Good day, ladies and gentlemen, and welcome to the first quarter 2009 ACCO Brands earnings conference call. My name is [Lacy] and I'll be your coordinator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Jennifer Rice, Vice President of Investor Relations. Please proceed.

Good morning. Welcome to our first quarter 2009 conference call. On the call today are Bob Keller, Chairman and Chief Executive Officer of ACCO Brands Corporation, and Neal Fenwick, Executive Vice President and Chief Financial Officer. A set of slides that accompany this call have been posted to the Investor Relations section of ACCOBrands.com. These slides provide detailed information to supplement this call. Our discussion this morning will refer to results on an adjusted basis for continuing operations excluding restructuring and nonrecurring charges. Our 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 it's my pleasure to turn the call over to Mr. Keller.

Thank you, Jennifer, and good morning, everyone. Earlier this morning we reported our first quarter 2009 results. Net sales were $293 million, a decline of 17% excluding foreign exchange and we recorded a loss from continuing operations of $3.7 million. Excluding charges, the adjusted loss per share was $0.02 and our EBITDA came in at $27.2 million. Neal will provide additional detail and color in a few minutes, but let me briefly share my perspective on our results. Given the headwinds we faced going into Q1 we're pleased with the progress we made in the quarter. Coming into January we faced a worsening global economy exacerbated by significant inventory destocking by our customers and by their commercial customers. The increased strength of the U.S. dollar was also driving significant translation pressure on our results. In addition, we were sitting on excess inventory that we brought in in the fourth quarter when commodity costs were much higher for year end purchases that didn't materialize, increasing the pressure on cash that we always feel during the first quarter. Our major customers were closing distribution centers and stores, adding to the time it would take us to reduce inventory, and internally and externally we were being challenged to improve almost every facet of our business. We've responded well to the challenges we faced. We generated $27 million in EBITDA despite the adverse volume, currency and commodity cost trends. Each month of our quarter showed sequential improvement in both top and bottom line results. We managed our costs aggressively and we executed against our internal objectives, scaling our business appropriately for the size of the opportunity today. We remained in compliance with our bank covenants, and importantly, we made significant operational improvements, strengthening customer relationships and improving our supply chain. Our efforts are being…

Thank you, Bob. This quarter's performance is recapped on Slide 3. Sales declined 27%, with volume down 19.6%. Currency impacted sales by 9.5%. January was our lowest point in the quarter. Customers had curtailed orders as they worked down inventory levels. Sales sequentially improved through the quarter and began to mirror our customers' point of sale in February and March. Adjusted operating income declined 22%, but our margin increased 30 basis points to 5.7%. As we will detail in a moment, the improvement was attributed to SG&A-related cost savings, which offset the impact of lower volume and commodity cost increases. EBITDA declined 21% to $27 million and adjusted EPS was a loss of $0.02. In terms of reported items, as expected we did incur one-time charges in the quarter, mostly severance related. Pre-tax restructuring and restructuring-related charges were $3.4 million. Slide 4 details the drivers behind our revenue decline. The economic decline, which has impacted businesses in all of our markets, was clearly the largest factor, reducing sales by $79 million. Foreign exchange further reduced sales by $38 million. We did receive a small benefit from price increases and the timing of Easter. Slide 5 details the specific contributing factors to our margin changes. Gross margins declined 250 basis points, driven largely by the adverse impact of cost increases as we utilized inventory purchased when commodity costs were inflated. SG&A improved 300 basis points. The improvement was entirely the result of cost reduction initiatives that more than offset the adverse leverage from reduced volume. All told, operating margin improved 30 basis points to 5.7% from 5.4% last year. Turning to an overview of our segments on Slide 6, in the Americas sales declined 21% or 17% excluding currency. This is actually a more favorable rate than seen during the fourth…

(Operator Instructions) Your first question comes from Derek Leckow - Barrington Research.

Just a question on the point you made in your prepared remarks earlier, the need to make sequential revenue improvements, leverage your supply chain improvements. Does that mean that, point one, the new business wins, are they going to be phased in starting in the second quarter? And, point two, you said that the customer inventory levels were at historical lows and that you expected those to increase. Is that the way to think about that?

