income		(20.4)			8.0			(28.4)		NM
Weighted average number of diluted shares outstanding:	Weighted average number of diluted shares outstanding:	95.6			98.9			(3.3)		(3.3)	%		96.2			101.9			(5.7)		(5.6)	%		Weighted average number of diluted shares outstanding:		95.1			97.5			(2.4)		(2.5)	%
Diluted income per share		$	0.20		$	0.28		$	(0.08)	(28.6)	%		$	0.34		$	0.62		$	(0.28)	(45.2)	%
Diluted (loss) income per share																								Diluted (loss) income per share		$	(0.21)		$	0.08		$	(0.29)	NM
Comparable net sales	Comparable net sales	$	443.6		$	505.7		$	(62.1)	(12.3)	%		$	1,196.5		$	1,418.3		$	(221.8)	(15.6)	%		Comparable net sales		$	332.1		$	384.1		$	(52.0)	(13.5)	%

(1) The Company acquired PowerA effective December 17, 2020; the results of PowerA are included as of that date.

Net Sales

For the three months ended ~~September 30, 2020, n~~etMarch 31, 2021, net sales ~~decreased primarily~~increased due to the COVID-19 impacts. While these impacts were overall less severe than in the second quarter, our International segment experienced the most significant impact. The impact in our North America segment was more modest and even smaller in our EMEA segment. Adverse foreign exchange contributed $0.5 million, or 0.1PowerA Acquisition, which added $62.7 million. Excluding PowerA, sales declined 9.5 percent ~~to the decline.~~ ~~Net sales benefited from t~~he Foroni Acquisition with the additional one month contributing $1.0 million to net sales. Back-to-school sales in North America and Mexico declined because of low replenishment orders. Our commercial office product sales continued to exhibit the largest decline from COVID-19 impacts, partially offset by growth in Kensington® ~~computer accessories, TruSens~~® ~~air purifiers, Leitz~~® ~~shredders, and Derwent~~® ~~art supplies~~.

~~For the nine months ended September 30, 2020, net sales decreased primarily~~ due to lower demand ~~resulting~~ from COVID-19 impacts in ~~all three segments. Adverse~~the North America and International segments, primarily from office and school closures. Favorable foreign exchange was ~~$18.1~~$15.7 million, or ~~1.3 percent.~~ 4.1 percent~~Net sales benefited from the Foroni Acquisition with the additional seven months contributing $16.7 million.~~.

Cost of Products Sold

Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in manufacturing; procurement and distribution ~~process;~~processes; 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.

For the three months ended ~~September 30, 2020, f~~March 31, 2021, the PowerA Acquisition added $46.5 million, or 17.1 percent. Foreign exchange reduced cost of products sold ~~$0.8~~$10.2 million, or ~~0.2 percent, and the Foroni Acquisition added $1.0 million, or 0.3~~3.8 percent. Excluding ~~Foroni~~PowerA and foreign exchange, cost of products sold decreased, primarily due to lower comparable ~~net sales. Additional factors included cost reductions,~~sales, which were partly offset by higher costs. The higher costs resulted from inflation, particularly related to inbound freight, which was partially offset by ~~lower fixed~~ cost ~~absorption. We received $1.5~~reductions and $0.5 million in government assistance, primarily provided in return for maintaining employment and wages.

~~For the nine months ended September 30, 2020, foreign exchange reduced cost of products sold $13.6 million, or 1.4~~

percent, and the Foroni Acquisition added $15.7 million, or 1.6 percent. Excluding Foroni and foreign exchange, cost of products sold decreased, primarily due to lower comparable sales. Additional factors included cost reductions, partially offset by lower fixed cost absorption, and $4.8 million of additional reserves for slow moving and obsolete inventory. We received $3.0 million in government assistance, primarily provided in return for maintaining employment and wages.

Gross Profit

~~We believe that gross profit and gross profit margin provide enhanced shareholder understanding of our underlying operating profit drivers.~~

~~For the three months ended~~ ~~September 30, 2020, foreign exchange increased gross profit $0.3 million, or 0.2 percent. Excluding foreign exchange, gross profit decreased primarily due to lower comparable sales.~~

~~For the three months ended~~ September 30, 2020, gross profit as a percent of net sales decreased 220 basis points. Gross profit margin declined in the North America and International segments primarily due to an unfavorable customer and product mix, and lower fixed cost absorption.

For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, foreign exchange reduced gross profit ~~$4.5~~$5.5 million, or ~~1.0~~4.9 percent, and ~~the Foroni Acquisition added $1.0~~PowerA contributed $16.2 million, or ~~0.2~~14.4 percent. Excluding ~~Foroni~~PowerA and foreign exchange, gross profit decreased primarily due to lower comparable sales.

~~For the nine months ended September 30, 2020, gross~~Gross profit as a percent of net sales ~~decreased 240~~decreased 110 basis points. Gross profit margin declined, primarily in ~~all segments, primarily~~the North America segment, due to ~~an unfavorable customer and product mix, lower fixed cost absorption,~~PowerA inventory step up charges and higher ~~charges for slow moving and obsolete inventory.~~inflation as noted above.

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).

~~For~~In the ~~three months ended~~ first quarter~~September 30, 2020,~~, foreign exchange ~~reduced~~increased SG&A ~~$0.7~~$2.5 million, or ~~0.7~~2.9 percent, and ~~the Foroni Acquisition~~PowerA added ~~$0.3~~$5.5 million, or 0.3 percent. The current year includes $0.1 million of integration costs related to the Foroni Acquisition. Excluding Foroni, integration costs, and foreign exchange, SG&A declined due to cost reductions, partially offset by an accrual for pay restitutions to our employees and $2.6 million of increased bad debt expense. SG&A benefited from $2.0 million in government assistance, primarily provided in return for maintaining employment and wages.

