Good day ladies and gentlemen and welcome to the second quarter 2008 ACCO Brands earnings conference call. (Operator Instructions) I would now like to turn the presentation over to our host for today’s conference, Ms. Jennifer Rice, Vice President of Investor Relations.

Good morning everyone and welcome to our second quarter 2008 conference call. On the call today are David Campbell, Chairman and Chief Executive Officer of ACCO Brands Corporation and Neal Fenwick, Executive Vice President and Chief Financial Officer. We have posted a set of slides to accompany this call to the Investor Relations section of www.accobrands.com. These slides give a lot of detailed information to supplement this call. Our discussion this morning will refer to our results on an adjusted basis, excluding asset impairment charges, restructuring and nonrecurring items. A reconciliation of these results to GAAP can be found in this morning’s press release. During the call we may make forward looking statements and based on certain risk factors, our actual results could differ materially. Please refer to our press release and SEC filings for an explanation of those factors. Following our prepared remarks we will hold a Q&A session. Now I’ll turn the call over to Mr. Campbell.

Thank you Jennifer and good morning everyone. Our second quarter’s top line growth was very challenging reflecting a continuation of weak industry demand we experienced in the first quarter particularly in our largest markets; the US and the UK. This decline was the result of weakness in consumer demand and cautious business spending across the economy. Our weakness was further exacerbated by customers aligning their inventory levels with new lower demand expectations. Clearly we are disappointed with our second quarter results and now believe that our expectations for the balance of 2008 and 2009 need to be adjusted downward and corrective cost adjustments made. I will discuss this in greater detail in a moment. To recap second quarter sales declined 5%. Pricing was positive adding 180 basis points but volume declined 11%. As in the first quarter office products and document finishing saw the most significant declines. Kensington computer products were up 3%. Our operating margin declined 100 basis points as a result of the overall lower sales volume. While our synergy savings continue to grow even during this challenging period, reduced leverage of our fixed cost base and high raw material costs offset the benefits of synergies. EBITDA and earnings per share were also down as a result. Increasingly over the first half of 2008 it became clear the current economic downturn will be longer and more severe then we originally foreseen. We now are planning for depressed market conditions through 2009. In response we have taken a more conservative view of our near-term and 2009 revenue outlook leading us to develop what we believe to be a balanced and appropriate reduction in our current cost structure. The shared service infrastructure that we’ve put in place over the past 18 months allows us the flexibility to dial up the…

Thank you David and good morning everyone. As noted on slide seven comparable sales for the quarter were down 9% year-over-year driven mainly by lower consumer demand but also 2007 lost product placements and planned business exits. Adjusted gross margin decreased 100 basis points. The decline was largely due to lower volumes reducing fixed cost absorption and a $2 million charge for recalls and product rework. The benefit from price increases was more then offset by significant increases in raw material cost inflation and freight increases. SG&A margin improved slightly as the negative effect of lower sales volume was offset by a reduction of $7.6 million in incentive accruals related to both our annual and long-term performance share plans as well as lower go-to-market expenditure which was down $1.6 million in line with the lower sales volume. As a result adjusted operating income declined 19% and operating income margins contracted 100 basis points. Our adjusted tax rate for the quarter came in at 27.2%. This was slightly lower then our now anticipated full year rate of 30% due largely to the timing of deductions. Adjusted earnings per share for the quarter were down 43% to $0.12. We had some one-time charges in the quarter. Restructuring related charges were only $1 million pre-tax. We also took a $62.4 million non-cash impairment charge relating to the commercial component of our laminating segment. On slide eight we have provided a breakdown of our Q2 year-over-year sales change. We are still cycling through a $6 million impact from the planned business exits, mainly the sale of our MACO label business in 2007. We are also working through the product placements lost in 2007. These had a $13 million impact on the quarter. Once you isolate all of these items you can see underlying sales…

(Operator Instructions) Your first question comes from the line of William Chappell – SunTrust Robinson Humphrey William Chappell – SunTrust Robinson Humphrey: Can you kind of walk through the business environment over the past six months in the US, have you seen a continued step down in terms of consumer takeaway or is the real change been international business slowing down a step further?

Let me start with an expectation at the beginning of the year, I think that we along with many others in the economy did not believe there would be the degree of consumer demand turndown as well as the conservatism we’ve seen with business spending. I think that dialed up over the course of 2008 and clearly that has been led with the US market. So it’s really the US and then as we went through the first half of the year, we saw a dialing up of slowness in our UK business as well. So what we have seen to date really has been a first US led and then following very quickly with UK softness. And as you know the nature of our products, we tend to produce products that are consumed in a business to business kind of relationship that are more businessy oriented then consumer per se but we first saw was consumer slowdown but I think laterally as we proceeded through the first half we began to see the business slowdown.