No and yes. The answer to the first question is we don't expect any material impact on the new business wins until late in this year and we won't fully get the benefit of them until next year. They're the result of line reviews that we're going through kind of as we speak over the course of the last 60 days and on an ongoing basis, and so we don't expect to see material positive impact by that in the next couple of quarters. And the inventory level point was both a reflection of discussions that we've had with our customers about where they are in terms of managing their working capital and inventory and a perspective that based on year-to-date through March point of sale information their sell-out of our product is roughly equivalent to their buy-in of our product.

And then just one other quick point, Derek. Seasonally our quarters do improve anyway, with Q1 being our smallest quarter and they seasonally get larger as Q2, 3 and 4 go on because of the build up of back-to-school and then the calendar year end.

And the impact in the Computer Products area, did you say that that was also kind of behind you at this point or do you still expect additional pressure from that in Q2?

I think the business is performing as expected is basically the message in terms of our computer products business and I think we've made some progress in expanding our channel partners that has offset the loss of Circuit City.

On a sequential basis, then, should I assume that that goes up next quarter?

Would you repeat that Derek?

I was just trying to gather the sequential information on the Computer Products business. Would you expect that to be higher than Q1 levels?

Q2 for Computer Products is very similar to Q1. Q3 and Q4 show the sequential improvement for that segment.

And then margin rates, the operating margin was surprisingly higher this quarter than we expected. Would I use that as sort of a low point for the year?

Again, if you're looking at margins I would look at the sequential margin so, you know, compare Q2 to Q2 and Q3 to Q3 and Q4 to Q4 because we do have quite a leveraging impact and we have certain businesses like Computer Products and Day-Timers that make a lot of their margin in the third and fourth quarter. And so we would anticipate having improvements in our margin in every one of our quarters.

Your next question comes from William Chappell - Suntrust Robinson Humphrey.

First, on the sales number for the quarter, is there anyway you could break out how much of it was destock versus what consumer takeaway was in the quarter?

I tried to do a good sales breakout on Slide 4 for you. I didn't include destocking and the reason I didn't is because I don't have a good read at the moment on March and so we're not sure we suffered significant total destocking in all markets. January certainly suffered from significant destocking and my best estimate would be that there was about a $10 million impact of destocking on the overall business for Q1.

So a large majority - let's say 70% plus - of the decline was just the overall market, not necessarily a destock issue?

Correct. And that would be in line with what our peers have shown in the industry.

Can you give us a little more detail on some of the category wins, like where you might have won some contracts and why you won it?

Yes. I think we've done a pretty good job with our Wilson Jones product line in binders in creating a set that has a strong good, better, best approach, augmented with both a style section and a cause section. And I think that's played out really, really well. I think we're winning in our boards business across our customer base because I think we have a superior product and we manufacture some significant portion of that domestically and are able to distribute it quickly - our manufacturing sites are linked to our distribution sites - and a combination of both the product quality and our manufacturing and distribution capability is helping us. We're pleased with the progress that we've made in terms of shifting the discussion with our customers from just a high-end premium provider to a category provider where we can leverage some of our strengths in terms of our supply chain improvements and, frankly, the marketing and merchandising capability that we have around our own product sets and it's been received well by our customers across the board.

Looking at pricing, that helped you in the quarter. With commodity costs coming down do you foresee a price rollback by midyear or can you hold the line on pricing?

We actually did two separate things, Bill. In the United States we completely rolled back our pricing from Q1, and so we had announced a January increase which we didn't impose. And one of the things that you'll see on the margin analysis slide that I did shows a significant impact on our gross margins in Q1; that was virtually all driven by the United States, where we had to still take through the cost of excess commodity costs that came through from the fourth quarter. Outside the United States the biggest driver has been foreign exchange movement. Foreign exchange movement hasn't gone away and so the price increase we put through in our international markets offsets the negative impacts on our cost of goods from foreign exchange. Fundamentally, we buy in China and we sell in Euros or pounds or Canadian dollars, etc., and they have a real cost of goods increase because of the strength of the U.S. dollar.

I can safely say I have no clue why Easter would affect office supplies in Europe. Can you give me an idea why it would help that out in the quarter?

Because the consumers all go on vacation; it's the same in Mexico, the same in Australia.

Your next question comes from Fred Buonocore - CJS Securities.

I just wanted to quickly talk about, you talked about the trends moving through the quarter. Can you give us a sense for how trends are going looking at April and into May? Clearly, you're saying you're sequential improvements, but can you give a little bit more color on that?

Not a lot. The reality is the second quarter is heavily driven by back-to-school loads which come in the tail end of May and most of June, and that load will determine the quarter. I think the positive perspective from our point of view is that in listening to our customers comment on their plans going forward, it's clear that all of the superstores are planning to compete aggressively in the back-to-school market and I think that bodes well for us.