~~For the three months ended~~ ~~September 30, 2020, SG&A as a percentage of net sales increased, primarily due to lower net sales, partially offset by lower SG&A expense.~~

~~For the nine months ended September 30, 2020, foreign exchange reduced SG&A $5.0 million, or 1.7~~6.4 percent, ~~and the Foroni Acquisition added $3.2 million, or 1.1 percent. The current-year period includes $0.8~~including $0.7 million of integration and transaction ~~costs related to the Foroni Acquisition. The~~costs. The prior-year period included ~~$1.9~~$0.3 million in integration costs related to prior acquisitions. Excluding ~~Foroni,~~PowerA, integration and transaction costs, and foreign exchange, SG&A ~~declined due to cost reductions, partially~~was flat, with $8.0 million higher incentive accruals largely offset by ~~$6.3~~cost reductions. We received $0.4 million ~~of increased bad debt expense. SG&A benefited from~~ in governm~~$4.5 million in government~~ent assistance, primarily provided in return for maintaining employment and wages.

~~For the nine months ended September 30, 2020,~~Excluding PowerA and foreign exchange, SG&A as a percentage of net sales increased, primarily due to flat SG&A expense and lower ~~net~~ sales.

Restructuring Charges

~~For~~Restructuring charges in the ~~three months ended September 30, 2020, restructuring~~quarter were $3.9 million. Costs associated with severance expense were $3.1 million, primarily in North America, but also in Brazil and the U.K. Lease abandonment charges were ~~$0.5~~$0.8 million ~~for severance expense~~related to facilities in North America and ~~International.~~Mexico.

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~~For the nine months ended September 30, 2020, r~~estructuring charges were $7.3 million. Costs associated with severance expense in North America were $5.0 million. The remainder of the severance charges were in Mexico, Brazil, EMEA and Australia. The prior-year charges related to severance costs associated with changes in the operating structure of our North America and International segments.

Operating (Loss) Income

~~For the three months ended~~ ~~September 30, 2020,~~ The quarter had a slight operating ~~income decreased,~~loss, primarily due to ~~lower net sales from COVID-19 impacts,~~the $6.7 million expense related to the change in fair value of the PowerA Earnout recognized during the quarter, $3.6 million of higher amortization, $3.6 million of higher restructuring costs, and increased SG&A expense, which were partially offset by cost reductions. Foreign exchange benefited operating income ~~$1.0~~$2.6 million, or ~~2.0~~14.9 percent. ~~Foroni~~PowerA contributed a loss of ~~$1.5~~$0.1 million.

~~For the nine months ended September 30, 2020,~~ ~~operating income decreased, primarily due to lower net sales from COVID-19 impacts, which were partially offset by cost reductions. Foreign exchange benefited operating income $1.0 million, or 0.8 percent. Foroni contributed a loss of $3.9 million.~~

Interest Expense and Income

~~For both the three and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020, the decrease~~The increase in interest expense was primarily due to ~~lower~~higher average debt outstanding ~~and lower interest rates on our variable rate debt.~~due to the PowerA Acquisition. The decrease in interest income was primarily due to lower cash balances being held in Brazil.

Other Expense (Income), Net

The quarter included charges associated with the refinancing of the Prior Notes and the amendment of our bank debt. These charges consisted of a call premium of $9.8 million and a $3.7 million charge for the write-off of debt issuance costs.

Income Tax (Benefit) Expense

For the three months ended ~~September 30, 2020, the~~March 31, 2021, we recorded an income tax benefit of $5.9 million on a loss before taxes of $26.3 million, for an effective rate of 22.4 percent. The decrease in the effective ~~tax~~ rate inversus the three months ended March 31, 2020, was primarily driven by the loss ~~an accrual made~~before taxes of $26.3 million in the current quarter versus income of $11.1 million in the prior ~~year of $1.6 million of Brazilian income taxes on a contingent gain.~~year.

For the nine months ended September 30, 2020, the decrease in effective tax rate for the period was primarily due to an increase in reserves for uncertain tax positions in the prior year, Brazilian income taxes accrued on a contingent gain and a decrease in non-deductible interest in the current year.

For the ~~nine~~three months ended ~~September 30, 2019, the high~~March 31, 2020, we recorded an income tax expense of $3.1 million on income before taxes of $11.1 million, for an effective ~~tax~~ rate ~~for the prior-year period wa~~of s primarily due to the Company increasing its reserves for uncertain tax positions in connection with the Brazil Tax Assessments (see Brazil Tax Assessments below) in the amount of $5.6 million, the accrual of the previously mentioned $1.6 million of Brazilian income taxes on a contingent gain, and the recording of deferred state taxes on unremitted non-U.S. earnings in the amount of $0.8 million and other reserves related to various tax contingencies.

~~See "Note 11. Income Taxes -~~ 27.9 percent~~Brazil Tax Assessments" to the condensed consolidated financial statements contained in Item 1. of this report for additional details on the Brazil Tax Assessments.~~.

Net (Loss) Income/Diluted Income per Share

For the three months ended ~~September 30, 2020,~~March 31, 2021, net income decreased primarily due to lower operating ~~income.~~income and the increase in other expense due to the bond and bank debt refinancing. Foreign exchange increased net income ~~$0.9~~$1.3 million, or ~~3.2 percent. Diluted income per share benefited from fewer outstanding shares.~~

~~For the nine months ended September 30, 2019,~~ ~~net income decreased primarily due to lower operating income. Foreign exchange increased net income $0.9 million, or 1.4~~16.3 percent. Diluted income per share benefited from fewer outstanding shares.

