ACCO Brands Earnings 2021-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

abd-20210331

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 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 April 22, 2021, the registrant had outstanding 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 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, 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

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


	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 Operations

(Unaudited)


	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		—
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 Loss

(Unaudited)


	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)


	Three Months Ended March 31,
(in millions)	2021		2020
Operating activities
Net (loss) income	$	(20.4)	$	8.0

Amortization of inventory step-up	2.4		—

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

Amortization of debt issuance costs	0.8		0.5
Amortization of intangibles	12.0		8.4
Stock-based compensation	4.8		0.9
Loss on debt extinguishment	3.7		—

Changes in balance sheet items:
Accounts receivable	34.4		112.0
Inventories	(54.4)		(26.2)
Other assets	(13.3)		(13.8)
Accounts payable	11.3		(45.2)
Accrued expenses and other liabilities	(27.9)		(72.1)
Accrued income taxes	(12.1)		(6.3)
Net cash used by operating activities	(42.4)		(25.2)
Investing activities
Additions to property, plant and equipment	(3.8)		(6.9)



Cost of acquisitions, net of cash acquired	18.2		0.6

Net cash provided (used) by investing activities	14.4		(6.3)
Financing activities
Proceeds from long-term borrowings	595.8		117.4
Repayments of long-term debt	(509.0)		(5.3)
Proceeds of notes payable, net	6.2		12.4
Payment for debt premium	(9.8)		—
Payments for debt issuance costs	(9.7)		—
Dividends paid	(6.2)		(6.2)
Repurchases of common stock	—		(18.9)
Payments related to tax withholding for stock-based compensation	(0.9)		(1.7)

Proceeds from the exercise of stock options	1.9		1.5
Net cash provided by financing activities	68.3		99.2
Effect of foreign exchange rate changes on cash and cash equivalents	(1.8)		(2.1)
Net increase in cash and cash equivalents	38.5		65.6
Cash and cash equivalents
Beginning of the period	36.6		27.8
End of the period	$	75.1	$	93.4
Cash paid during the year for:
Interest	$	12.7	$	2.9
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)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total
Balance at December 31, 2020	$	1.0	$	1,883.1	$	(564.2)	$	(39.9)	$	(537.3)	$	742.7
Net loss	—		—		—		—		(20.4)		(20.4)
Gain on derivative financial instruments, net of tax	—		—		4.1		—		—		4.1
Translation impact, net of tax	—		—		(20.7)		—		—		(20.7)
Pension and post-retirement adjustment, net of tax	—		—		3.6		—		—		3.6

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

Shares of Capital Stock


	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)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total
December 31, 2019	$	1.0	$	1,890.8	$	(505.7)	$	(38.2)	$	(574.2)	$	773.7
Net income	—		—		—		—		8.0		8.0
Gain on derivative financial instruments, net of tax	—		—		2.4		—		—		2.4
Translation impact, net of tax	—		—		(49.7)		—		—		(49.7)
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

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

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 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, 2020.

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

Effective December 17, 2020, we completed the acquisition of PowerA (the "PowerA Acquisition"), a leading provider of third-party video gaming console accessories primarily in 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 $321.8 million, plus an additional earnout of 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 PowerA Acquisition and related expenses were funded by cash on hand, as well as borrowings from our revolving credit facility. See "Note 3. Acquisitions" for details on the 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 March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying current GAAP to contracts, hedging relationships, and other transactions affected by the transition from the use of LIBOR to an alternative reference rate. We are currently evaluating our contracts and hedging relationships that reference LIBOR and the potential effects of adopting this new guidance. The guidance can be adopted immediately and is applicable to contracts entered into on 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to

ACCO Brands Corporation and Subsidiaries

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

reduce complexity in accounting for income taxes. Effective January 1, 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 three months of 2021 that had a material effect on the Company’s financial condition, results of operations or cash flow.

3. Acquisitions

Acquisition of PowerA

Effective December 17, 2020, we completed the acquisition of PowerA, a leading provider of third-party video gaming console accessories primarily in North America. The results of PowerA are included in all three of the Company's reporting units effective December 17, 2020.

The preliminary purchase price was $321.8 million, plus an additional earnout of 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 fair value of $24.9 million as of March 31, 2021. The PowerA Acquisition and related expenses were funded by cash on 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 PowerA Acquisition is being accounted for as a purchase business combination and PowerA's results are included in the Company’s consolidated financial statements as of December 31, 2020. The additional net sales from PowerA during the three months ended March 31, 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)

Our fair value estimate of assets acquired and liabilities assumed is pending the completion of several elements, including the final determination of the purchase price, pending final determination of the fair value of the assets acquired and liabilities assumed, and the 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 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 valuation of intangible assets and their respective useful lives, among other adjustments.

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, 2020, transaction costs related to the PowerA Acquisition were $3.7 million, and for the quarter ending March 31, 2021, they were $0.1 million. These costs were reported as SG&A expenses in the Company's Consolidated Statements of 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 March 31, 2021 and December 31, 2020:


(in millions)	March 31, 2021		December 31, 2020
Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.25% at March 31, 2021)	$	273.9	$	—
Euro Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.50% at December 31, 2020)	—		287.4
USD Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.45% at March 31, 2021)	92.5		—
USD Senior Secured Term Loan A, due May 2024 (floating interest rate of 3.50% at December 31, 2020)	—		92.5
Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of 2.31% at March 31, 2021)	42.8		—
Australian Dollar Senior Secured Term Loan A, due May 2024 (floating interest rate of 2.57% at December 31, 2020)	—		43.4
U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 2.47% at March 31, 2021)	173.3		—
U.S. Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 3.50% at December 31, 2020)	—		307.2
Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 2.31% at March 31, 2021)	45.6		—
Australian Dollar Senior Secured Revolving Credit Facility, due May 2024 (floating interest rate of 2.57% at December 31, 2020)	—		25.4
Senior Unsecured Notes, due March 2029 (fixed interest rate of 4.25%)	575.0		—
Senior Unsecured Notes, due December 2024 (fixed interest rate of 5.25%)	—		375.0
Other borrowings	11.4		5.7
Total debt	1,214.5		1,136.6
Less:
Current portion	48.2		76.5
Debt issuance costs, unamortized	10.4		5.5
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. 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 defined in the Credit Agreement) of 3.00:1.00; and

•reflect a more favorable restricted payment covenant, with the 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;

The USD Term Loan, the Euro Term Loan and the Australian Term Loan are collectively referred to herein as the “Term Loan Facility.”