And then in terms of share gains, can you elaborate a little bit more on who you're taking share from? Are you recapturing share lost to private label or from other brands? Can you give us a better sense for that, please?

It's kind of across the board. We feel very good about where we're winning and where we're not, and we're winning more than we're losing as we go through the line review process. We think we've protected the business that we've had very, very effectively and we've been able to take business both from competitors and from private label going forward.

In terms of when you put a product line out for bid I'd imagine that it has just been a challenging process over the last year and I'm wondering if the time between when you may put a new product line out for bid and when you win an agreement if that cycle time has started to shorten or can you give us any sense for how that process is going?

I think the old paradigm where line review happened kind of once a year with a midyear update on new product introductions appears to be turning into more of just an annual cycle where you're kind of in continuous process sequentially through your product line. And that's fine. The reality is, I think, given our size and scale and our relationship with our customers, if we win business and perform we should be able to hold it and so the line review process is an opportunity to get better.

Your next question comes from Reza Vahabzadeh - Barclays Capital.

On the SG&A front, the decline, how much of that is sales driven and how much of it is permanent cost takeouts?

Reza, I tried to give you that outline on the slide that I put in the deck.

Right, I see it.

We have done some temporary cost takeout; we've done some permanent cost takeout. Obviously, part of what we've tried to do is recognize how small Q1 is in terms of our annual year and therefore where possible push out some of the go-to-market activity to the back half of the year. And also we took some temporary cost savings in terms of putting through employee payroll reductions in order to balance our equations for Q1 and Q2. And so part of the cost savings are temporary, but we have more permanent cost savings that we'll build as the year goes on and therefore on a kind of ongoing basis we expect those level of cost savings to actually be permanent.

And the temporary cost savings were how much?

For Q1 they amount to about $5 million.

And then on pricing, I'm just trying to clarify a lot of your slides, which, by the way, are very helpful, on the revenue front pricing is helping you by $10 million, but on the gross margin front it seems like price versus cost is negative 230 basis points. Can you explain that?

Which is about $7 million. So fundamentally what you have flowing through there is a lot of the price increases in our International markets to offset the foreign exchange translation affect on our cost of goods. And if you assume that kind of nets to a net neutral overall, the impact of Q4 commodity costs coming through our P&L in Q1, which we don't anticipate continuing for the rest of the year, is about $7 million.

So really this is the impact of pricing not offsetting cost in the non-U.S. markets?

No, in the U.S. market. And fundamentally one of the decisions we made going into the year was not to raise our prices in the U.S. and to rollback our price increase. Many of our competitors raised theirs and so part of the opportunity we're getting to bid on our competitors' business is because they went ahead and raised prices. The cost of that we took in Q1 as the excess commodity costs that had to run through our P&L.

But is it reasonable to expect that the wins that you have obtained so far are at reasonable margins by first quarter standards?

I think the key thing to understand is going forward I don't anticipate that negative drag on my gross margin. It was a Q1 effect from the tail end of the commodity spike. And I would anticipate by Q3 and Q4 that that actually would run positive.

Right. But, still, these wins that you have that seem to be sizeable, these are wins that are profitable wins by at least first quarter standards?

Yes, they are.

And then on the cash flow front, I'm sorry if I missed your comments. I thought you said you were going to be cash flow neutral in the second quarter and positive in the third and fourth quarters?

That would be correct.

And you have a cash flow source for working capital for the whole year. I'm assuming most of that will occur in the fourth quarter and do you have a dollar amount for that?

I haven't dollarized it specifically, but if you go back to my fourth quarter comments, one of the things I highlighted in the fourth quarter was that we had about $60 million too much inventory. We reduced about $30 million of that in Q1 and so clearly are planning to reduce inventory by another $30 million as the year goes on.

And then as we look at a lot of commodity costs, they obviously declined quite a bit. What kind of a cost inflation are you experiencing right now and what is that number, say, in the second half of the year? Can you provide any color on that?

I think the real way to understand it is if you go back to a baseline of 2007, we are seeing that we still have commodity inflation over that 2007 level. The peak of commodity inflation that we experienced in Q3 and Q4 we don't anticipate repeating that level as we go into the second half of this year. So from a gross margin point of view it will appear as though we have lower costs. We still actually have higher costs in real terms, which is, I'm sure, a point you are alluding to, but on a relative basis compared to last year they will be lower in Q3 and Q4 and so our gross margin will benefit in Q3 and Q4 as a consequence of that.