Segment Net Sales and Operating (Loss) Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~

ACCO Brands North America

Three Months Ended September 30, Amount of Change Nine Months Ended September 30, Amount of Change
(in millions) 2020 2019 $ %/pts 2020 2019 $ %/pts
Net sales $ 238.5 $ 272.4 $ (33.9) (12.4) % $ 638.0 $ 740.7 $ (102.7) (13.9) %
Segment operating income(1)
22.9 33.7 (10.8) (32.0) % 67.9 101.1 (33.2) (32.8) %
Segment operating income margin 9.6 % 12.4 % (2.8) pts 10.6 % 13.6 % (3.0) pts
Comparable net sales $ 239.0 $ 272.4 $ (33.4) (12.2) % $ 639.3 $ 740.7 $ (101.4) (13.7) %


	Three Months Ended March 31,	Amount of Change
(in millions)		2021			2020			$		%/pts
Net sales		$	188.8		$	167.8		$	21.0	12.5	%
Segment operating (loss) income(1)		(0.7)			7.6			(8.3)		NM
Segment operating (loss) income margin		(0.4)		%	4.5		%			(4.9)		pts
Comparable net sales (Non-GAAP)(2)		$	136.3		$	167.8		$	(31.5)	(18.8)	%

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

(2) See reconciliation to GAAP, contained in Part II, Item 6. "Supplemental Non-GAAP Financial Measures."

~~For~~Net sales increased due to the ~~three months ended~~PowerA Acquisition, which added ~~September 30, 2020, n~~$51.5 million.~~et sales decreased primarily from~~ Excluding PowerA, we continued to experience lower demand due to COVID-19 ~~impacts. The segment saw very strong growth~~impacts, particularly in ~~sales of Kensington~~our comme® ~~computer accessories, which included its largest ever single contract shipment, more than doubling its sales in the quarter~~rcial product lines as many people continued to work from ~~last year. Sales of TruSens~~® ~~air purifiers and Derwent~~® art supplies also posted good growth. This was offset by a weak back-to-school sell-out as approximately 70 percent of students were partly or fully learning remotely, which caused customers and consumers to reduce purchases. We expect an elongated back-to-school season that will extend into the fourth quarter, as retailers continue to sell through a larger-than-normal inventory overhang. Excluding the growth in computer accessories, we continue to experience more significant sales reductions with our commercial and office superstore customers, and we expect this trend to continue. Sales to these customers collectively were down approximately 30 percent compared with the prior year while our sales to mass/retail/e-tail customers, which are heavily weighted to back to school, were only down approximately 11 percent relative to the prior year. Unfavorablehome. Favorable foreign exchange ~~reduced~~increased net sales ~~$0.5~~$1.0 million, or ~~0.2~~0.6 percent.

~~For the nine months ended September 30, 2020, net sales decreased primarily from lower demand due to COVID-19 impacts. The segment saw very good growth in Kensington~~® ~~and TruSens~~® branded products. Back-to-school sales for the second and third quarters combined were approximately 5 percent below 2019 primarily due to a reduction in the total back-to-school market. In addition, we reduced both our sales of private label products and sales to certain retailers. We have experienced the more severe COVID-19 impacts in our commercial product lines while sales to mass/retail/e-tail customers remained flat. Unfavorable foreign exchange reduced net sales $1.3 million, or 0.2 percent.

~~For the three months ended~~ ~~September 30, 2020, operating~~Operating income and operating margin decreased, primarily due to ~~lower sales~~$3.4 million of increased amortization, $2.4 million of inventory step-up charges related to ~~COVID-19 impacts~~the PowerA Acquisition and ~~unfavorable customer~~$3.0 million of restructuring charges. Also contributing to the decline were cost increases, particularly in freight costs, and ~~product mix. Partially offsetting these factors~~ higher incentive accruals, which were partially offset by cost reductions and lower charges for obsolete inventory. We received $0.4 million in Canadian government assistance, primarily provided in return for maintaining employment and wages.

~~For~~ PowerA contributed $2.8 million, including the ~~nine months ended September 30, 2020, o~~amortization charge noted above.perating income and operating margin decreased primarily due to lower sales related to COVID-19 impacts, unfavorable customer and product mix, lower fixed cost absorption and increased reserves for slow moving and obsolete inventory. Restructuring charges were $5.3 million versus $1.5 million in the prior year. Partially offsetting these factors ~~were cost reductions, and~~ ~~$1.6 million in Canadian government assistance,~~ ~~primarily provided in return for maintaining employment and wages~~.

ACCO Brands EMEA


		Three Months Ended September 30,						Amount of Change					Nine Months Ended September 30,						Amount of Change						Three Months Ended March 31,						Amount of Change
(in millions)	(in millions)	2020			2019			$		%/pts			2020			2019			$		%/pts			(in millions)	2021			2020			$		%/pts
Net sales	Net sales	$	136.4		$	133.1		$	3.3	2.5	%		$	352.2		$	407.9		$	(55.7)	(13.7)	%		Net sales	$	156.9		$	127.5		$	29.4	23.1	%
Segment operating income(1)	Segment operating income(1)	16.7			13.8			$	2.9	21.0	%		26.9			37.1			$	(10.2)	(27.5)	%		Segment operating income(1)	16.8			12.0			4.8		40.0	%
Segment operating income margin	Segment operating income margin	12.2		%	10.4		%			1.8		pts	7.6		%	9.1		%			(1.5)		pts	Segment operating income margin	10.7		%	9.4		%			1.3		pts
Comparable net sales		$	130.3		$	133.1		$	(2.8)	(2.1)	%		$	352.5		$	407.9		$	(55.4)	(13.6)	%
Comparable net sales (Non-GAAP)(2)																								Comparable net sales (Non-GAAP)(2)	136.1			127.5			$	8.6	6.8	%