On May 1, 2020, the Company entered into a Third Amendment (the "Third Amendment") to the Credit Agreement pursuant to which the Credit Agreement was amended to, among other things:

•increase the maximum 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, with a scaled increase in interest rates and fees, effective May 1, 2020;

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

In connection with the PowerA Acquisition, effective November 10, 2020, the Company entered into a Fourth Amendment (the "Fourth Amendment") to the Credit Agreement pursuant to which the Credit Agreement was amended to, among other things:

•provide flexibility under the permitted acquisition provisions to accommodate the acquisition of 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 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 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

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 March 31, 2021, were as follows:


(in millions)
2021	$	20.1
2022	20.7
2023	16.1
2024	13.3
2025	9.9
2026	8.3
Thereafter	24.2
Total minimum lease payments	112.6

Less imputed interest	19.1
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 months ended March 31, 2021 and 2020 were as follows:















	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	$	—	$	—
Interest cost	1.0		1.5		1.6		2.4		—		—
Expected return on plan assets	(2.8)		(2.9)

Price	9.82	EPS	1
Shares	102	P/E	10
MCap	1,001	P/FCF	13
Net Debt	876	EBIT	170
TEV	1,877	TEV/EBIT	11
TTM 2019-09-30, in MM, except price, ratios

10-Q	2021-03-31	Filed 2021-04-28
10-K	2020-12-31	Filed 2021-02-26
10-Q	2020-09-30	Filed 2020-10-28
10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-05-05
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-07-31
10-Q	2019-03-31	Filed 2019-05-02
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-10-30
10-Q	2018-06-30	Filed 2018-07-31
10-Q	2018-03-31	Filed 2018-05-01
10-K	2017-12-31	Filed 2018-02-28
10-Q	2017-09-30	Filed 2017-11-01
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-02-27
10-Q	2016-09-30	Filed 2016-10-26
10-Q	2016-06-30	Filed 2016-08-02
10-Q	2016-03-31	Filed 2016-04-27
10-K	2015-12-31	Filed 2016-02-24
10-Q	2015-09-30	Filed 2015-10-28
10-Q	2015-06-30	Filed 2015-07-29
10-Q	2015-03-31	Filed 2015-04-29
10-K	2014-12-31	Filed 2015-02-25
10-Q	2014-09-30	Filed 2014-10-29
10-Q	2014-06-30	Filed 2014-07-30
10-Q	2014-03-31	Filed 2014-04-30
10-K	2013-12-31	Filed 2014-02-25
10-Q	2013-09-30	Filed 2013-10-31
10-Q	2013-06-30	Filed 2013-08-06
10-Q	2013-03-31	Filed 2013-05-08
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-10-31
10-Q	2012-06-30	Filed 2012-08-09
10-Q	2012-03-31	Filed 2012-05-10
10-K	2011-12-31	Filed 2012-02-23
10-Q	2011-09-30	Filed 2011-10-26
10-Q	2011-06-30	Filed 2011-07-27
10-Q	2011-03-31	Filed 2011-04-27
10-K	2010-12-31	Filed 2011-02-24
10-Q	2010-09-30	Filed 2010-10-27
10-Q	2010-06-30	Filed 2010-07-28
10-Q	2010-03-31	Filed 2010-05-07
10-K	2009-12-31	Filed 2010-02-26

EX-31.1	acco-2021xq1ex311.htm
EX-31.2	acco-2021xq1ex312.htm
EX-32.1	acco-2021xq1ex321.htm
EX-32.2	acco-2021xq1ex322.htm

8-K	2021-02-16
8-K	2020-12-17
8-K	2020-11-10
8-K	2020-10-27
8-K	2020-08-27
8-K	2020-07-28
8-K	2020-06-02
8-K	2020-05-19
8-K	2020-05-01
8-K	2020-04-17
8-K	2020-04-12
8-K	2020-03-16
8-K	2020-03-02
8-K	2020-02-11
8-K	2019-10-29
8-K	2019-08-07
8-K	2019-08-05
8-K	2019-07-30
8-K	2019-05-23
8-K	2019-05-21
8-K	2019-05-02
8-K	2019-04-04
8-K	2019-02-13
8-K	2018-10-30
8-K	2018-10-16
8-K	2018-07-26
8-K	2018-05-15
8-K	2018-05-01
8-K	2018-03-26
8-K	2018-03-07
8-K	2018-02-14


PART I — FINANCIAL INFORMATION			4
Item 1. Financial Statements			4
Condensed Consolidated Balance Sheets			4
Consolidated Statements of Operations			5
Consolidated Statements of Comprehensive 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			43
PART II — OTHER INFORMATION			44
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Defaults Upon Senior Securities			45
Item 4. Mine Safety Disclosures			45
Item 5. Other Information			45
Item 6. Exhibits			45
SIGNATURES			46

ACCO 10Q Quarterly Report

ACCO Brands Earnings 2021-03-31