Your next question comes from Karru Martinson - Deutsche Bank.

In terms of the new products and the wins that you have, are you moving more towards kind of the value offerings that you referenced last quarter or how does that kind of break out?

You know, honestly, we are trying to manage categories for our customers, so it's not that we are focused on the low end of the product line; we want to bring all the strength we can to help our customers drive our product line and that says by controlling the category we have a better opportunity to do that. The products that we've recently introduced frankly are at the high end of the product line; they're in-line punches for premium-level distributors and that's been extraordinarily well accepted, and the product we just introduced on the laminator side is in the mid to upper part of the marketplace for that product and we are building a family around that that we'll introduce over the course of the next 12 months that will take us down to a pretty aggressive opening price point for consumers to be able to buy the product all the way up to high-end product that will fit very well in a commercial environment.

And I think you guys referenced last quarter about $50 to $60 million of excess inventory that you held. I'm kind of wondering where we are today on the progress of working through that.

During Q1 we reduced our inventory by $28 million, so we have $32 million still to come out.

So another $32 million to come. And with the kind of cautious optimism that you reference here and the improvement in February and March, have we seen those trends continue, you know, we're less negative into April and May?

Yes. As I said earlier, we don't have point of sale data for April - we tend to get that several weeks in delay - but the reality is our second quarter is driven by the back-to-school season and the load ins for that don't start until the end of May and through June, and that will drive our performance this quarter.

Okay, I guess, while the actual load in hasn't happened yet, are you getting indications that that's what's giving you the confidence for the year's outlook or how should we think of that?

Again, I think what our customers said in their comments on their calls earlier over the course of the last several weeks is that they plan to compete pretty aggressively in the back-to-school market and we think that bodes well for us.

Your next question comes from Carney Hawks - Brigade Capital.

I guess you guys talked about sequential improvement but you clearly, as you alluded to, have sequential improvement just by the seasonal nature of your business. Were you further trying to insinuate that the year-over-year comparisons of EBITDA should improve? You were down a little over 20%, I guess, in the first quarter. Is that the expectation, that the cost saves will allow EBITDA to improve and then hopefully go positive by the fourth quarter?

I think the way to understand our business is that we will make just seasonally more EBITDA in Q2 than we made in Q1 and we'll make more in Q3 than we did in Q2 and we should make more in Q4 than we did in Q3. That's the normal seasonal pattern of our business in a normal year. Part of what you will also see is we have an accelerating cost reduction schedule that will pull more through to the bottom line. And so Q2 will still be a tough quarter from a comparison point of view - we'll have all the negatives that we've had in Q1 from an FX point of view, we will have adverse volumes, still, on a year-over-year basis because the real negative volume affect on our business occurred in Q3 and Q4 last year. So Q2 will still be very challenging. When you get into Q3 you get up against a much easier comparison, but you still have a lot of negative foreign exchange effect. When you get into Q4 there is no negative foreign exchange effect; it's potentially positive. There isn't the possibility of the level of destocking that we endured last year, and so Q4 should actually be the first quarter that you can see a top line that could potentially look positive. It'll be a negative top line Q2 and Q3 still driven by a combination of significant adverse foreign exchange similar to that which you saw in Q1 and also the fact that the market has declined to a lower level than we experienced, particularly in Q2, but in Q3 it's still less adverse, but we've already seen a lot of the negative impact by Q3 last year.

Just to try to tie it up, though, fourth quarter on a year-over-year basis was obviously the worst comparison and this quarter you're down about 20% on the EBITDA line in the first quarter of '09. Is it at least fair to say that your hope or your expectation is that we won't see your year-over-year EBITDA comparisons get sequentially worse, meaning worse than 20% year-over-year decline, and they should start to get better?

Q1 is always our most struggling quarter and always was going to be given the number of things that impacted it and the small size of it. In Q2 you will see a quarter where we will still have a lot of negative headwinds. Q3 and Q4 is where I would expect us to flip around and become positive.

And you've already kind of alluded to this but on the hedges, I mean, clearly, just looking at the currency curve you should have negative comparisons through the third quarter. Do you have any sort of hedges in place or anything that might mitigate that or make it less or more than it otherwise would be?