~~For the three months ended~~ ~~September 30, 2020, n~~etNet sales increased ~~due to favorable~~primarily because of favorable foreign exchange of ~~$6.1~~$12.2 million, or ~~4.6 percent.~~9.6 percent, and the PowerA Acquisition which added $8.6 million. Comparable sales ~~declined 2.1 percent~~increased primarily from higher demand for air purifiers, do-it-yourself tools, computer accessories, home-use filing items, shredders, and art products. These increases more than offset lower demand ~~related to COVID-19 impacts. These impacts were largely offset by growth in sales of Leitz~~® ~~personal shredders, TruSens~~® air purifiers, DIY tools, and computer accessories. EMEA experienced a much stronger level of demand in the third quarter compared with the second quarter as many COVID-19 restrictions were lifted and commercial businesses and consumers were less adversely impacted. Given the recent resurgence of the COVID-19 pandemic throughout Europe, there can be no assurance this demand will continue in the fourth quarter.

~~For the nine months ended September 30, 2020, net sales and comparable sales decreased primarily from lower demand~~for traditional office products due to COVID-19 impacts. ~~Unfavorable foreign exchange reduced net sales $0.3 million, or 0.1 percent.~~

~~For the three months ended~~ ~~September 30, 2020,~~ operating income and margin improved primarily from a higher gross margin (50 basis points) and lower SG&A costs (100 basis points), as well as $0.3 million of lower restructuring charges. EMEA received ~~$1.2 million~~We took share in ~~governments' assistance,~~ ~~primarily provided in return for maintaining employment and wages~~. ~~Foreign exchange increased operating income $0.7 million, or 5.1 percent.~~many office product categories.

~~For the nine months ended September 30, 2020, operating~~Operating income and operating margin ~~declined~~increased primarily due to ~~lower~~higher sales, ~~from COVID-19 impacts, lower fixed cost absorption,~~which offset higher incentive costs and ~~higher bad debt expense. Partially offsetting these factors~~inflation, particularly related to inbound freight. ~~were cost reductions and $2.7 million in governments' assistance, primarily provided in return for maintaining employment and wages.~~ Foreign exchange ~~increased~~ benefited operating income ~~$0.6~~$1.6 million, or ~~1.6 percent.~~13.3 percent and PowerA contributed $2.6 million.

ACCO Brands International


		Three Months Ended September 30,						Amount of Change					Nine Months Ended September 30,						Amount of Change						Three Months Ended March 31,						Amount of Change
(in millions)	(in millions)	2020			2019			$		%/pts			2020			2019			$		%/pts			(in millions)	2021			2020			$		%/pts
Net sales	Net sales	$	69.2		$	100.2		$	(31.0)	(30.9)	%		$	204.9		$	269.7		$	(64.8)	(24.0)	%		Net sales	$	64.8		$	88.8		$	(24.0)	(27.0)	%
Segment operating income(1)	Segment operating income(1)	3.7			10.8			$	(7.1)	(65.7)	%		5.2			20.5			$	(15.3)	(74.6)	%		Segment operating income(1)	0.6			5.9			(5.3)		(89.8)	%
Segment operating income margin	Segment operating income margin	5.3		%	10.8		%			(5.5)		pts	2.5		%	7.6		%			(5.1)		pts	Segment operating income margin	0.9		%	6.6		%			(5.7)		pts
Comparable net sales		$74.3			$	100.2		$	(25.9)	(25.8)	%		$204.7			$	269.7		$	(65.0)	(24.1)	%
Comparable net sales (Non-GAAP)(2)																								Comparable net sales (Non-GAAP)(2)	$	59.7		88.8			$	(29.1)	(32.7)	%

~~For the three months ended~~ ~~September 30, 2020, n~~et sales decreased primarily as a result of lower demand due to COVID-19 impacts, which were felt in all markets, but most severely in Mexico, Brazil, and Chile (representing 70 percent of the segment decline). Outside of Latin America, the largest impact on demand was from the lockdown in the state of Victoria, Australia. Net ~~sales benefited from t~~he Foroni Acquisition with the additional one month contributing $1.0 million to net sales. Unfavorable foreign exchange was $6.1 million, or 6.1 percent. Excluding Foroni and foreign exchange, comparable sales decreased $25.9 million, or 25.8 percent, primarily due to lower demand from COVID-19 impacts.

~~For the nine months ended September 30, 2020, net~~ sales and comparable sales decreased primarily as a result of lower demand related to COVID-19 ~~impacts.~~impacts that most significantly occurred in Brazil and Mexico where schools and many offices remain closed. The PowerA Acquisition contributed ~~Net sales benefited from t~~$2.6 million and favor~~he Foroni Acquisition with the additional seven months contributing $16.7~~able foreign exchange added $2.5 million, or ~~6.2 percent, which was largely offset by unfavorable foreign exchange of $16.5 million, or 6.1~~2.8 percent.

~~For~~Operating income was down significantly, primarily from lower sales, fixed expenses, higher bad debt reserves, and restructuring charges. These factors were partially offset by cost reductions. Foreign exchange increased operating income $0.8 million or 13.6 percent, and PowerA contributed $1.2 million.