During the second quarter particularly what also accelerated was Mainland Europe and Canada joining on with the UK and US market and also within the US the direct sale channel in DFG also took a big downturn which had stayed up through the first quarter. So our US experience actually deteriorated even though it didn’t on the in direct channel.

I think as we chat with customers and others we I think see this as a pretty typical trend that we’re seeing broadly for our industry. William Chappell – SunTrust Robinson Humphrey: When you’re talking about the price increases both in the past and going forward are you seeing pushback from the retailers or is it more pushback from end consumers that may be trading down as the price points just get too high? On the price increases you’re passing through are you getting to where the price points are too high for—and pricing some of the consumers out of the market or are you even seeing any pushback from retailers saying, hey we can’t take these price increases right now, its slowing down our business.

I think what we’re seeing in terms of the cost increases, the oil driving plastics, freight, those kinds of expenses that they really are broad across the industry and that is to say that these inflationary, these cost inflationary drivers in the business really effect the industry broadly. It affects us, it affects private brand, it affects our competitors, there’s no question its broad. So I think its one of those situations where this is an effect that is treating all competitors as equal. I do think this; I think there’s no question that as prices rise consumers have an appetite, have a limit as to what they can absorb. I think one of the interesting things that we believe that we’re seeing with our back to school efforts and energy is that much more of the consumers that we can see are tending to go to the mass market outlets. Want to make one trip, want to get in the car, go once with the family, buy your back to school office supplies, buy all of that. So no question about it, I think consumers will have a limited appetite. I can’t really speak to it effecting our business per se at this point but I think we have to be cautious and I think one of the things that we said was while we’ve worked well with our vendors to mitigate and pushback and reconfigure our vendor base to not just broadly accept these increases, but to try to manage them as best we can, we have put through price increases but we have tried to be balanced and proportioned in the price increases that we put through.

The consumer at this stage hasn’t met the real cost increases that are coming through the organization. So just as [Newel] has announced large January price increases, we’re also working through the same issue and part of the issue we’re experiencing and part of our guidance reflects the fact that we won’t be able to pass on in a real time sense all of the cost experiences we’re currently seeing. So at the moment I think that there hasn’t been a problem passing through the raw material increases we saw which we really passed through in January and to a small extent in July. But a bigger increase will come in January of 2009.

The way we look at our business, we see our business as much more of a business to business kind of product, 70% of the products we sell are typically consumed in businesses, so its more of a business issue for us rather then a consumer issue per se. William Chappell – SunTrust Robinson Humphrey: On the commercial business is there any thought to taking that off the table, I would image with the credit markets and just the overall environment its tougher to get top dollar for that right now, does it make sense to keep moving forward and then relook at that 12 to 18 months from now?

Actually the position we’re in with the business is that the banking arrangements we have with the business and the history of the banker who we’ve got representing us in the sale process is such that they understand the cyclicality of that industry and the business and therefore they’ve been prepared to offer a staple on finance package with the business which has allowed us to get attractive offers for the business so we think that it makes sense to proceed with the sale now and we think we’re in a position to conclude that.

Your next question comes from the line of Reza Vahabzadeh – Lehman Brothers Reza Vahabzadeh – Lehman Brothers: On the cost front do you have visibility on most of your input costs in the second half of the year to the extent that you may be hedged or have the inventory already in house and to what extent do you have visibility?

From this point we still have about two months of nakedness in terms of our visibility horizon and fundamentally one of the things we’ve seen is our suppliers take much shorter positions in terms of what they’re prepared to accept in terms of forward coverage and its fundamentally because of the volatility in the market both in terms of commodities and currencies. And so the traditional levels of forward purchase order coverage we may have been able to get have been reduced in the current market and so we have a couple of months of still uncertainty. I would also say that there are a lot of issues in the entire supply chain associated with people being able to cope with the rising cost of their own inventories and so one of the issues we’ve been seeing is suppliers with cash crunches as much as with raw material price inflation. Reza Vahabzadeh – Lehman Brothers: Do you have any feel for sales trends so far in the third quarter with back to school also starting anytime soon?

We always have a strange position with back to school because the sell-in for back to school tends to be fairly standard and it’s the reorders that tell us whether we have a good back to school or not so we never really know whether back to school is either up, down or sideways until we get the reorder process and so its really at the tail end of back to school that we get a good view of it. I can tell you that most people are saying that it’s slow at the customer end but that’s anecdotal evidence, not our evidence.