I'm unable to hedge foreign exchange translation and just that alone will negatively impact Q2 by $5 million and Q3 by a similar amount.

Okay, and then Q4, assuming foreign exchange rates don't change, Q4 should be better?

Yes, Q4 would be slightly positive. I mean, foreign exchange fluctuates wildly and if the dollar weakens we will benefit and if the dollar stays strong then we'll come in much as we just discussed.

And just to quantify, it looks like right now it's about a $0.20 difference from where you were year-over-year and you're saying that translates into $5 million on a quarterly basis?

Right. So there's $5 million for Q1. It's about $5 million for Q2. And about -

That's $0.20 at about $20 million a year, then?

Yes.

Your next question comes from Christopher Dechiario – ISI Capital. Christopher Dechiario – ISI Capital: I guess one of the issues in the fourth quarter and I assume the first quarter was channel shift. Having spoken quite a bit about your ability and your going further into private label, but how about in terms of these new products and new sales? Have you been penetrating new channels as well? I think you talked about a couple of Wal-Mart placements last quarter and I was just wondering what the progress was on that?

We're pleased. We reorganized to create a dedicated focus on the mass channel and we've had two or three wins in that channel and we are actively competing as we speak in that channel. And we feel good about the channel that we've made there.

Is that something that's material to the company this year or is that something really that's further out?

Again, I think the benefit of the wins that we'll have we'll see more in 2010 in the mass channel. They react a little bit quicker, so we'll see a little bit of benefit tail end of the third quarter and the beginning of the fourth quarter.

And also you mentioned, obviously, you had a large improvement in your supply chain and delivery metrics. I think you had talked about one in particular, which is, I think, on time and accurate, if I remember correctly?

Line on time and complete.

On time and complete, exactly. I'm just trying to get a sense for sort of how much that's improved and is there still a lot of room left to improve there or do you pretty much feel like you've done what you can do there?

Honestly, we've made significant improvement. I think all of our strategic customers would say that we are performing at a minimum at acceptable levels and in some cases significantly better than that. But we have been muscling it. We got there because we have an absolute focus on delivering our product on time and complete, and we are building back end processes to enable us to do that on a systemic basis as opposed to just a manpower-driven basis. And I think because of that we have an opportunity to both improve our performance over time, have it be more sustainable and, frankly, take cost out.

Your next question comes from Justin Sughrue - Apidos Capital Management, LLC.

You show on Slide 7 $10 million of restructuring. Can you break that out?

Justin, you're fading out. Would you mind repeating that?

Can you break out on Slide 7 the $10 million of restructuring related charges this quarter?

That's cash flow, not charges. The actual charges were just under $4 million. Obviously, we came into the year with significant charges that we'd taken on the fourth quarter for severance that we've been expensing through the first quarter. Our severance terms are paid out on a monthly basis rather than as a lump sum.

Okay, so the $10 million is the cash with a carryover from Q4?

Correct.

But it's still severance related?

Yes.

And then can you remind me, on the $30 to $40 million of expected debt reduction in '09 how that gets paid down or what that relates to?

Our term Loan A has about a $26 million maturity in the third quarter and the fourth, split between the third and the fourth quarter, and so obviously that will receive the primary amount of our debt paydown. In Q1 we increased the size of our revolver and obviously that will get paid down as well as part of the annual cycle of the business.

Okay, either by 4 or 14, I guess. Okay.

Your next question comes from Ken [Bain] - Jefferies & Co. Ken Bain – Jefferies & Co.: You mentioned that you had been putting in place additional cost reductions in your International operations. Can you give us some details on that, how much you expect to save in those areas?

Not at this stage, Ken. Obviously there's a need to go through a process in Europe which is much more legally driven than the processes that you have in the United States and so we have to follow that legal process. Ken Bain – Jefferies & Co.: Can you tell us will it be significant when you're done with the process?

We need to tie our cost base to the levels of demand that they're seeing and the recession in Europe has a time lag effect to that which you have seen in the United States and so we still need to right-size our cost base in Europe and we'll be doing that in the current quarter. Ken Bain – Jefferies & Co.: Would it be safe to say, though, that probably this is not something that's going to have a big impact this year but would be more of an impact next year?

No, it'll have an impact in Q2 and mainly in Q3 and Q4.

And at this time we have no further questions in queue. I would now like to turn the call back over to Bob Keller for closing remarks.

I just wanted to say thank you for your time and we look forward to talking to you next quarter. Thanks, everybody.

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day, everyone.