Liquidity and Capital Resources

Our primary liquidity needs are to support our working capital requirements, service indebtedness and fund capital expenditures, dividends and acquisitions. Our principal sources of liquidity are cash flows from operating activities, cash and cash equivalents held and seasonal borrowings under our $600 million multi-currency revolving credit facility (the "Revolving Facility"). As of March 31, 2021, there was $218.9 million in borrowings outstanding under the Revolving Facility ($16.3 million reported in "Current portion of long-term debt" and $202.6 million reported in "Long-term debt, net"), we had $75.1 million in cash on hand, and the amount available for borrowings was $367.1 million (allowing for $14.0 million of letters of credit outstanding on that date). We maintain adequate financing arrangements at market rates.

Effective March 31, 2021, we amended our bank debt maintenance covenant increasing the maximum Consolidated Leverage Ratio for the fiscal quarter ending September 30, 2022 and thereafter to 4.00:1.00 from 3.75:1.00. As of March 31, 2021, our Consolidated Leverage Ratio was approximately 4.50 to 1.00 versus our maximum covenant of 5.25 to 1.00. We have no debt maturities before March 2026.

Given the debt incurred in connection with our acquisition of PowerA, our near-term use of cash will be to fund our dividend and reduce debt. As a result, we currently do not anticipate repurchasing shares of our common stock in 2021. Our long-term strategy remains to deploy cash to fund dividends, reduce debt, make acquisitions and repurchase stock.

The $628.1 million of debt currently outstanding under our senior secured credit facilities has a weighted average interest rate of 2.34 percent as of March 31, 2021, and $575.0 million outstanding principal amount of our New Notes have a fixed interest rate of 4.25 percent.

Adequacy of Liquidity Sources

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

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, 2021, the Company recorded $3.9 million in restructuring expenses primarily related to its cost reduction programs representing expected severance costs mainly in North America. Additional charges were also taken in Brazil, EMEA and Mexico. For additional details, see "Note 10. Restructuring" to the condensed consolidated financial statements contained in "Part I, Item 1. Financial Information" of this Quarterly Report on Form 10-Q.

~~September 30, 2020, foreign exchange increased operating~~

In addition, the Company recorded a $1.4 million pension curtailment loss charged against pension income ~~$0.3~~and an aggregate $0.7 million ~~or 2.8 percent. Operating income included a $1.5 million loss from Foroni. Excluding Foroni and foreign exchange,~~in non-restructuring integration expenses related to the ~~decrease in operating income was primarily driven by lower sales, adverse customer and product mix, higher bad debt expense, and lower~~integration of PowerA with ACCO Brands' operations.

3940

Cash Flow for the Three Months Ended March 31, 2021 and 2020

~~fixed cost absorption. Partially offsetting these factors~~

Cash Flow from Operating Activities

Cash used by operating activities during the three months ended March 31, 2021 was ~~were cost reductions~~$42.4 million, an increase in cash outflow of $17.2 million compared to cash used by operating activities of $25.2 million during the three months ended March 31, 2020. The $17.2 million increase in cash used from operating activities was primarily due to the increase in cash used to rebuild PowerA's working capital because we purchased PowerA without its outstanding accounts receivable or payable. The significant change was the result of a decrease in cash provided by net working capital of $49.3 million, which was partially offset by decreases in payments of customer incentives of $13.3 million driven by lower sales, lower annual employee incentive payments of approximately $7.6 million and ~~$1.9 million in government assistance,~~ ~~primarily provided in return~~less net cash used for ~~maintaining employment and wages. Restructuring charges in the quarter were $0.3 million versus $0.1 million in the prior year.~~paying accrued expenses, including income taxes.

~~For~~The table below shows our cash flow used or provided by accounts receivable, inventories and accounts payable for the ~~nine~~three months ended ~~September 30, 2020, f~~March 31, 2021 and 2020:


	Three Months Ended				Amount of Change
(in millions)	March 31, 2021		March 31, 2020
Accounts receivable	$	34.4	$	112.0	$	(77.6)
Inventories	(54.4)		(26.2)		(28.2)
Accounts payable	11.3		(45.2)		56.5
Cash flow (used) provided by net working capital	$	(8.7)	$	40.6	$	(49.3)

•~~oreign exchange increased operating income $0.6~~Accounts receivable was a source of cash of $34.4 million ~~or 2.9 percent. Foroni contributed~~during the three months ended March 31, 2021, an unfavorable change of $77.6 million compared to a ~~loss~~source of ~~$3.9 million. Excluding Foroni and foreign exchange, operating income decreased primarily from~~cash of $112.0 million during the first three months ended March 31, 2020. The $77.6 million unfavorable change was due to lower sales ~~lower fixed cost absorption~~available for collection and minimal collections related to Power A as we did not purchase the outstanding accounts receivable at closing.

•Inventories was a use of cash of $54.4 million during the three months ended March 31, 2021, an unfavorable change of $28.2 million when compared with the $26.2 million cash used during the three months ended March 31, 2020. The use of cash for inventory was higher ~~bad debt expense. Partially offsetting these factors~~ during the three months ended March 31, 2021, compared to the three months ended March 31, 2020, as a result of the Company increasing inventory during the quarter both to support the growth in PowerA and also due to supply chain disruptions related to international shipping and an extended Chinese New Year.

•~~were cost reductions~~Accounts payable was a source of cash of $11.3 million during the three months ended March 31, 2021, a favorable change of $56.5 million when compared to a use of cash of $45.2 million during the three months ended March 31, 2020. The source of cash for accounts payable was a result of the Company purchasing more inventory and ~~$3.2~~also not acquiring the outstanding accounts payable associated with PowerA at closing.

Cash Flow from Investing Activities

Cash provided by investing activities was $14.4 million and cash used by investing activities was $6.3 million for the three months ended March 31, 2021 and 2020, respectively. Cash used for capital expenditures was down $3.1 million primarily due to the completion of certain IT projects during 2020. Cash provided by acquisitions was an $18.2 million inflow in the first quarter of 2021 for the working capital adjustment received from the seller of PowerA due to having delivered less working capital than required in the acquisition agreement.