I think by and large our large customers are seeing a sluggishness and again I think that the part of the market that we see or the part of the channel that we see being more robust at back to school is more the mass side rather then the more traditional large customers we deal with. Reza Vahabzadeh – Lehman Brothers: Your guidance suggests that you are going to be comfortable with your bank covenants later on in the year, but I was curious, your bank covenants seem to be calculated on a gross debt basis, so would that suggest that you would use your cash to pay bank debt so that you can have a more then adequate cushion under the bank covenants?

Yes, our belief is as we get into second half of the year that the cash that we generate seasonally in the second half which is always very strong will actually go to pay down bank debt. Reza Vahabzadeh – Lehman Brothers: As far as the price increase that you announced for the January 2009 is that when your pricing will catch up with input costs or is that going to be before that?

Effectively it will catch up with what we are now experiencing as the input costs. The issue we believe is we’re seeing such unpredictability in our input costs, we don’t know whether they will stay at these levels or go down or go back up and therefore we’re also adding a lot more flexibility to our pricing for 2009 so that we can have a very broad interim price review in July of 2009, up or down depending on what happens to input costs.

This is just an area that we are monitoring very closely I think both on the pricing side and on the buying side. So I think it’s just truly just an ongoing continuous process of monitoring. Reza Vahabzadeh – Lehman Brothers: And is it your view that most of your competitors also have to take comparable price increases?

I think absolutely, as a matter of fact, these are fundamental costs across the economy that are affecting all businesses in many, many industries so I think this is like a rising tide that affects all boats.

Your next question comes from the line of Derek Leckow – Barrington Research Derek Leckow – Barrington Research: Just wanted to go back to the last recession and get a sense for the volume declines back then because its hard for me to tell, you were a part of [Fortune] brands and you were also involved in a restructuring process back then, its hard for me to tell how deep the volume declines were. Do you sense that we’re at sort of an inflection point right now or do feel like it still has a ways to go? I wanted to get your sense for the macro picture on that.

I’m not an economist but I’ve lived in this business awhile and the one thing I would tell you is this is a different character recession to the last one that we saw. We’re seeing an unusual combination of rapidly rising raw material costs, coupled with slowing demand and as raw material costs get pushed through into the market there’s a question of customers moving down the price point food chain as they respond to that and/or further impacts on their business and therefore on their employment situation. Fundamentally we’re impacted by white collar employment and that has started to go negative. It’s been running negative all year, continuing to run negative. My belief is that that will continue to get worse and obviously therefore I don’t think that we are near the end of this. We think this is going to be a prolonged situation.

Having said that though, we are not economists and this is just—I think this is a difficult period for just a bunch of folks in terms of understanding really what’s going to go on in the economy here. Derek Leckow – Barrington Research: I’m just trying to get a sense for the volume levels that were down in the last one because as you were restructuring back then I think this 11% volume decline in the office products category seems to be larger then what we had back then. I think that was 5% back then? So the question is, is there some inventory rebalancing going on here that’s in excess of what the normal business trends would tell you or do you feel like there’s something else going on.

Part of what I tried to call out on one of the slides is what I think the various inputs are and if you look at slide eight you can see for the second quarter and I did the same for the first quarter the breakdown of where we’re seeing the decline and so we do have some lost placement and we have some planned exits which are part of our numbers making it look slightly worse and we try and estimate what we think the channel inventory reductions are. But fundamentally the slowdown in demand that we’re seeing is more pronounced then we saw going into the last recession and I don’t exactly know why that is but it seems to be that everybody from our customers is seeing that same reduction in demand and so its not unique to us, its their level that the demand is being lost as opposed to something happening in share shifts or something like that. Derek Leckow – Barrington Research: As far as your customers’ behavior is concerned, when you announce publically that you’re going to have a pretty large price increase in January do you think that also has an impact on their inventory levels during let’s say Q3 and Q4?

That’s one of the always unknown issues and I once said that I thought there would be a pull forward ahead of that, I think there could be in some customers this year end but we’re not banking on that and if happens it’ll be an upside and it’ll be a swap between Q1 and Q4. Derek Leckow – Barrington Research: Is there anything meaningful in terms of new products that you’re going to be launching during the next six to 12 months?

As I talked about in my comments, I think that we believe that we’ve talked about there being a pretty decent rollout of new products in our Kensington business. I think we see over the back half of 2008 and into 2009 some new product platforms across our binding, laminating and shredding business, also in our document finishing business. We’ve really revamped the US direct to sales channel. I think to make that more affective so I think as we introduce these products we believe we can be more affective in taking them to our direct customers. We’ve also developed a direct sales organization now, we’re building a direct sales organization across Europe and we think that will help accelerate some of these new products in document finishing. And our third area, our work space tools area, where new products as well as new merchandising is being introduced for a lot of the desktop and electric areas that we’ve introduced. So really all of that is baked into Q4 2008 into Q1 of 2009.

