Information on Business Segments

12 Months Ended

Dec. 31, 2019

18. Information on Business Segments

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



Operating Segment	Geography	Primary Brands	Primary Products
ACCO Brands North America	United States and Canada	Five Star^®, Quartet^®, AT-A-GLANCE^®, GBC^®, Swingline^®, Kensington^®, Mead^®, and Hilroy^®	School notebooks, planners, dry erase boards, storage and organization products (3-ring binders), stapling, punching, laminating, binding products, and computer accessories

ACCO Brands EMEA	Europe, Middle East and Africa	Leitz^®, Rapid^®, Esselte^®, Kensington^®, Rexel^® GBC^®, NOBO^®, and Derwent^®	Storage and organization products (lever-arch binders, sheet protectors, indexes), stapling, punching, laminating, shredding, do-it-yourself tools, dry erase boards, writing instruments and computer accessories

ACCO Brands International	Australia/N.Z., Latin America and Asia-Pacific	Tilibra^®, GBC^®, Barrilito^®, Foroni^®, Marbig^®, Kensington^®, Artline^®, Wilson Jones^®,Quartet^®, Spirax^®, and Rexel^®Australia/N.Z. only	School notebooks, planners, dry erase boards, storage and organization products (binders, sheet protectors and indexes), stapling, punching, laminating, shredding, writing instruments, janitorial supplies and computer accessories

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

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

Customers

We distribute our products through a wide variety of retail and commercial channels to ensure that they are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, discount, drug/grocery and variety chains, warehouse clubs, hardware and specialty stores, independent office product dealers, office superstores, wholesalers, and contract stationers. We also sell direct to commercial and consumer end-users through e-commerce sites and our direct sales organization.

Net sales by reportable business segment for the years ended December 31, 2019, 2018 and 2017 were as follows:



(in millions)	2019		2018		2017
ACCO Brands North America	$	966.8	$	940.7	$	999.0
ACCO Brands EMEA	569.3		605.2		542.8
ACCO Brands International	419.6		395.3		407.0
Net sales	$	1,955.7	$	1,941.2	$	1,948.8

Operating income by reportable business segment for the years ended December 31, 2019, 2018 and 2017 was as follows:



(in millions)	2019			2018			2017
ACCO Brands North America	$	131.0		$	116.6		$	152.4
ACCO Brands EMEA	58.6			59.4			32.0
ACCO Brands International	48.5			49.2			50.9
Segment operating income	238.1			225.2			235.3
Corporate⁽¹⁾	(41.9		)	(38.2		)	(50.8		)
Operating income⁽¹⁾	196.2			187.0			184.5
Interest expense	43.2			41.2			41.1
Interest income	(3.2		)	(4.4		)	(5.8		)
Non-operating pension income	(5.5		)	(9.3		)	(8.5		)
Other (income) expense, net	(1.8		)	1.6			(0.4		)
Income before income tax	$	163.5		$	157.9		$	158.1


(1)	Corporate operating loss in 2019, 2018 and 2017 includes transaction costs of $1.6 million, $0.5 million and $5.0 million respectively, primarily for legal and due diligence expenditures associated with the Foroni, GOBA, and Esselte acquisitions.


(2)	Operating income as presented in the segment table above is defined as i) net sales; ii) less cost of products sold; iii) less SG&A expenses; iv) less amortization of intangibles; and v) less restructuring charges.

The following table presents the measure of reportable business segment assets used by the Company’s chief operating decision maker as of December 31, 2019 and 2018:



(in millions)	2019		2018
ACCO Brands North America⁽³⁾	$	403.4	$	456.1
ACCO Brands EMEA⁽³⁾	257.9		276.7
ACCO Brands International⁽³⁾	384.1		341.3
Total segment assets	1,045.4		1,074.1
Unallocated assets	1,742.3		1,711.0
Corporate⁽³⁾	0.9		1.3
Total assets	$	2,788.6	$	2,786.4


(3)	Represents total assets, excluding goodwill and identifiable intangibles resulting from business acquisitions, intercompany balances, cash, deferred taxes, derivatives, prepaid pension assets, prepaid debt issuance costs and right of use asset, leases.

As a supplement to the presentation of reportable business segment assets presented above, the table below presents reportable business segment assets, including the allocation of identifiable intangible assets and goodwill resulting from business combinations as of December 31, 2019 and 2018:



(in millions)	2019		2018
ACCO Brands North America⁽⁴⁾	$	1,165.1	$	1,231.0
ACCO Brands EMEA⁽⁴⁾	670.9		709.2
ACCO Brands International⁽⁴⁾	686.7		629.8
Total segment assets	2,522.7		2,570.0
Unallocated assets	265.0		215.1
Corporate⁽⁴⁾	0.9		1.3
Total assets	$	2,788.6	$	2,786.4


(4)	Represents total assets, excluding intercompany balances, cash, deferred taxes, derivatives, prepaid pension assets, prepaid debt issuance costs and right of use asset, leases.

Capital spend by reportable business segment for the years ended December 31, 2019, 2018 and 2017 was as follows:



(in millions)	2019		2018		2017
ACCO Brands North America	$	21.7	$	24.3	$	16.3
ACCO Brands EMEA	7.0		6.1		5.1
ACCO Brands International	4.1		3.7		9.6
Total capital spend	$	32.8	$	34.1	$	31.0

Depreciation expense by reportable business segment for the years ended December 31, 2019, 2018 and 2017 was as follows:



(in millions)	2019		2018		2017
ACCO Brands North America	$	17.3	$	15.9	$	17.7
ACCO Brands EMEA	12.2		12.6		11.9
ACCO Brands International	5.4		5.5		6.0
Total depreciation	$	34.9	$	34.0	$	35.6

Property, plant and equipment, net by geographic region as of December 31, 2019 and 2018 was as follows:



(in millions)	2019		2018
U.S.	$	116.6	$	111.7
Canada	1.7		1.9
ACCO Brands North America	118.3		113.6

ACCO Brands EMEA	92.8		100.0

Australia/N.Z.	12.1		13.1
Latin America	42.2		35.1
Asia-Pacific	1.7		1.9
ACCO Brands International	56.0		50.1
Property, plant and equipment, net	$	267.1	$	263.7

Top Customers

Net sales to our five largest customers totaled $641.5 million, $577.3 million and $615.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. For the year ended December 31, 2019, net sales to Staples/Essendant, our largest customer, were $200.2 million (10 percent). Except as disclosed, no other customer represented more than 10 percent of net sales in any of the last three years.

As of December 31, 2019 and 2018, our top five trade account receivables totaled $112.9 million and $125.0 million, respectively.