Cash Flow from Financing Activities

Cash provided by financing activities was $68.3 million for the three months ended March 31, 2021, a decrease of $30.9 million, compared with cash provided of $99.2 million by financing activities during the first three months of the prior year. The decrease of $30.9 million primarily relates to a reduction of cash used for share repurchases of $18.9 million in ~~government assistance,~~ ~~primarily~~2020 and a decrease in cash provided ~~in return~~by our incremental net borrowings of $31.5 million during the first three months of 2021, compared to the prior year’s first three months. In addition, there were cash outflows of $9.8 million related to the call premium on early redemption of our Prior Notes and $9.7 million for ~~maintaining employment~~payments of debt issuance costs associated with our bond and ~~wages. Restructuring charges were $1.5 million versus $1.2 million~~bank debt refinancing in the ~~prior year.~~quarter.

Credit Facilities and Notes Covenants

As of March 31, 2021, our Consolidated Leverage Ratio was approximately 4.50 to 1.00 versus our maximum covenant of 5.25 to 1.00.

Guarantees and Security

Generally, obligations under the 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.

Supplemental Non-GAAP Financial Measure

To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide investors with certain non-GAAP financial measures, including comparable net sales. Comparable net sales represent net sales excluding the impact of acquisitions and with current-period foreign operation sales translated at prior-year currency rates. We sometimes refer to comparable net sales as comparable sales.

We use comparable net sales both to explain our results to stockholders and the investment community and in the internal evaluation and management of our business. We believe comparable net sales provide management and investors with a more complete understanding of our underlying operational results and trends, facilitate meaningful period-to-period comparisons and enhance an overall understanding of our past and future financial performance. Comparable net sales should not be considered in isolation or as a substitute for, or superior to, the directly comparable GAAP financial measure and should be read in connection with the Company's financial statements presented in accordance with GAAP.

The following tables provide a reconciliation of GAAP net sales change as reported to non-GAAP comparable net sales change:

Comparable Net Sales - Three Months Ended September 30, 2020
Non-GAAP
GAAP Currency Comparable
(in millions) Net Sales Translation Acquisition Net Sales
ACCO Brands North America $238.5 $(0.5) $— $239.0
ACCO Brands EMEA 136.4 6.1 — 130.3
ACCO Brands International 69.2 (6.1) 1.0 74.3
Total $444.1 $(0.5) $1.0 $443.6
Amount of Change - Three Months Ended September 30, 2020 compared to the Three Months Ended September 30, 2019
$ Change - Net Sales
Non-GAAP
GAAP Comparable
Net Sales Currency Net Sales
(in millions) Change Translation Acquisition Change
ACCO Brands North America $(33.9) $(0.5) $— $(33.4)
ACCO Brands EMEA 3.3 6.1 — (2.8)
ACCO Brands International (31.0) (6.1) 1.0 (25.9)
Total $(61.6) $(0.5) $1.0 $(62.1)
% Change - Net Sales
Non-GAAP
GAAP Comparable
Net Sales Currency Net Sales
Change Translation Acquisition Change
ACCO Brands North America (12.4)% (0.2)% —% (12.2)%
ACCO Brands EMEA 2.5% 4.6% —% (2.1)%
ACCO Brands International (30.9)% (6.1)% 1.0% (25.8)%
Total (12.2)% (0.1)% 0.2% (12.3)%

Comparable Net Sales - Nine Months Ended September 30, 2020
Non-GAAP
GAAP Currency Comparable
(in millions) Net Sales Translation Acquisition Net Sales
ACCO Brands North America $638.0 $(1.3) $— $639.3
ACCO Brands EMEA 352.2 (0.3) — 352.5
ACCO Brands International 204.9 (16.5) 16.7 204.7
Total $1,195.1 $(18.1) $16.7 $1,196.5
Amount of Change - Nine Months Ended September 30, 2020 compared to the Nine Months Ended September 30, 2019
$ Change - Net Sales
Non-GAAP
GAAP Comparable
Net Sales Currency Net Sales
(in millions) Change Translation Acquisition Change
ACCO Brands North America $(102.7) $(1.3) $— $(101.4)
ACCO Brands EMEA (55.7) (0.3) — (55.4)
ACCO Brands International (64.8) (16.5) 16.7 (65.0)
Total $(223.2) $(18.1) $16.7 $(221.8)
% Change - Net Sales
Non-GAAP
GAAP Comparable
Net Sales Currency Net Sales
Change Translation Acquisition Change
ACCO Brands North America (13.9)% (0.2)% —% (13.7)%
ACCO Brands EMEA (13.7)% (0.1)% —% (13.6)%
ACCO Brands International (24.0)% (6.1)% 6.2% (24.1)%
Total (15.7)% (1.3)% 1.2% (15.6)%

~~Liquidity and Capital Resources~~

Our primary liquidity needs are to service indebtedness, fund capital expenditures, fund our acquisition strategy 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 $600 million multi-currency revolving credit facility (the "Revolving Facility"). As of September 30, 2020, there was $123.7 million in borrowings outstanding under the Revolving Facility ($5.2 million reported in "Current portion of long-term debt" and $118.5 million reported in "Long-term debt, net") and the amount available for borrowings was $465.5 million (allowing for $10.8 million of letters of credit outstanding on that date). We maintain adequate financing arrangements at market rates.