Your next question comes from the line of Bill Schmitz – Deutsche Bank Bill Schmitz – Deutsche Bank: Can we talk about, I know you have those charts on white collar employment trends and I notice you are doing an employee reduction as well, but I look back at the entire earnings season for all the companies I cover in some other industries, it seems like people are making their numbers by SG&A cost reductions. What does that do for the demand environment, do we need to wait for an uptick in that kind of white collar employment level for you to get to a normalized sales base?

I think we will see two things that roll into the latter half of the year. I think the inventory reductions in the channel will abate but I think that you will see white collar employment continue to go down and so that’s why we’re basically assuming that the second half is going to continue to be poorer then we would have originally anticipated. At the end of the day what we need to do fundamentally is to drive consumer interest in our products and that’s why we’re keen about all the new products that we’ve got already coming through the pipeline which get launched in Q4 and in 2009. That fundamentally is what will help improve demand.

I also believe that we view—there’s market softness, part of the decline. We’ve also talked about our share loss that we view as a temporary situation and I think we’ve being very aggressive now about going after that share loss. We are working very closely with customers and going back and trying to revisit some of the share loss that occurred during the transition particularly with what we would call Tier 2 and Tier 3 suppliers. So as we review the situation we are making very sure that we’ve got the right people involved in every bit, making some tough decisions on trade off with price and margin. Again trying to become more aggressive in the marketplace now that we’ve got the infrastructure, now that we’ve got a lot of the transition bedded down. We’re really trying to get far more focused now on the market share piece that we’ve talked about and go right after it. Bill Schmitz – Deutsche Bank: What’s the breakdown now between consumers and businesses in terms of consumption for the business as a whole?

Fundamentally business consumers are still around 70% of our demand and out of what we could call the consumer demand, a lot of that is actually small office, home office as well. Bill Schmitz – Deutsche Bank: Who’s going to buy a stapler or white board if employment is declining, right? So you can do all this great stuff for market share gains but if the [categories] decline I’m not sure what the end game is.

If you look at some of the machinery we’re launching in the DFG end what that allows is productivity improvements for our customers. Some of those higher end machines have labor associated with using them and so they will be very keen for people to purchase because it actually gives them a cost reduction in their own processing and a de-scaling. Bill Schmitz – Deutsche Bank: On the cost side are you seeing a pullback in freight rates in China now that the economy has softened a little bit? Have you seen a decline in some of the container rates yet out of China given the fact that that economy has softened quite a bit?

Not significant.

I think more of our effort is built trying to do work on the logistic sense so we make sure that we can order smaller quantities, mix and match what goes into a container and just be more affective and efficient in the utilization of container space. I think we found that to be an area of opportunity for us. Bill Schmitz – Deutsche Bank: Will there ever be a point in time where you don’t manufacture anything directly, will you ever have 100% variable cost model?

No, no absolutely not and I think that it really speaks to the nature of how we have looked at our products. We believe that there are some products that fundamentally have a very, very high labor content and by the nature of their cost structure they really should be produced in a low labor, low direct cost environment. We believe that we have other products that by their nature have a very high freight distribution bulky kind of nature. So what we have done is a very conscious division of those kinds of products produced close to the customer where it makes sense to make it close to the customer, produce in low labor areas where direct labor is the issue. So that’s been the defining issue for us. We have not peanut buttered our approach to say we’re going to manufacture versus we’re going to be an outsourcer. I think we’ve very deliberately make conscious decisions. Bill Schmitz – Deutsche Bank: Can you remind us what the debt covenants are and what your target is for the end of the year and what the implications are if the unforeseen happens and you do break those covenants?

We fundamentally have two debt covenants, one of them is our gross debt to EBITDA ratio which currently requires us to keep that at 4.25 or below and that reduces in Q4 to 3.75 and then the other one is our interest coverage which is currently 3x multiple and that actually doesn’t change. So the tighter covenant for us is the gross debt to EBITDA and fundamentally if ever you breach your debt covenants you’re into negotiation with your bank and the most likely outcome of that is you pay a higher interest rate going forward. It’s not that there’s some great doomsday that results. Bill Schmitz – Deutsche Bank: Who is the banker, are you at liberty to discuss that?

It’s a consortium and it was put together when we spun out of Fortune, its lead by Citibank but there are actually about 35 different banks involved. And they’re not concerned. We only addressed this because we had heard that there were a number of shareholders who were concerned about the issue and that it was something they felt that we should address on the call.