We are in a strong financial position with $85.8 million cash on hand and $465.5 million available for borrowings under our Revolving Facility as of the end of the third quarter of 2020. During the second quarter, we amended our bank debt maintenance covenant increasing the ~~maximum consolidated leverage ratio from~~ 3.75x to 4.75x, stepping back down to 3.75x for the first quarter ending after June 30, 2021. This will provide us additional financial flexibility to cover the anticipated financial impact of COVID-19 should we need it. As of September 30, 2020, our ~~consolidated leverage ratio~~ ~~was~~ ~~3.45x.~~ ~~We have no debt maturities before May 2024.~~

We are monitoring our working capital, including accounts receivable and inventory. We have and are continuing to experience an increased level of late payments and potential bad debts in certain geographies as our customers deal with the COVID-19 impacts on their businesses. Our bad debt expense was $2.6 million higher in the current quarter than in the third quarter of 2019 and $6.3 million higher on a year-to-date basis than the prior year. We are actively managing our receivables and have restricted and will continue to restrict our own sales if necessary to mitigate our risk. In addition, the drop in demand

~~has increased the need to make additional provisions for slow moving inventory. In the third quarter, we had a $5.7 million charge for~~ inventory provisions, $0.5 million higher than the third quarter of 2019 and $4.8 million higher on a year-to-date basis than the prior year. We anticipate that these trends for increased bad debt and inventory provisions will continue.

The $536.5 million of debt currently outstanding under our senior secured credit facilities has a weighted average interest rate of 2.41 percent as of September 30, 2020, and the $375.0 million outstanding principal amount of our senior unsecured notes (the "Senior Unsecured Notes") has a fixed interest rate of 5.25 percent.

Consolidated cash and cash equivalents were $85.8 million as of September 30, 2020, approximately $23 million of which was held in Brazil. Our Brazilian businesses is 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 make frequent cash transfers 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.

~~Adequacy of Liquidity Sources~~

~~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 and nine months ended September 30, 2020, the Company recorded $0.5 million and $7.3 million, respectively, in restructuring expenses primarily related to costs associated with cost reduction programs initiated during the second quarter of 2020, representing expected severance costs in North America. Additional severance charges were also taken in Mexico, Brazil, EMEA and Australia. For additional details, see "Note 10. Restructuring" to the condensed consolidated financial statements contained in "Part I, Item 1. Financial Information" of this Quarterly Report on Form 10-Q.

In addition, during the three and nine months ended September 30, 2020, the Company recorded an aggregate $0.1 million and $0.8 million, respectively, in non-restructuring integration expenses related to the integration of Foroni with ACCO Brands' operations in Brazil.

~~Cash Flow for the Nine Months Ended September 30, 2020 and 2019~~

~~Cash Flow from Operating Activities~~

Cash provided by operating activities during the nine months ended September 30, 2020 was $21.8 million, a reduction of $53.3 million compared to cash provided by operating activities of $75.1 million during the nine months ended September 30, 2019. The reduction of $53.3 million included reduced net income of $31.1 million, an $18.2 million of additional cash used for paying accrued expenses, including income taxes, and an increase in cash used for working capital requirements of $3.5 million.

~~The table below shows our cash flow used or provided by accounts receivable, inventories and accounts payable for the nine months ended September 30, 2020 and 2019:~~

Nine Months Ended Amount of Change
(in millions) September 30,
2020 September 30,
2019
Accounts receivable $ 78.7 $ 54.0 $ 24.7
Inventories (28.4) 34.8 (63.2)
Accounts payable (67.1) (102.1) 35.0
Cash flow used by net working capital $ (16.8) $ (13.3) $ (3.5)
































	Comparable Net Sales - Three Months Ended March 31, 2021
		Non-GAAP
	GAAP		Currency		Comparable
(in millions)	Net Sales		Translation	Acquisition	Net Sales
ACCO Brands North America	$188.8		$1.0	$51.5	$136.3
ACCO Brands EMEA	156.9		12.2	8.6	136.1
ACCO Brands International	64.8		2.5	2.6	59.7
Total	$410.5		$15.7	$62.7	$332.1

	Amount of Change - Three Months Ended March 31, 2021 compared to the Three Months Ended March 31, 2020
	$ Change - Net Sales
		Non-GAAP
	GAAP				Comparable
	Net Sales		Currency		Net Sales
(in millions)	Change		Translation	Acquisition	Change
ACCO Brands North America	$21.0		$1.0	$51.5	$(31.5)
ACCO Brands EMEA	29.4		12.2	8.6	8.6
ACCO Brands International	(24.0)		2.5	2.6	(29.1)
Total	$26.4		$15.7	$62.7	$(52.0)

	% Change - Net Sales
		Non-GAAP
	GAAP				Comparable
	Net Sales		Currency		Net Sales
	Change		Translation	Acquisition	Change
ACCO Brands North America	12.5%		0.6%	30.7%	(18.8)%
ACCO Brands EMEA	23.1%		9.6%	6.7%	6.8%
ACCO Brands International	(27.0)%		2.8%	2.9%	(32.7)%
Total	6.9%		4.1%	16.3%	(13.5)%

•Accounts receivable was a source of cash of $78.7 million during the nine months ended September 30, 2020, a favorable change of $24.7 million compared to a source of cash of $54.0 million during the first nine months ended September 30, 2019. The $24.7 million improvement included an increase in cash collections in early 2020, compared to early 2019, due to a receivable balance at the end of 2019 that was $25.3 million higher than 2018.

•Inventories was a use of cash of $28.4 million during the nine months ended September 30, 2020, an unfavorable change of $63.2 million when compared with the $34.8 million cash provided during the nine months ended September 30, 2019. The use of cash for inventory was higher during the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, as a result of the Company acquiring less inventory during the first nine months of 2019. This was due to the Company acquiring inventory during the fourth quarter of 2018 that would normally be acquired during 2019 in order to secure supply and to partially reduce anticipated inflation and import tariffs that went into effect during 2019.