Your final question comes from the line of Arnold Ursaner – CJS Securities Arnold Ursaner – CJS Securities: I’d like to try to focus if I can on the negotiation process you have with your key retailers going into January, it sounds like from your prepared remarks that its virtually impossible to hedge the underlying commodities you would need to build your products, it sounds like you’re asking your customer to have more flexibility in their pricing post January and I assume they’re trying to create catalogues that have essentially fixed price. So as you go through this process where your raw material costs are a complete unknown, you need and they want some pricing flexibility in this equation, when you negotiate with these key retailers are they negotiating on the price of the product or are you finding its easier to perhaps show them more of an open book and negotiate on your behalf to achieve a fair margin.

I think the answer is kind of all of the above. So first of all I think we’re in a different day. I think that that’s just a basis reality that there always have been certain product categories within our business that are fluctuated more rapidly and so our customers had accommodated that because they felt there were some areas of the business that were more flexible and rapid and volatile and some more stable. So the world has changed. I think that what’s happening now and what we’re seeing is that there’s just greater volatility on the cost side for much more of the products that are sold in our industry. And so I think as such, I think both our customers are changing their relationship with their customers and we with ours. The whole chain is sort of shifting a little bit. I think if you take a look at comments made this quarter there are other producers of office products that have said, gee we’re now looking at going to a quarterly price increase. I think that we aren’t quite there yet but we certainly in this mid quarter, this last quarter put through some price increases that we just had to; we just believed we had to. I think that there was some flexibility in that. I think that people are looking for time, time is a big factor. It’s not necessarily just the increase it’s the timing of how much time you can give people so we’re just trying to work around all of that. I don’t think that at this point we want a peanut butter approach; we don’t want to just sort of rigidly say this is the timeframe. We want to be looking at this area by area and making sure that what we pass on really has to be passed on and its done in a way that accommodates people as best as possible. Arnold Ursaner – CJS Securities: As I said you’re dealing with an incredibly challenging environment, it sounds like you’re doing the best you can to deal with it. In the past you have been more than willing to walk away from business when you couldn’t earn a reasonable return, with this changing commodity environment and pricing environment are there more of your businesses that may be ones you believe make no sense for you to continue to do?

No, I think that we’ve really purged a lot, really exited a lot of the commodity categories over the past two, two and a half years and I think that was—in hindsight as we look back on that we think that was the right and sensible thing to do. That’s really now put us in a position where the product areas and the product categories that we’re in really are the ones that we kind of more see ourselves being long-term so I don’t think that we are now saying that something that we once saw was good we want to exit, not at all. I think that we believe that what we’ve got here has been carefully assessed. So I think what we’re really saying is that we just want to get very close to our customers. Our customers will no question over this period, be making decisions about strategic vendors, who they believe are their long-term strategic vendors, who are going to be the people that really have invested in their business. I think in my prepared remarks I spoke to this. I think this is a tremendously important point. As I look around our industry I don’t see a huge number of people really investing in fundamental infrastructure systems, product development, etc. We are. And I think that our customers see that and our customers will realize and appreciate that, golly, if we’re going to have a future as we become bigger, as we integrate, as they go into their natural evolution, I think they’re going to want to align themselves with people who have invested well in their industries. So I think that’s what we’ve tried to do. Arnold Ursaner – CJS Securities: I know that you [remanded] those very careful contingency planning to the extent you had, call it five contingency plans, given the current environment how far down on your list of five did you go?

Gee I’m not going to answer that one. I think—I have no idea how to answer that. I would say this and I go back to my script, I think that what we are doing is aggressive, no question about it, we are really trying to bring forward and lever the good things that I think we’ve done with our systems and our distribution infrastructure. So the way I would look at it it’s not how far down on the contingency plan are you going, its how aggressive and how much are you trying to bring forward. So no question about it, we have some levers left and I think we’re trying to be proportioned and balanced here. One of the things we’re not doing and I think it’s important I stress this, that we’re not doing radical costs chopping kinds of activities. We’re trying to accelerate into the future and that is to say that what are the things that we want to be bringing to bare in our business. We want simpler processes. We want more consolidated activities in our ops and finance area. So we’re not cutting into muscle, what we’re doing is we are really trying to bring forward more rapidly the benefits that would logically accrue. But rather than in 12 months and in 18 months, we’re just trying to bring it forward faster.

There are no further questions; I would now like to turn the call back over to Mr. David Campbell.

Well thanks very much for all your good questions, I appreciate your interest in us and we look forward to chatting again and updating you further on the progress we’ve made in our next call in November. Have a great morning and thanks.