•Accounts payable was a use of cash of $67.1 million during the nine months ended September 30, 2020, a favorable change of $35.0 million when compared to a use of cash of $102.1 million during the nine months ended September 30, 2019. The use of cash for accounts payable was higher during the nine months ended September 30, 2019 as a result of the Company paying for the additional inventory that was acquired during the fourth quarter of 2018.

~~Cash Flow from Investing Activities~~

Cash used by investing activities was $11.2 million and $69.1 million for the nine months ended September 30, 2020 and 2019, respectively. Cash used for capital expenditures was down $10.1 million primarily due to the completion of certain IT projects completed during 2020. Cash used for acquisitions was $47.3 million in 2019 which included the Foroni acquisition for $42.1 million and the acquisition of certain assets of the Cumberland brand in Australia for $5.2 million.

~~Cash Flow from Financing Activities~~

Cash provided by financing activities was $48.6 million for the nine months ended September 30, 2020, an increase of $82.7 million, compared with cash used of $34.1 million by financing activities during the first nine months of the prior year. The increase of $82.7 million primarily relates to a reduction of cash used for share repurchases of $37.9 million and an increase in cash provided by our incremental net borrowings of $42.3 million during the first nine months of 2020, compared to the prior year’s first nine months.

~~Credit Facilities and Notes Covenants~~

~~As of and for the periods ended September 30, 2020 and December 31, 2019, the Company was in compliance with all applicable loan covenants.~~

~~Guarantees and Security~~

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, ~~2019.~~2020. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management in the quarter ended ~~September 30, 2020~~March 31, 2021 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 of 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 as of ~~September 30, 2020.~~March 31, 2021.

(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 ~~September 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

4443

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 assessments against our Brazilian subsidiary, Tilibra Produtos de Papelaria Ltda (the "Brazil Tax Assessments"), which is more fully described in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and in "Part I, Item 1. Note 11. Income Taxes - Brazil Tax Assessments" to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2019, except as updated under "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30,~~ 2020.

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 ~~September 30, 2020:~~March 31, 2021:


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)
~~July~~January 1, ~~2020~~2021 to ~~July~~January 31, ~~2020~~2021	—	$	—	—	$	125,045,248
~~August~~February 1, ~~2020~~2021 to ~~August 31, 2020~~February 28, 2021	—	—		—	125,045,248
~~September~~March 1, ~~2020~~2021 to ~~September 30, 2020~~March 31, 2021	—	—		—	125,045,248
Total	—	$	—	—	$	125,045,248

(1) On February 14, 2018, the Company announced that its Board of Directors had approved an authorization to repurchase up to $100 million in shares of its common stock. On August 7, 2019, 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. ~~Early in~~The Company did not repurchase shares of its common stock after the first quarter of 2020, ~~we announced that we do~~and does not intend to repurchase ~~additional~~ shares ~~of our common stock~~ during ~~2020.~~2021 (other than in connection with tax withholding for share based-compensation).

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.

4544

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

4.1 Indenture dated as of March 15, 2021, among the Company, as issuer, the guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 16, 2021).

10.1 Fifth Amendment to Third Amended and Restated Credit Agreement, dated as of March 31, 2021, among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 1, 2021)

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 **

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Filed herewith.


**			Furnished herewith.

4745

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/ James M. Dudek, Jr.
James M. Dudek, Jr.
Senior Vice President, Corporate Controller and Chief Accounting Officer (principal accounting officer)

Date: ~~October~~April 28, ~~2020~~2021

4846


Leverage Ratio	Applicable Rate	Undrawn Fee
> 4.25 to 1.00	2.75%	0.500%
≤ 4.25 to 1.00 and > 4.00 to 1.00	2.50%	0.500%
≤ 4.00 to 1.00 and > 3.50 to 1.00	2.25%	0.375%
≤ 3.50 to 1.00 and > 3.25 to 1.00	2.00%	0.375%
≤ 3.25 to 1.00 and > 3.00 to 1.00	1.75%	0.300%
≤ 3.00 to 1.00 and > 2.00 to 1.00	1.50%	0.250%
≤ 2.00 to 1.00	1.25%	0.200%


(in millions)	Balance at December 31, 2018		Provision		Cash Expenditures		Non-cash Items/ Currency Change		Balance at September 30, 2019
Employee termination costs	$	7.9	$	4.1	$	(7.2)	$	(0.2)	$	4.6
Termination of lease agreements	1.8		0.1		(1.6)		0		0.3
Other	0		0.6		(0.1)		0		0.5

Total restructuring liability	$	9.7	$	4.8	$	(8.9)	$	(0.2)	$	5.4


	2020 3rd QTR Average Versus 2019 3rd QTR Average	2020 YTD Average Versus 2019 YTD Average
Currency	Increase/(Decline)	Increase/(Decline)
Euro	5%	—%
Brazilian real	(26)%	(23)%
Australian dollar	4%	(3)%
Canadian dollar	(1)%	(2)%
Mexican peso	(12)%	(11)%
Swedish krona	8%	—%
British pound	5%	—%
Japanese yen	1%	1%


	Nine Months Ended				Amount of Change
(in millions)	September 30, 2020		September 30, 2019
Accounts receivable	$	78.7	$	54.0	$	24.7
Inventories	(28.4)		34.8		(63.2)
Accounts payable	(67.1)		(102.1)		35.0
Cash flow used by net working capital	$	(16.8)	$	(13.3)	$	(3.5)